Journal of Law and Business
\\server05\productn\N\NYB\3-2\NYB201.txt unknown Seq: 1 3-JUL-07 12:45 NEW YORK UNIVERSITY JOURNAL OF LAW AND BUSINESS VOL. 3 Spring 2007 No. 2 COURT OF LAW AND COURT OF PUBLIC OPINION: SYMBIOTIC REGULATION OF THE CORPORATE MANAGEMENT DUTY OF CARE TAMAR FRANKEL* INTRODUCTION The story of the Disney Corporation, Michael Eisner, and Michael Ovitz. On August 9, 2005, the Delaware Chancery Court handed down a decision that exonerated the defendant directors of Disney Company and its top management from liability for their handling of the Ovitz Affair.1 The story is quite simple. Disney’s president died in an accident, and the corporation’s CEO, Michael Eisner, underwent a heart opera- tion. Disney needed a successor president and immediate help for its ailing CEO. Eisner, who had been courting his friend, the famous Michael Ovitz, for years, approached him again. As this was an opportune time for Ovitz as well, the deal was struck, and Ovitz moved to Disney as its president. The new president did not work out. He did not merge into the Disney culture, had difficulties in being close to the very commanding and demanding Eisner, and to two top executives, who were resentful of Ovitz, and who continued to report to Eisner. Af- ter about one year, Ovitz’s contract with Disney was termi- nated. The termination, after a year of unsatisfactory service, * Professor of Law, Michaels Faculty Scholar, Boston University School of Law. 1. In re Walt Disney Co. Derivative Litig., 907 A.2d 693 (Del. Ch. 2005), aff’d sub nom., Brehm v.
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