He will be eligible for a performance-based bonus with a target equal to 100% of annual base salary.
Iger, 71, who was chief executive for 15 years and retired as chairman last year, has agreed to serve as CEO for two more years effective immediately, Disney said late on Sunday.
He will replace Bob Chapek, who took over as Disney CEO in February 2020 just as the COVID-19 pandemic led to park closures and visitor restrictions.
Chapek will receive separation benefits payable in accordance with the terms of his previously disclosed employment agreement, the company said.
Chapek's tenure was marked by mounting losses in the streaming business, Disney+, and the company's stock lost about a third of its value during that period.
(Reporting by Arshreet Singh; Editing by Krishna Chandra Eluri and Sriraj Kalluvila)
