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Disney, Katzenberg settle
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July 7, 1999: 4:48 p.m. ET
Agreement closes 3-year battle over $250M bonus owed to former exec
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NEW YORK (CNNfn) - Walt Disney Co. said Wednesday it agreed to settle a lawsuit filed by former studio chief Jeffrey Katzenberg, ending a three-year squabble over a bonus of at least $250 million.
Terms weren't disclosed, but both parties said in a written statement that they were satisfied with the settlement.
"The time has come to put this matter behind us and to focus on our business initiatives," said Disney Chairman and CEO Michael Eisner, Katzenberg's one-time mentor.
"There is never an absolute winner or loser, but I am relieved," Katzenberg told CNNfn in a telephone interview. "(I) don't think it was something I was proud of or enjoyed. There is a price paid on all sides for something like this. I don't feel great about it."
Katzenberg also said that he was proud of his 10 years at Disney, which he described as "very rewarding."
Analysts said the settlement would not have any impact on Disney's earnings and likely would have little impact on the company's stock, which hit a three-month low Tuesday.
Katzenberg originally filed the breach of contract suit against Disney in April 1996, claiming his former employer reneged on a clause in his contract granting him 2 percent of the profits from all Disney products produced or acquired during his 10 years with the studio.
Katzenberg sought share of revenue generated from such hits as 'The Lion King'
Disney claimed Katzenberg forfeited his right to that bonus when he severed his contract in 1994 and resigned to help launch the DreamWorks studios with Hollywood moguls Stephen Spielberg and David Geffen.
Katzenberg told CNNfn that the case had been a "professional distraction" from his duties at DreamWorks.
In May, a judge arbitrating the case sided with Katzenberg and held that Disney had illegally withheld his bonus, a decision Katzenberg claimed in court papers actually cost him more than $500 million, according to Reuters.
Judge Paul Breckenridge further ruled Katzenberg could also be entitled to interest on income earned beginning in October 1994, almost two years longer than Katzenberg had been seeking.
Katzenberg's contract, considered fairly unique in the entertainment industry because of its correlation to revenue from Disney products, could hinder the company's attempts to attract talent down the line, some analysts said.
Disney's stock hit 3-month low Tuesday
"The question is, is this a model [contract] that Disney is going to abandon or are they embracing it?" said Michael J. Schroeder, an analyst with Wasmer, Schroeder & Co. "Is this the kind of thing that Disney now needs to attract a talented person like Katzenberg?"
Schroeder said he thought the court battle could further hinder Disney's recruitment efforts.
"I think it could hurt them," he said. "You don't want to begin your association with the company with the idea that you might get stiffed down the line."
Disney spokesman John Dreyer said he would not comment on whether Disney currently structures contracts for top executives like it did Katzenberg's.
Since Breckenridge's ruling in May, the two parties have been negotiating how much Katzenberg would receive in daily sessions at their attorney's offices.
Disney has already paid Katzenberg roughly $117 million in association with a previous settlement, one source close to the company said. That money is expected to count against the settlement reached Wednesday.
Disney (DIS) shares ended up 1/16 Wednesday to 28.
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