Disney Investors Offer Say on Executive Pay, and Dislike
(Bloomberg) -- Walt Disney Co. shareholders turned an authoritative thumbs down in an advisory vote on the company’s rich executive pay plan, which delivered $36.3 million to Chief Executive Officer Bob Iger and is likely to reward him even more in fiscal 2018.
Investors voted 52 percent against the non-binding advisory resolution on executive compensation, with 44 percent in favor and 4 percent abstaining, the company said in a statement from its annual meeting in Houston. It’s the first time since federal regulators began encouraging such votes at companies that Disney shareholders rejected the plan. The company said it will take the vote under advisement in weighing future pay.
Disney is in the midst of the $52.4 billion purchase of film and TV assets from 21st Century Fox Inc. In December the company extended Iger’s contract through 2021 to see the deal through. Three proxy advisers had urged stockholders to reject the pay plan, saying it was not properly aligned with company performance. Disney, based in Burbank, California, defended Iger’s compensation in a statement.
“The board decided it was imperative that Bob Iger remain as chairman and CEO through 2021 to provide the vision and proven leadership required to successfully complete and integrate the largest, most complex acquisition in the company’s history,” Aylwin Lewis, head of the Disney board’s compensation committee, said Thursday.
Shares of Disney rose 0.7 percent to $104.29 at 1:03 p.m. in New York. They were down 3.6 percent this year through Wednesday.
Glass Lewis, one of the proxy firms advising investors to vote against the say-on-pay proposal, gave Disney a “D” grade for its compensation, after two years with “Cs.”
“Overall, the company paid more than its peers, but performed about the same,” Glass Lewis said.
Iger has been a permanent fixture on the Bloomberg Pay Index, which ranks the 200 top-paid U.S. executives at public companies, and probably will be near the top after Disney’s fiscal year ends on Sept. 30, with his compensation potentially doubling.
As part of the extension, Iger’s target annual pay was bumped by about 60 percent to $48.5 million. He also got stock awards worth about $100 million that will vest over the next few years, in part depending on Disney’s stock return.
Disney is in heated contract negotiations with theme-park workers in California and Florida who are asking for higher wages, though employees speaking at the meeting only had praise. Four park workers thanked Iger for the company’s commitments to employee education and career advancement. Two said they met their spouses while working at the company.
Outside the meeting it was a different story. About 40 employees and union activists protested the company’s wages.
Billie Taylor, 59, a five-year employee who works full time training food service workers for $11.50 an hour at Disneyland in Anaheim, California, said she is on food stamps to make ends meet. She’s living temporarily with her brother and his wife after car repair payments and other bills left her unable to pay her rent.
“We are creating the magic, we are creating the happiness for them,” she said, motioning to children getting off school buses to attend the meeting.
Iger said new park investments had created 10,000 U.S. jobs in recent years and that the company would create a similar number in the future. Some 83 percent of salaried employees at the parks division rise from hourly positions, he said. Disney employed about 199,000 people at the end of fiscal 2017.
Disney holds its annual meeting in a different city each year. This year’s was held at the Hobby Center for the Performing Arts in Houston. Shareholders arriving at the meeting could get their pictures taken with Disney characters such as Mr. and Mrs. Incredible and stormtroopers from “Star Wars.”
At the start of the meeting, shareholders saw a short video of relief efforts in Houston following Hurricane Harvey last year. It was produced by the local ABC TV station, which Disney owns. Iger said employees and company raised $16 million for hurricane relief in the region.
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