DISNEY PERFORMANCE CLAUSE FOR IGER – more-rigorous benchmarks required for Mr. Iger to collect a $100 million equity grant in 2021..By Todd Horwitz, Bubba Trading

 

Disney Raises Bar for Iger

Shareholder pushback against Walt Disney Co. Chief Executive Robert Iger’s compensation has led the company to increase the targets he must meet to collect his performance bonus. Disney announced Monday more-rigorous benchmarks required for Mr. Iger to collect a $100 million equity grant in 2021 that had been criticized by shareholder advisory groups.

Mr. Iger has already been granted a portion of the grant valued at roughly $25 million. Under the new arrangement, he will collect the remaining amount tied to the equity grant only if his company’s total shareholder return outperforms 65% of companies in the S&P 500. The original agreement granted the payment if Disney outperformed the 50th percentile.

In March, Disney shareholders in a nonbinding advisory vote rejected a compensation plan for Mr. Iger and other executives, with 52% of shareholders voting no on a plan that would have paid the CEO as much as $48.5 million a year in total compensation from 2018 to 2021. The additional $100 million equity grant—which the advisory firm Institutional Shareholder Services had called “excessive”—would follow in 2021 if Disney shareholder return met those S&P targets.

Iger entered a new employment agreement on Nov. 30 that created different performance thresholds for Iger to be rewarded shares for Disney’s performance. Under his previous contract, Iger would collect half of these shares if Disney delivered a performance equal to 25% of the companies in the S&P 500 Index; with more shares awarded as the company hit other, higher milestones. Under the revised employment agreement, Iger would receive fewer shares than originally called for if the company fails to exceed the performance of 60.5% of the S&P 500.

“In line with the Disney Board’s pay-for-performance philosophy, the amendments to Mr. Iger’s contract establish more rigorous performance requirements for his equity award than those reflected in the original contract, further aligning Mr. Iger’s compensation with shareholder value creation,” said a company spokesman. “The decision to implement more rigorous performance criteria reflects feedback received directly from shareholders and underscores Mr. Iger’s and the Board’s confidence that the current strategic direction of the company will generate significant value for our shareholders.”

Todd “Bubba” Horwitz

IN ASSOCIATION WITH

Financial Markets and Political Commentary

 

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About the author

Todd Horwitz - Author of “Average Joe Options“. Todd began his trading career in 1980 at the CBOE. He was one of the original traders in the OEX & helped start the SPX. He is a member the CME where he trades S&P futures as well as foreign currencies & is a regular contributor to CNBC, Bloomberg, BNN, Fox & many other major news networks.