Disney shareholders vote against CEO Iger's "excessive" pay package

[LOS ANGELES] Walt Disney Co shareholders rejected an executive compensation plan that could reward chief executive officer Bob Iger with up to US$48.5 million a year over four years, plus an equity grant worth about US$100 million, in a non-binding vote on Thursday.

The total compensation is tied to the closing of Disney's planned US$52.4 billion acquisition of film and TV assets from Twenty-First Century Fox and meeting performance targets.

Fifty-two per cent of shareholders voted against Disney's compensation plan for Mr Iger and other executives, the company said at its annual shareholder meeting in Houston. Forty-four per cent cast ballots in favour and 4 per cent abstained.

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

Mr Iger's continuation as chief executive is imperative in light of the planned Fox acquisition, Mr Lewis said, noting that total shareholder return has more than quadrupled over Iger's tenure.

Mr Iger has been CEO since 2005 and added the title of chairman in 2012.

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

Mr Iger was also awarded an equity grant that could be worth about US$100 million in 2021, according to proxy adviser Institutional Shareholder Services, which urged investors to vote against the pay resolution. Seventy-five per cent of the grant is based on Disney's total shareholder returns compared with the S&P 500 Index.

Mr Iger's compensation reached US$36.3 million in fiscal 2017. His contract was extended through 2021 when Disney announced the Fox deal in December.

It is unusual for shareholders to vote against executive compensation. Just 1.2 per cent of S&P 500 companies failed to win majority support for their advisory pay resolutions in 2017, according to ISS Analytics.

ISS said the "substantial" payments to Mr Iger tied to the Fox merger were "concerning".

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

Mr Lewis said the board had decided it was "imperative" for Mr Iger to remain to oversee the integration of Fox businesses and that Fox also felt his continued leadership was "essential".

Total shareholder return has jumped 414 per cent during Iger's tenure, and Disney's market capitalisation has climbed to US$156 billion from US$46 billion, Mr Lewis added.

"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," Mr Lewis said.

The Fox acquisition is undergoing regulatory review that could take at least a year and has been complicated by Comcast Corp's bid for one of the assets, Britain's Sky PLC.

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

One shareholder asked Mr Iger about his plans for Fox Searchlight, the arthouse film division that on Sunday won the Academy 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," Mr Iger said.

REUTERS