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Monday, March 4, 2019

Bob Iger’s Pay Cut

by Ray Keating
March 4, 2019

The Walt Disney Company’s CEO Robert Iger has received kudos for the deals he’s mastered that have vastly expanded Disney’s IP portfolio, for moving the company into the streaming business, for theme park expansions, for blockbuster movies, and more. So, what does Iger get for all of this? Well, The Wall Street Journal reported today that he’s taking a pay cut. Talk about ungrateful.

Of course, in reality, no one need be worried about Mr. Iger. He’s still being well compensated.

But this move is still rather interesting. According to the Journal’s reporting on a Disney securities filing, $13.5 million will be removed from Iger’s compensation after the close of the Fox deal. Specifically, “Disney said in a securities filing Monday that it canceled an annual $500,000 base-salary increase, lowered his yearly bonus to $12 million from $20 million, and cut by $5 million his annual, long-term incentive award to $20 million. All of those potential compensation increases were tied to Disney’s acquisition of Fox’s entertainment assets, which the company is expected to close this year.”

However, Iger’s compensation jumped by 81 percent to $65.6 million in the fiscal year that ended this past September. That jump was part of Iger’s deal for staying on as CEO through the end of 2021.

Some shareholder advisory groups weren’t thrilled with that increase, and in March of last year, Iger’s compensation package actually was voted down by shareholders in a nonbinding vote.

The Journal also pointed out that Iger has collected $25 million of a $100 million equity grant. He will only collect the rest of that grant “if the company’s total returns to shareholders outperforms 65% of companies in the S&P 500, up from 50%.”

In the end, Bob is doing just fine. 

But before the usual suspects start complaining about CEO compensation, it pays to keep in mind that very few people are capable of running a company such as Disney, including being responsible to shareholders, facing ever-changing and intensifying competition in a dynamic marketplace, and working on behalf of the company’s more than 200,000 employees. So, please no silly comparisons between Iger’s compensation and what the average Magic Kingdom cast member makes.

Ray Keating is the editor, publisher and economist for DisneyBizJournal.com, and author of the Pastor Stephen Grant novels, with the three latest books being Reagan Country: A Pastor Stephen Grant NovelHeroes and Villains: A Pastor Stephen Grant Short Storyand Shifting Sands: A Pastor Stephen Grant Short Story. He can be contacted at raykeating@keatingreports.com.

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