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October 26, 2004
Witness Calls Ovitz's Compensation Package 'Unreasonable'

An economics and law professor at the University of Southern California has testified that the compensation package Disney Co. gave to former president Michael Ovitz was "unreasonable" and one of the most generous ever awarded to an executive below the level of chief executive officer, the Associated Press reports.

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Kevin J. Murphy was testifying as an expert witness for shareholders in a lawsuit alleging the company's board failed in its fiscal responsibilities when it signed Ovitz to a contract that included $1 million a year in salary, an annual bonus of $7.5 million, and 5 million stock options, and then paid Ovitz a $140 million severance package when Ovitz left after 14 months with the company.

Murphy testified that the median combined salary and bonus of similarly situated presidents in Fortune 500 companies was $540,000, the news service reports. Murphy said Ovitz's compensation package was not in shareholders' interest.

Shareholders contend the compensation package and severance package should have received more scrutiny.

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