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WALT DISNEY COMPANY (THE) (DIS)
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Disney Shareholders Don't Endorse Compensation Plan for CEO Iger -- 2nd Update

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03/08/2018 | 11:48pm CEST

By Ben Fritz and Joann S. Lublin

In a rare rebuke of Walt Disney Co. leadership, shareholders on Thursday voted down a nonbinding endorsement of the compensation given to Chairman and Chief Executive Robert Iger following an increase in December.

About 52% of votes cast at the company's annual meeting expressed displeasure with Mr. Iger's new pay package. It was the first time a majority of votes were cast against such a proposal at Disney.

Only 1.2% of S&P 500 companies saw less than majority support for their "say on pay" resolutions last year, according to ISS Analytics, the data arm of Institutional Shareholder Services, the biggest proxy advisory firm. Disney is the first S&P 500 company in 2018 to lose such a vote, the firm said.

The media giant's shareholders went along with the board's recommendations on all other matters, including electing the 10 members of its board and voting down two shareholder proposals.

Under a contract extension signed as part of Disney's December agreement to buy most of the assets of 21st Century Fox Inc., Mr. Iger is eligible to receive stock worth up to $142 million at the then-current share price. He also got an immediate bump in his base salary to $3 million from $2.5 million, with another $500,000 raise to come if the purchase is completed. In addition, Mr. Iger's annual target bonus would increase to $20 million from $12 million once Fox's film and television studio, cable networks and other assets become part of Disney.

Mr. Iger's contract extension through 2021, from the prior expiration in July 2019, takes effect only if the Fox deal closes.

Aylwin B. Lewis, chairman of the Disney board's compensation committee, said, "The board accepts the result of today's nonbinding vote and will take it under advisement for future CEO compensation. We believe that the terms of Bob's extension are in the best interests of our company and our shareholders, and essential to Disney's ability to effectively maximize long-term value from this extraordinary acquisition."

After the unsuccessful vote on compensation. Disney directors likely will decrease the size of Mr. Iger's equity award, predicted Mark Reilly, a managing director at Overture Group, a human-resources consulting firm.

ISS and Glass, Lewis & Co., the second biggest proxy advisory firm, had recommended Disney shareholders vote against the say-on-pay resolution. ISS had said in its report that "the substantial payments to Bob Iger, in connection with his contract extension and the upcoming 21st Century Fox merger, are concerning" and that the equity award in his contract extension, "while primarily performance-based, is tied to fairly nonrigorous goals."

Disney's total shareholder return since Mr. Iger was named CEO in 2005 has been 416%, compared to 190% for the S&P 500, according to The Wall Street Journal Market Data Group.

Mr. Iger was the S&P 500's fifth-highest paid CEO, according to an analysis published by The Wall Street Journal last year, before his new contract was signed.

His total compensation in fiscal 2017, after the Journal's analysis, was valued at $36.3 million, down from $43.9 million in fiscal 2016.

In other matters, Oracle Corp. co-CEO Safra Catz and Illumina Inc. CEO Francis deSouza were elected to Disney's board for the first time, along with eight returning members. Facebook Inc. Chief Operating Officer Sheryl Sandberg and Twitter Inc. CEO Jack Dorsey didn't stand for re-election as Disney, which is developing its own streaming video services, increasingly competes with their companies.

A shareholder proposal for the company to be more transparent in its lobbying activities was rejected, as was a proposal to change the proxy-access bylaws to make it easier for shareholders to nominate directors. Both were opposed by Disney's board and supported by ISS, while Glass Lewis supported the lobbying proposal only.

Following Thursday's shareholder meeting, Disney's board of directors elected Susan Arnold, an executive at private-equity firm Carlyle Group, as its lead independent director. She succeeds Orin Smith, who recently died.

--Aisha Al-Muslim contributed to this article.

Write to Ben Fritz at ben.fritz@wsj.com and Joann S. Lublin at joann.lublin@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
DJ INDUSTRIAL 0.32% 26743.5 Delayed Quote.8.19%
NASDAQ 100 -0.50% 7531.0719 Delayed Quote.17.74%
NASDAQ COMP. -0.51% 7986.9551 Delayed Quote.16.29%
S&P 500 -0.04% 2929.48 Real-time Quote.9.62%
TWENTY-FIRST CENTURY FOX -0.54% 44.33 Delayed Quote.28.38%
WALT DISNEY COMPANY (THE) -1.09% 110.4 Delayed Quote.2.69%
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Financials ($)
Sales 2018 58 862 M
EBIT 2018 14 803 M
Net income 2018 12 301 M
Debt 2018 25 818 M
Yield 2018 1,52%
P/E ratio 2018 13,52
P/E ratio 2019 14,96
EV / Sales 2018 3,23x
EV / Sales 2019 3,09x
Capitalization 164 B
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Technical analysis trends WALT DISNEY COMPANY (THE)
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Mean consensus OUTPERFORM
Number of Analysts 24
Average target price 118 $
Spread / Average Target 7,1%
EPS Revisions
Managers
NameTitle
Robert A. Iger Chairman & Chief Executive Officer
Christine M. McCarthy Chief Financial Officer & Senior Executive VP
John S. Chen Independent Director
Aylwin B. Lewis Independent Director
Fred H. Langhammer Independent Director
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