Roy Disney yesterday told a courtroom that he had sensed Michael Ovitz was not performing well as Walt Disney president within weeks of the Hollywood power broker joining the company in late 1995.

Mr Disney, a former director of the company, was testifying in a trial brought by shareholders angered by the $140m (£75.8m) severance package Mr Ovitz received when ousted in 1996, after just 14 months.

Michael Eisner, the firm's longstanding chief executive and the man who hired Mr Ovitz, was expected to testify after Mr Disney.

Mr Disney, the son of company co-founder Roy Disney, said he had a first glimpse of tension in the executive suite at a management lunch in October 1995, about three weeks after Mr Ovitz had joined.

The lunches usually began promptly at noon, but Mr Ovitz arrived 15 minutes late and conversation stopped when he burst in, Mr Disney said. He noted that the "body language" of the other directors hinted at an underlying friction.

Mr Disney said the decision to oust Mr Ovitz was the right one. "The right thing to do was to sever the relationship," he said.

Mr Ovitz had earlier testified that the firm's other directors had frozen him out and that the problems had begun even before his appointment was announced. "I was cut out like cancer," he said. He left with one of the biggest payouts in history.

Investors are complaining that Mr Ovitz should never have been hired and he should have been fired without compensation. In the lawsuit, which has gone on for seven years, they are looking to recoup $200m, the severance package plus interest.

Last week, another former director, Stanley Gold, said "petty bickering" during Mr Ovitz's time had left the company in a state of "suspended animation".

He did not, however, support Mr Eisner's view that Mr Ovitz was a "psychopath". Mr Gold said: "I think of a psychopath as someone like Charlie Manson.

"Michael Ovitz is not a psychopath and he's not totally incompetent," he said.

Mr Disney was a backer of Mr Eisner but turned on his former ally earlier this year. He and Mr Gold led a campaign for Mr Eisner's removal as chief executive, citing years of financial underperformance.