Disney shareholders reject CEO Iger’s pay package

Walt Disney Co. shareholders turned an authoritative thumbs down in an advisory vote on the company’s rich executive pay plan, which delivered $36.3 million to Chief Executive Officer Bob Iger and is likely to reward him even more in fiscal 2018.

 

Investors voted 52 percent against the non-binding advisory resolution on executive compensation, with 44 percent in favor and 4 percent abstaining, the company said in a statement from its annual meeting in Houston. It’s the first time since federal regulators began encouraging such votes at companies that Disney shareholders rejected the plan. The company said it will take the vote under advisement in weighing future pay.

 

 Changes to Remuneration Policy:

  • Base salary to be increased to $3 million for 2018 and $3.5 million thereafter.
  • Annual target bonus allocation is $12 million and can reach 200% of the award. In 2017, Iger received $15.2 million (127% of the target). Starting in 2018, the annual target allocation will be $20 million and  can reach 200% of the target, or $40 million.
  • For the LTIP (both RSUs and options), the target in 2018 will be $25 million and can reach 200% of the target, or $50 million.
  • Assuming the same other compensation amount of $1.3 million, fair value of compensation for “meeting targets” will be $49.8 million and can reach a maximum of $94.8 million.

 

Transaction with 21st Century Fox:

  • Iger received 245,098 RSUs that will vest over four years “regardless of whether the tansaction is completed”. Using the numbers above, at $105.46/share, these RSUs are valued at $25.85 million;
  • Iger received 687,898 performance-based RSUs that  that will vest on December 31, 2021 if (1) the acquisition transaction is completed and (2) subject to satisfaction of a performance-vesting requirement based on TSR vs. S&P500. Up to 150% of this award could vest. This award is valued at $72.55 million and can reach a maximum of $109 million;

 

Other elements:

  • According to his original contract, Iger is entitled to a cash bonus of $5 million just for the mere fact of being employed as CEO until July 2, 2019;
  • Following his retirement, Iger will be hired as a consultant for the company for 3 years where he will receive $500,000 per quarter for the first eight quarters, and $250,000 per quarter thereafter (the contract was amended to 5 years and $500,000 per quarter all throughout said period). So in his first year as a consultant he could cost the company $2 million in consulting fees and  additional security services (which exclude the use of Company provided or leased aircraft; cost in 2017 was $900,000).
  • Generous change in control provisions:

 

 

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