Wilmington, Del. ? The Walt Disney Co.’s board did not breach its fiscal responsibilities by agreeing to hire Hollywood superagent Michael Ovitz as president in 1995 and then granting him a $140 million severance package when he left just 14 months later, a judge ruled Tuesday.

Chancellor William Chandler III said that while the directors’ conduct “fell significantly short of the best practices of ideal corporate governance,” board members did not violate their duties or waste Disney resources.

“It is easy, of course, to fault a decision that ends in failure, once hindsight makes the result of that decision plain to see. But the essence of business is risk – the application of informed belief to contingencies whose outcomes can sometimes be predicted, but never known,” Chandler wrote in a 175-page decision.

The ruling closes a shareholder derivative trial that revealed the stormy inner workings of one of the world’s largest entertainment companies.

Trial testimony included details of Ovitz’s lavish spending and the enmity he engendered among fellow Disney executives, including CEO Michael Eisner, who described Ovitz in company memos as a “psychopath” with a “character problem.”

Ovitz contended that he loved Eisner “like a brother” but was micromanaged, undermined by other key executives and “cut out like cancer” before he had time to prove his worth.

Eisner and the company contended Ovitz wasted money, alienated executives with his arrogance and could not be trusted.

Attorneys for the plaintiffs said they will appeal Chandler’s decision to the Delaware Supreme Court.

“It would be unfortunate for shareholders and employees of public companies if this decision is read by corporate managers as a license to act in disregard of their duties to engage in the deliberate processes required by fiduciaries,” said Melvyn Weiss, a partner with Milberg Weiss Bershad & Schulman.

The Walt Disney Co. CEO Michael Eisner, left, is shown in a 1996 file photo with Michael Ovitz in New York. A judge ruled Tuesday in favor of Walt Disney Co.'s board of directors, saying it did not neglect its fiduciary duties by agreeing to hire Ovitz as president and then granting him a 40 million severance package when he left 14 months later.

The lawsuit claimed that current and former members of Disney’s board did not properly scrutinize Ovitz’s employment contract after Eisner tapped him as president, then wrongly granted Ovitz a non-fault termination entitling him to a $140 million severance package just over a year later.

Chandler last year granted Ovitz summary judgment on the claim that he violated his fiduciary duties in negotiating the terms of his contract, noting that he was not yet a fiduciary of Disney at the time. The judge said, however, that there were “genuine issues of material fact” to be resolved regarding Ovitz’s non-fault termination.

Lawyers for the shareholders alleged that Ovitz’s performance was so poor that he should have been fired for cause and not paid the remainder of his contract.

The defendants, including Eisner and Ovitz, said Ovitz’s contract was given careful consideration, and that while Ovitz’s tenure was stormy from the start, there was no gross negligence or malfeasance that would justify denying him his severance package.

Eisner’s attorney, Gary Naftalis, said the CEO was “very pleased that the court, after hearing all the testimony and seeing the witnesses, has found that he and the other directors properly carried out their fiduciary duties to the shareholders.