particularized and bad facts (many of which were ultimately not proven) and an
application of deferential procedural standards on a motion to dismiss.
Disney IV does not significantly clarify the elusive concept of good faith, but
opportunity created by this well publicized case to emphasize deficiencies in the
Disney directors’ decision-making process with the expressed purpose of
instructing directors how to act as better stewards of the assets of stockholders.
See Disney IV, slip op. at 5, 134, 161.
BACKGROUND OF THE WALT DISNEY COMPANY DERIVATIVE LITIGATION
The rise and fall of Michael Ovitz is a story born in Hollywood that has received Hollywood treatment from Vanity Fair and others. What follows is necessarily an abbreviated version of that story.
Michael Ovitz was one of the biggest names in Hollywood when his longtime friend, Disney CEO Michael Eisner, approached him about becoming the Company’s president after the unfortunate and untimely death of the Company’s former president, Frank Wells.
Mr. Ovitz, who at the time was enjoying a multi-million dollar income from his highly successful talent agency, demanded both an opportunity to participate in the upside of Disney’s success and “downside protection” if he were to consider joining The Walt Disney Company.
Eisner, with the assistance of the chairman of Disney’s compensation committee, Irwin Russell, negotiated with Ovitz on behalf of the Company and reached an agreement under which Ovitz would receive a five-year contract with two tranches of options. The first tranche consisted of three