Witness: Ovitz Didn’t Steal Money

Former Walt Disney Co. President Michael Ovitz’s alleged mishandling of $140,000 in expenses didn’t provide a way to fire him without paying his $140-million severance, Disney’s former general counsel told a judge Wednesday.

Sanford Litvack, who resigned as Disney’s top lawyer in 2000, testified that personal gifts and meals Ovitz allegedly billed to the company didn’t justify denying him severance under his contract. Disney executives withheld the $140,000 from Ovitz’s severance payment as reimbursement for the expenses, according to court papers.

“I believe to this day, whatever else I think about Michael Ovitz, he did not steal any money,” Litvack said in the Delaware Chancery Court trial of a shareholder lawsuit seeking to recover Ovitz’s severance. He was responding to questions about whether withholding the expense money suggested that Ovitz stole company funds.

Litvack spent much of his second day on the witness stand in Georgetown, Del., countering investors’ accusations that Chief Executive Michael Eisner could have fired Ovitz without paying him severance. Shareholders want the $140 million returned to Disney.

Litvack testified that outside auditors hired to review Ovitz’s expense filings after he was fired found some questionable submissions. Among those were expenses connected with a private screening room in Ovitz’s home and a security system.

“It turned out that some portion of the expenses were either not reimbursable or not properly documented,” Litvack told Judge William B. Chandler. That led Disney officials to withhold the $140,000 from the final $1-million payment of the cash portion of Ovitz’s severance package.

Litvack also testified he was unaware Ovitz had used $24,000 in company funds to buy 80 watches, designed by a Disney animator, as gifts for business associates and personal friends.

Earlier in the trial, former Disney board member Irwin Russell, who also serves as Eisner’s personal attorney, testified that he questioned Ovitz about the watch-related expense and demanded reimbursement.