DisneyWar Author James B. Stewart '73 Discusses Court Decision on NPR
August 11, 2005
August 11, 2005, Greencastle, Ind. - [Download Audio: "A Victory for Disney's Directors" - 258kb] "It's the first big case to test what a director's responsibility is post-Enron and in the Sarbanes-Oxley era," Pulitzer Prize-winning investigative journalist and 1973 DePauw University graduate James B. Stewart says of a decision in a case involving the Walt Disney company. Earlier this week, a Delaware judge ruled that Disney's board of directors were within their rights when they approved paying former Disney executive Michael Ovitz $140 million in severance pay. Disney shareholders argued, unsuccessfully, that the board breached its fiduciary responsibilities in making the payment. "It was a victory for the Disney directors," Stewart told National Public Radio's Morning Edition, "but the judge did warn that in today's era of higher standards for corporate directors, the result might have been different had the decision to fire Ovitz been made now, rather than several years ago."
The author of the best-seller DisneyWar: The Battle for the Magic Kingdom, an inside look at the company and its embattled CEO Michael Eisner, Stewart calls the ruling [Download Audio: "A Personal Embarrassment" - 323kb] "a legal victory, but a personal embarrassment. The chancellor deciding the case actually wrote that Eisner had enthroned himself as the omnipotent and infallible monarch of his personal Magic Kingdom, which is pretty strong language from a judge. And I think the case did expose a great deal of dysfunctional, embarrasssing behavior at the top of the Disney company," he told NPR.
Stewart, who serves as chair of DePauw's Board of Trustees, says the decision should put corporations on notice. [Download Audio: "A Warning to Directors" - 353kb] "[The judge] specifically said that he was holding [Disney] to the kinds of standards that applied when the decision was made; he didn't think it would be fair to hold them to the higher standards that have come to be expected since Enron. So it's certainly not a blank check for directors to revert to the kind of a 'let's go to a cocktail party and dinner and otherwise forget our responsibilities and rubber stamp whatever the CEO wants to do.' I think, on the contrary, his language is quite harsh about the Disney directors' behavior and although he's not holding them legally liable, I would read the opinion as a warning to directors today that they will be held to higher standards than the Disney directors were in this case." Listen to the complete segment by clicking here.
James B. Stewart will be among the presenters at DePauw Discourse 2005, to be held September 15-17 on the DePauw campus. Read more by clicking here.
The editor-at-large of SmartMoney magazine, James Stewart served as editor of The DePauw while a student in Greencastle, and has been called by the San Francisco Examiner “the journalist every journalist would like to be.” His other books include: Den of Thieves, Blind Eye and Blood Sport. Stewart received a Pulitzer Prize for Wall Street Journal articles on the 1987 stock market crash and the insider-trading scandal. He received DePauw's Young Alumni Award in 1988, an Alumni Citation in 1988, and an honorary Doctor of Journalism degree in 1989.Back