Disney shareholders vote against CEO Iger's pay package

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Reuters

By Lisa Richwine

March 8 (Reuters) - Walt Disney Co(DIS.NaE) shareholdersrejected an executive compensation plan that could reward ChiefExecutive Officer Bob Iger with up to $48.5 million a year overfour years plus an equity grant worth about $100 million, in anon-binding vote on Thursday.

The total compensation is tied to the closing of Disney's(DIS.NaE)planned $52.4 billion acquisition of film and TV assets fromTwenty-First Century Fox and meeting performancetargets.

Fifty-two percent of shareholders voted against Disney's(DIS.NaE)compensation plan for Iger and other executives, the companysaid at its annual shareholder meeting in Houston. Forty-fourpercent cast ballots in favor and 4 percent abstained.

"The board accepts the result of today's non-binding voteand will take it under advisement for future CEO compensation,"Aylwin Lewis, chair of the board's compensation committee, saidin a statement.

Iger's continuation as chief executive is imperative inlight of the planned Fox acquisition, Lewis said, noting thattotal shareholder return has more than quadrupled over Iger'stenure.

Iger has been CEO since 2005 and added the title of chairmanin 2012.

Under the compensation plan, Iger would be paid up to $48.5million in annual salary and bonuses if the Fox deal goesthrough, for each of the four years from 2018 to 2021.

Iger was also awarded an equity grant that could be worthabout $100 million in 2021, according to proxy adviserInstitutional Shareholder Services, which urged investors tovote against the pay resolution. Seventy-five percent of thegrant is based on Disney's(DIS.NaE) total shareholder returns comparedwith the S&P 500 Index.

Iger's compensation reached $36.3 million in fiscal 2017.His contract was extended through 2021 when Disney(DIS.NaE) announced theFox deal in December.

It is unusual for shareholders to vote against executivecompensation. Just 1.2 percent of S&P 500 companies failed towin majority support for their advisory pay resolutions in 2017,according to ISS Analytics.

ISS said the "substantial" payments to Iger tied to the Foxmerger were "concerning."

"While we acknowledge the need to retain critical leadershipin anticipation of such a significant merger, the magnitude ofthe special equity grant ($100 million) is excessive," ISS saidin a January report.

Lewis said the board had decided it was "imperative" forIger to remain to oversee the integration of Fox businesses andthat Fox also felt his continued leadership was "essential."

Total shareholder return has jumped 414 percent duringIger's tenure, and Disney's(DIS.NaE) market capitalization has climbed to$156 billion from $46 billion, Lewis added.

"We believe that the terms of Bob's extension are in thebest interests of our company and our shareholders, andessential to Disney's(DIS.NaE) ability to effectively maximize long-termvalue from this extraordinary acquisition," Lewis said.

The Fox acquisition is undergoing regulatory review thatcould take at least a year and has been complicated by ComcastCorp's(CMCSA.NaE) bid for one of the assets, Britain's Sky PLC.

At the shareholder meeting, Iger said the deal would create"an extraordinary global entertainment company with a contentand the platforms and the reach to meet the growing demands ofconsumers around the world."

One shareholder asked Iger about his plans for FoxSearchlight, the arthouse film division that on Sunday won theAcademy Award for best picture for "The Shape of Water."

"We have every intention, once the acquisition is approved,to maintain the business of Fox Searchlight," Iger said.(Reporting by Lisa Richwine in Los Angeles and Taenaz Shakir inBengaluru; Editing by Cynthia Osterman and Leslie Adler)