Former Walt Disney Company Director Robert A.M. Stern said the company made a “wise investment’ when it fired ex-President Michael Ovitz in 1996 and paid his $140 million severance to end his 15-month tenure.

Mr. Stern testified yesterday in the trial of a shareholder lawsuit over the severance package that Mr. Ovitz “created a climate that was counter-productive” at the entertainment company, and that the chief executive, Michael Eisner, had no choice other than to oust his friend of 30 years as Disney’s second in command.

“I believe the amount of money the company had to pay Mr. Ovitz amounted to a wise investment, given the destructive” nature of some of his actions at America’s no. 2 entertainment company, said Mr. Stern, the head of Yale University’s architecture school. He stepped down as a Disney director last year.

Disney investors are claiming in Delaware Chancery Court that Mr. Stern and other former and current Disney directors should be held financially responsible for Mr. Ovitz’s severance because they failed to oversee his hiring and firing properly. Messrs. Eisner and Ovitz are also defendants in the case. Shareholders want the $140 million returned to Disney.

In pretrial depositions, Mr. Eisner, 62, said he fired Mr. Ovitz, a former agent, as Disney’s no. 2 executive because he failed to make the transition to corporate executive. Mr. Ovitz cofounded a talent agency that represented stars such as singer Michael Jackson and author Tom Clancy.

Mr. Ovitz, 57, countered in his testimony that Mr. Eisner, a friend of 30 years, betrayed him by not giving him time to learn the job before firing him and not backing him up in disputes with other executives.

Plaintiffs in the trial contend that directors deferred too much to Mr. Eisner in deciding to bring Mr. Ovitz to the company and then firing him 15 months later. They claim that Mr. Ovitz shouldn’t have been entitled to the $140 million because of his poor performance and ethical lapses.

Mr. Stern concluded his testimony late yesterday. The trial, overseen by Judge William Chandler, won’t resume until January 11, when expert witnesses will take the stand. There is no jury in the trial.

Mr. Stern, who owns a New York based architectural firm that does work on Disney theme parks, said during his two and a half hours on the witness stand that Mr. Eisner told him in August 1995 that Mr. Ovitz would be joining Disney’s executive ranks.

“I thought it was fantastic,” given Mr. Ovitz’s reputation as the one of Hollywood’s most powerful figures and his long-standing relationship with Mr. Eisner, Mr. Stern said.

“But I pointed out to Michael that sometimes good friends don’t work out as good partners,” Mr. Stern said.

By the following year, Mr. Stern said, Messrs. Eisner and Ovitz’s partnership was showing signs of strain. “It was not a perfect marriage,” he said.

Mr. Ovitz had a reputation for mistreating lower-level Disney employees and for “spinning stories and presentations” to make himself look good, Mr. Stern said.

Once Mr. Eisner had decided to fire Mr. Ovitz, Mr. Stern said Disney General Counsel Sanford M. Litvack assured directors there was no way to fire him without paying the $140 million severance.

“He said he looked at it every which way and there was no way to get out of it,” Mr. Stern added.

Shares of Disney, which have risen 22% over the past 12 months, rose 10 cents to $27.73 in New York Stock Exchange composite trading yesterday.

Disney has directors’ and officers’ insurance provided by American International Group and other companies that might cover a ruling that Mr. Eisner and other executives must return Mr. Ovitz’s severance payments.

The case is In Re the Walt Disney Co., No. C.A. 15452, Court of Chancery, Wilmington, Del.