Logourl black
From our private database of 13,300+ case briefs...

Brehm v. Eisner

Supreme Court of Delaware
746 A.2d 244 (2000)


Facts

The Walt Disney Company (Disney) hired Michael Ovitz as its president in 1995. Ovtiz’s employment agreement was negotiated by Disney chairman and CEO Michael Eisner and was approved by the 1995 board of directors (the Old Board). Under the five-year agreement, Disney agreed to give Ovitz a $1 million per year salary, a discretionary bonus, and stock options that would enable Ovitz to buy 5 million shares of Disney common stock. A non-fault termination provision in the agreement provided that if Ovitz left his employment with Disney through no fault of his own, he would receive a severance package, including a $10 million termination fee, his remaining salary under the five-year agreement term, the amount of probable unpaid installments of bonuses, and acceleration of his options for three million shares, which would become immediately exercisable at market price. Fourteen months after he was hired, the 1996 board (the New Board) terminated Ovitz’s employment on a non-fault basis. Ovitz received approximately $140 million under his severance package in cash payments and the value of his stock options that vested upon termination. Shareholders (plaintiffs) brought a derivative action against Disney’s directors (defendants), claiming that the Old Board breached its fiduciary duty and committed waste by approving the employment agreement without properly informing itself of the cost of the non-fault termination provision. The complaint admits that the Old Board was advised by a corporate compensation expert in deciding whether to approve the agreement. The complaint also alleges that the New Board breached its fiduciary duty by agreeing to the non-fault termination, which constituted waste. The Court of Chancery dismissed the complaint.

Rule of Law

The rule of law is the black letter law upon which the court rested its decision. To access this section, start your 7-day free trial of Quimbee for Law Students.

Issue

The issue section includes the dispositive legal issue in the case phrased as a question. To access this section, start your 7-day free trial of Quimbee for Law Students.

Holding and Reasoning (Veasey, C.J.)

The holding and reasoning section includes:

  • A “yes” or “no” answer to the question framed in the issue section;
  • A summary of the majority or plurality opinion, using the CREAC method; and
  • The procedural disposition (e.g. reversed and remanded, affirmed, etc.).

To access this section, start your 7-day free trial of Quimbee for Law Students.

What to do next…

  1. Unlock this case brief with a free (no-commitment) trial membership of Quimbee.

    You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 97,000 law students since 2011. Some law schools—such as Yale, Vanderbilt, Berkeley, and the University of Illinois—even subscribe directly to Quimbee for all their law students. Read our student testimonials.

  2. Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.

    Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students. Read more about Quimbee.

Here's why 136,000 law students have relied on our case briefs:

  • Written by law professors and practitioners, not other law students. 13,300 briefs, keyed to 182 casebooks. Top-notch customer support.
  • The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
  • Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
  • Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.