Michael Ovitz – The Fool
To see the The Fool generally means a beginning of a new journey, one where you will be filled with optimism and freedom from the usual constraints in life. When we meet him, he approaches each day as an adventure. He believes that anything can happen in life and there are many opportunities that are lying out there, in the world, waiting to be explored and developed. When it comes to finances, you may be in a period where you are feeling spontaneous and idealistic. All spending now can be for the purpose of adventure and exploration. There can be a feeling that you will have all that you need, so there’s no need to worry about the bills, and more emphasis on feeling expansive and curious. If you’ve pulled the Fool card, you are in the position to take a risk and try something new career-wise. You can feel safe knowing that even if it doesn’t work out, you’ll be taken care of.
“The Disney Case”
- In 1994, Disney’s President Frank Wells died in a helicopter accident.
- The company had no real succession plan and in 1995, they hired Ovitz who was known as a very powerful man in Hollywood.
- Ovitz wanted a lot of money for the job and negotiated an exit package that would increase yearly if the job didn’t work out. Ovitz was hired under these terms before the terms were approved by the compensation committee.
- After just over a year with Disney, Ovitz was fired without cause (so he was entitled to the entire severance package).
- Luckily for Ovitz… This meant he got a massive severance payout (about $130 million)
- In 1997, Disney shareholds brought derivative actions on behalf of Disney against Ovitz and directors of Disney . They claimed the severance payout was a fiduciary duty breach and a contractual breach by Ovitz and fiduciary duty breaches and a waste of assets by the directors.
- The Supreme Court of Delaware found no breaches. The directors hadn’t breached their fiduciary duties because although their conduct “fell significantly short of the best practices of ideal corporate governance”, they’re decisions fell short of a breach of fiduciary duty and waste of assets.
- The court found that directors don’t have to be informed of every single contingency but instead have to be “reasonably informed” to meet the directors’ duty of care.
- Ovitz didn’t breach his fiduciary duties because he didn’t play a part in deciding whether the company should approve his severance deal.
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