Business Law 3650
Final Examination
WALT DISNEY COMPANY DERIVATIVE LITIGATION
Disney Shareholders v. Michael D. Eisner; Michael S. Ovitz; The Walt Disney Company’s Board
of Directors and The Walt Disney Company
1. Analyze whether Disney’s board’s Compensation Committee was protected from liability
for breach of the fiduciary duty of care under the business judgment rule in its approval of
Ovitz’ compensation package.
Issue:
Was Disney’s board’s Compensation Committee protected from liability for breach of the
fiduciary duty of care under the business judgment rule in its approval of Ovitz’ compensation
package?
Rule:
Corporate Statute § 8.40: Corporate Directors’ Fiduciary Duty of Care
Corporate directors or a board committee must act with the care a reasonably prudent person
would exercise in a like position and under the same or similar circumstances.
The Business Judgment Rule (Case Law)
A director’s decision constitutes a valid business judgment, and is therefore insulated from
liability, when it:
(1) is made by financially disinterested directors;
