Walt Disney chief executive Michael Eisner yesterday said he had relied on the advice of the company's top legal officer in reaching the decision that former company president Michael Ovitz could not be fired without severence.

The issue of whether Disney had grounds to oust Mr Ovitz is central to the current trial being heard in Delaware. Shareholders who brought the case have argued that Disney had substantive reason to fire Mr Ovitz and that he should not have received a package on leaving worth about $140m (£75.3m).

In his third day of testimony, Mr Eisner said he had sought the advice of Sanford Litvack, Disney's chief of corporate operations and legal officer in the autumn of 1996.

Mr Litvack said that Disney could not fire Mr Ovitz with cause and would need to make the severance payment under the terms of his contract, Mr Eisner recalled.

"This was not a grey area," Mr Eisner said he had been told. "It was cut and dry from day one and I accepted that." He said he had passed on the legal advice to other board members during a meeting in November of that year.

He also testified about his deteriorating relationship with Mr Ovitz, who he earlier said had created a "bad vibe" because of his elitist attitude. Under questioning Mr Eisner was asked to explain what had led him to describe Mr Ovitz as a "psychopath" in a now infamous email.

Mr Eisner said he had asked Mr Ovitz to leave the company quietly. But he became enraged when Mr Ovitz hired a public relations agent and began negotiating contracts with other companies.

"I bent over backwards - not because he was a friend, I would do the same thing for anybody leaving the company under those circumstances - and he just threw it right in the company's face," Mr Eisner said. "I was furious at him. I had spent a year trying to educate him and I thought I showed enormous patience.

"I was not trying to trump up false accusations and create some giant conflict and indicate to the community we serve that we do not honour contracts," he said.

He said he had instructed Mr Litvack to get a second opinion from outside legal counsel. Mr Litvack said the outside advice was the same, although Mr Eisner said he never saw a written opinion, nor could he remember which firm had been consulted.

Mr Eisner said his personal relationship with Mr Ovitz had not influenced the decision to grant him a severance package. Mr Eisner said yesterday he had seen Mr Ovitz socially just twice in the years since he was ousted.