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Katz' beats Mouse
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May 19, 1999: 8:19 p.m. ET
Judge says former Disney executive should get bonus after leaving studio
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NEW YORK (CNNfn) - Former Walt Disney studio chief Jeffrey Katzenberg scored a major victory Wednesday when a judge ruled in his favor in a $250 million breach-of-contract suit.
The case, which pitted Katzenberg against his one-time mentor, Disney Chairman Michael Eisner, now goes into a second phase where the judge will determine how much money Disney must pay.
Katzenberg had claimed he was entitled to a bonus of $250 million because a clause in his contract allowed him to receive 2 percent of income from films, TV shows and other products sold during his 10 years at the studio.
Disney had claimed that Katzenberg forfeited his bonus when he resigned in 1994 to form a new studio called Dreamworks SKG with Hollywood moguls Steven Spielberg and David Geffen.
A King's ransom?
In his eight-page ruling, Judge Paul Breckenridge, who is serving as an arbitrator in the case, said Katzenberg did not forfeit the bonus. In addition, he said Katzenberg could also be entitled to interest on income earned beginning in October 1994, almost two years more than Katzenberg had been seeking.
According to published reports, Disney (DIS) has already paid Katzenberg almost $117 million.
But Katzenberg wanted more, so he decided to pursue the case. The judge will now determine how much he is owed in an upcoming phase to the proceedings. However, if Disney is ordered to pay interest, the studio could be forced to fork over nearly $200 million more, sources said.
As head of Disney's film studio, Katzenberg spearheaded the production of many hits such as "Aladdin," "Beauty and the Beast" and "The Lion King" and claimed a right to the bonus for that work as well as the merchandise associated with the films.
However, the judge said Katzenberg was entitled to a portion of the income from products that were made only by Disney as opposed to those made by third parties under license from Disney.
From Little Mermaid to 'little midget'
The decision comes after years of acrimony and mudslinging between two of the top names in Hollywood. During testimony earlier this month, Eisner was grilled about his relationship with Katzenberg and a reported statement in which he referred to his former deputy as "a little midget."
Katzenberg left Disney after Eisner refused to promote him to president following the death of Frank Wells in a helicopter crash.
Katzenberg had also claimed Disney committed fraud but the judge rejected that claim.
In a statement after the ruling, Disney said: "We are very pleased by the referee's ruling." For his part, Katzenberg was said to be delighted with the verdict.
Sources said Katzenberg was "pretty happy" with the decision and was breaking out the Diet Coke to celebrate. 
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