Disney Case Teaches Importance of Following Good Board Process

It took seven years, 24 witnesses, 37 days of trial, 1,033 trial exhibits and a 175-page opinion with 571 footnotes to tell us that "Mickey" really was fine. Well, sort of fine.

On August 9, 2005, the Delaware Chancery Court said the Walt Disney Co., did not owe shareholders anything for the company's hiring of Michael Ovitz, a friend of CEO Michael Eisner, and the subsequent, $140 million golden parachute given to Ovitz when he was fired.

Earlier rulings in this case seemed to establish a director's additional duty of "good faith" in Delaware. At stake in the trial was turning the business judgment rule on its head and dramatically limiting a provision of Delaware general corporation law that protects directors from personal liability for monetary damages for alleged breaches of fiduciary duty.