Promotion pays off for Iger
Disney showers its new chief executive with a raise, bonus and stock grant.
Richard Verrier | Sentinel Staff Writer
Posted January 12, 2006
Walt Disney Chief Executive Officer Robert Iger not only got a big promotion last year, he got a pretty nice raise.
According to the company's proxy statement made public Wednesday, Iger's annual salary was raised to a minimum of $2 million when he took over as CEO in October.
Under his new five-year employment agreement, Iger also will be eligible for an annual bonus of $7.25 million each year, depending on Disney's growth. He also received 500,000 shares of restricted stock that is tied to Disney's long-term performance.
That pay bump comes on top of a $1.5 million salary, $7.7 million bonus and $500,000 restricted stock grant that Iger earned as Disney president, the No. 2 job, during the fiscal year ended Sept. 30. He also received stock options for 274,241 shares.
Departing CEO Michael Eisner didn't do so badly himself, according to the filing.
Eisner earned a $9.1 million bonus in the fiscal year, up from $7.2 million a year earlier, on top of his regular $1 million salary. It's one of Eisner's bigger payouts, although it pales in comparison to the $576 million he reaped in 1998, when he exercised stock options he had accumulated for years.
The proxy is the first to be released under Iger's tenure as CEO. Under Eisner, Disney's executive pay was one of most closely scrutinized in corporate America. In recent years, Disney has sought to mollify critics by tying bonuses more closely to performance.
Shareholder reaction to the disclosures was largely muted.
"While these payments may seem eye-popping, it seems more closely aligned with the company's performance and is less likely to raise the ire of shareholders than in years past," said Patrick McGurn, senior vice president of Institutional Shareholder Services, which advises many Disney investors.
Eisner, once one of America's highest-compensated executives, could have received a much larger payout, he said. "Shareholders are moving on," McGurn said.
Greg Taxin, chief executive of the proxy advisory firm Glass Lewis, said of the payments: "It doesn't look like there's anything out of line, given the size and the performance of the business."
In justifying Eisner's pay, Disney's board noted his role in creating an "effective and seamless transition," the "successful opening" of the new theme park in Hong Kong the company's improved financial performance. Disney's net income rose 8 percent to $2.5 billion in fiscal 2005.
Eisner retired after 21 years, leaving with one year left on his contract. Nonetheless, he will continue to receive an annual $7.5 million bonus through September 2007. He may get the same amount in 2008, although he would forfeit the money if he joins another media company.
The ongoing compensation complies with Eisner's employment contract. The board and Eisner, however, agreed that he will not serve as a consultant to the company, which was provided for under the agreement. Eisner announced this week that he will be taking a job as a talk-show host on CNBC.
Eisner still owns 14.24 million Disney shares, making him the second-largest individual shareholder in Disney after Roy Disney, who led the shareholder battle against Eisner before making peace with the board and Iger.
Disney's chief financial officer, Thomas Staggs, also got a $2.1 million bonus and a $500,000 stock grant in 2005, in addition to his salary of $987,500.
The company also disclosed that it paid $4.3 million in legal fees and expenses related to a shareholder lawsuit over how current and former directors handled the hiring and firing of former President Michael Ovitz in the mid-1990s.
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