National Post (National Edition)
Disney cuts CEO’S future pay by millions
N EW YOR K /L OS A NGEL E S • Walt Disney Co., facing criticism over excessive pay packages, cut tens of millions of dollars of future potential earnings for chief executive Bob Iger.
The move, disclosed in a regulatory filing Monday, comes days before the company’s annual meeting, where investors are set to vote on the entertainment giant’s executive compensation program. Disney didn’t provide a reason for the planned reduction, the second change to Iger’s pay in four months.
Iger’s target annual compensation will be cut 28 per cent to US$35 million after Disney completes a deal to acquire assets from Rupert Murdoch’s 21st Century Fox Inc., according to the filing. The changes don’t affect more than Us$100-million of equity awards Iger received as part of a 2017 contract extension.
The cut precedes Disney’s annual meeting on Thursday, at which Iger’s contract was likely to face resistance from investors. Institutional Shareholder Services, the proxy-advisory firm that sells voting recommendations to asset managers, said in a Feb. 11 report that the pay program should be rejected, citing “ongoing concerns about the structure and magnitude” of Iger’s an- nual compensation.
Rival proxy advisers Glass Lewis & Co. and Egan-jones also issued reports critical of the pay program.
“Disney’s had a problem for years with pay — they’re walking this tightrope trying to keep Iger on board while figuring out the succession plan,” said Robin Ferracone, CEO of Farient Advisors, a compensation-consulting firm. “Even with this change, I think they’re going to have some pressure. They will continue to be scrutinized for a few years after this.”
A year ago, more than half of all shares voted in the firm’s annual say-on-pay referendum were cast against the compensation program for senior managers — a remarkable rebuke given that the vast majority of S&P 500 firms register average support of more than 90 per cent. Such votes aren’t binding but represent a rare vehicle for investors to publicly showcase discontent with a company’s decisions.
Upon striking the deal with Fox in 2017, Disney gave Iger a contract extension to keep him on the job through 2021. The new agreement came with several lucrative provisions: It bumped the CEO’S salary by 20 per cent to US$3 million, and included promises to boost his target bonus and long-term awards by more than 40 per cent once the deal was completed.
In all, Iger’s annual target compensation would have risen to US$48.5 million, from roughly US$32 million before the deal was announced, an increase of about 50 per cent.
But after the 2018 vote, Disney’s board met with many of its biggest shareholders, who voiced concerns about Iger’s pay. In Monday’s filing, the company disclosed that the CEO’S target bonus will remain unchanged at US$12 million after the deal is completed, while his long-term stock award be US$20 million instead of US$25 million.