Practical Tips for Directors Post-"Disney"

On June 8, 2006, the Delaware Supreme Court issued an opinion ending nearly 10 years of shareholder derivative litigation against the directors of The Walt Disney Company. In its opinion, the Supreme Court upheld in all respects the September 2005 decision of the Delaware Chancery Court in which the Chancery Court found, after a several-week trial, that the Disney directors had not breached their fiduciary duties of care, loyalty and good faith in connection with their approving the employment and – only 14 months later – the no-fault termination of Michael Ovitz, at a cost of approximately $130 million to Disney. (For a summary of the facts of the Disney case and the rulings of the Delaware Chancery Court, see Goodwin Procter’s October 3, 2005 Public Company Advisory entitled "Practical Steps for Directors to Consider After Disney," by clicking on the 'Next Page' link at the foot of this article.