Wednesday, August 10, 2005

Disney Board Not Guilty, But Not So Smart

It's time for greatness -- not for greed. It's a time for idealism -- not ideology. It is a time not just for compassionate words, but compassionate action.
Marian Wright Edelman, author, lecturer, and proud social agitator

A judge ruled that The Walt Disney Co.'s board did not breach their fiscal responsibilities by agreeing to hire Hollywood agent Michael Ovitz as president in 1995, then granting him a $140 million severance package when he left just 14 months later.

The judge said that while directors' conduct "fell significantly short of the best practices of ideal corporate governance," board members did not breach their duties or commit waste.

"It is easy, of course, to fault a decision that ends in failure, once hindsight makes the result of that decision plain to see. But the essence of business is risk — the application of informed belief to contingencies whose outcomes can sometimes be predicted, but never known," the judge wrote in a 175-page opinion.

I like the judge’s reasoning, but maybe he should have commented on the common sense of fiscal responsibility that paying Disney executives a king’s ransom in salary, bonuses and benefits while laying off employees is shameful and truly inexcusable.

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