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Disney Opts Not to Grant Bonus to Eisner, Top Executives

The company also released details of a 10-year plan to improve performance.

After a year of disappointing performance,

Walt Disney

(DIS) - Get The Walt Disney Company Report

decided not to grant bonuses to its chairman and chief executive

Michael Eisner

and other executives.

In a separate announcement, Disney also released details of a 10-year plan to improve the company's performance.

In a proxy statement filed with the

Securities and Exchange Commission

, Disney, the world's second largest media company, said it had decided not to pay annual bonuses to its executives because the company failed to meet its fiscal 1999 financial targets.

Disney saw its stock price inch up only 2.5% in 1999 as the sales of its branded products slumped and low ratings at its


network weighed on advertising revenues.

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"A lot of companies are switching over to incentive-based bonuses and obviously Disney didn't meet their goals," said Suzanne Betts, an analyst at

Pittsburg Institutional

, an institutional research and brokerage boutique.

Eisner, who has been chairman and chief executive of Disney since 1984, has been punished for poor performance in the past. Disney slashed his bonus from $9.9 million in 1997 to $5 million in 1998.

Eisner earned $750,000 in 1999 and $3,820 in other compensation. He also took $49.9 million in paper profits, exercising 1.99 million stock options throughout the year. At the end of September he held 24 million unexercisable "in-the-money" stock options.

Based on the current share price, Eisner would show a profit of about $161 million if he exercised the options today.

Analysts said, however, that the Burbank, Calif.-based company was embarking on a program that could help to jumpstart sales.

Betts, who rates the company a buy, said investors should now watch to see how Disney implements its marketing campaign and expands its video distribution channels. Her firm does not do any underwriting.

Calling the recent disappointing performance a "short-term earnings hiccup," Eisner on Wednesday unveiled a 10-year strategy that will focus on cutting costs, expanding existing companies, emphasizing the need to create innovative products and developing the company's home video and consumer products segment.

He said that one move would include pumping previously unreleased titles from its film library into the video market starting in January. A decision to release four fewer major library titles in the U.S. during 1999 resulted in a sales decrease of abut 40 million video units compared with 1998, Eisner noted.

Disney's total revenue increased only 2% to $23.4 billion in 1999, compared with 1998. Operating income fell 21% to $3.2 billion in 1999.

Eisner also said that he would continue evaluating opportunities to sell off non-core assets and would trim costs with the aim of saving more than $300 million annually within five years through its strategic sourcing program.

The market has been warming to Disney in recent trading sessions. Disney was up 1 5/16, or 4%, to 32 15/16 late on Wednesday, the second day of gains after

Morgan Stanley Dean Witter

on Tuesday increased its rating to an outperform from a neutral.