Walt Disney Co., coping with criticism over excessive pay packages, cut back tens of millions of of future potential earnings for Chief Executive Officer Bob Iger.
The switch, disclosed in a regulatory submitting Monday, March 4, comes days before the company’s annual meeting, the place consumers are set to vote on the leisure massive’s authorities compensation program. Disney didn’t current a trigger for the deliberate low cost, the second change to Iger’s pay in 4 months.
Iger’s aim annual compensation is likely to be cut back 28 % to $35 million after Disney completes a deal to amass property from Rupert Murdoch’s 21st Century Fox Inc., in line with the submitting. The modifications don’t impact better than $100 million of equity awards Iger obtained as part of a 2017 contract extension.
The cut back precedes Disney’s March 7 annual meeting, the place Iger’s contract was vulnerable to face resistance from consumers. Institutional Shareholder Services, the proxy-advisory company that sells voting strategies to asset managers, acknowledged in a Feb. 11 report that the pay program must be rejected, citing “ongoing concerns about the structure and magnitude” of Iger’s annual compensation.
Rival proxy advisers Glass Lewis & Co. and Egan-Jones moreover issued tales vital 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,” acknowledged Robin Ferracone, CEO of Farient Advisors, a compensation-consulting company. “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.”
“I am proud to be leading the Walt Disney company through this important time and believe the changes I, with the board, have made are in the best interest of the company,” Iger, 68, acknowledged in an emailed assertion.
A 12 months previously, better than half of all shares voted inside the company’s annual say-on-pay referendum have been solid in opposition to the compensation program for senior managers — a distinctive rebuke supplied that the overwhelming majority of S&P 500 companies register widespread help of better than 90 %. Such votes aren’t binding nonetheless symbolize a unusual vehicle for consumers to publicly showcase discontent with a company’s alternatives.
Upon placing the handle Fox in 2017, Disney gave Iger a contract extension to keep up him on the job by approach of 2021. The new settlement acquired right here with numerous worthwhile provisions: It bumped the CEO’s wage by 20 % to $3 million, and included ensures to boost his aim bonus and long-term awards by better than 40 % as quickly because the deal was achieved.
In all, Iger’s annual aim compensation would have risen to $48.5 million, from roughly $32 million before the deal was launched, an increase of about 50 %.
But after the 2018 vote, Disney’s board met with a lot of its best shareholders, who voiced points about Iger’s pay. In Monday’s submitting, the company disclosed that the CEO’s aim bonus will keep unchanged at $12 million after the deal is achieved, whereas his long-term stock award be $20 million in its place of $25 million.
The board moreover scrapped a $500,000 wage enhance that may have kicked in after the closing of the Fox deal.
Iger stays to be poised to remain one in all many highest-paid CEOs of a publicly traded U.S. agency, in line with the Bloomberg Pay Index. His $3 million base wage is bigger than double the widespread of his S&P 500 pals.
In December, Disney tweaked the effectivity thresholds for the grant of stock value better than $100 million that Iger was awarded as part of his 2017 contract extension. The payout is tied to the effectivity of Disney’s stock versus totally different S&P 500 companies. The board raised the baseline hurdle Disney should exceed for the CEO to acquire any shares the least bit, however moreover elevated the number of shares he can get if the best purpose is reached.
In its report, ISS well-known that Iger’s contract extension moreover included a block of 245,000 shares value about $28 million that he’ll purchase in chunks by approach of 2021, irrespective of whether or not or not the Fox deal is achieved.
“The lack of performance criteria on a significant portion of the CEO’s special award is problematic, particularly when he already receives” sizable annual grants of equity, ISS acknowledged.