Disney Pays Eisner $8.3 Million

Plus, the media giant reveals for the first time its annual executive security tab.
Author:
Publish date:

It costs Disney (DIS) - Get Report plenty to keep the Magic Kingdom safe for Michael Eisner.

The company revealed Thursday that it spent $735,000 in its latest fiscal year on security systems, security advice and personal protection services for CEO Eisner.

By comparison, Eisner received a base salary of $1 million in the fiscal year ended Sept. 30, and was awarded a cash bonus of $7.3 million.

Disney also said Thursday that it spent more than $470,000 in the fiscal year ended Sept. 30 on similar protection for Robert Iger, Disney's chief operating officer and the only internal candidate in the running to succeed Eisner.

Disclosures about the security measures -- which cost Disney a similar amount the prior year -- came in the proxy statement Disney issued in advance of its annual meeting, which is slated to take place Feb. 11 in Minneapolis.

While Disney has provided these services to the two executives over at least the past three years, it didn't break out the costs in the proxy statement prepared for Disney's contentious annual meeting held in Philadelphia last year.

Climaxing a growing number of complaints about Eisner's stewardship of the company in the run-up to that meeting, 45% of Disney shareholders voted to withhold votes for Eisner's re-election to Disney's board. Eisner ended up stepping down from his post as Disney chairman, and was replaced as chairman by Disney director George Mitchell.

Disney shares rose 37 cents Thursday to trade at $27.77.

As itemized in the proxy statement, Eisner's and Iger's compensation in fiscal 2004 rose from 2003 levels and reflect a shift from equity-based compensation to cash.

Eisner, who didn't receive any restricted stock units in 2004, earned a $1 million base salary and $6.3 million worth of stock units the prior year.

Iger, who also didn't receive any new stock units in 2004, earned $8 million in salary and bonus for the latest fiscal year, and received $3.5 million in payouts for previously awarded long term incentive plan grants. In fiscal 2003, Iger received $5.4 million worth of salary and bonus, and $1 million in stock units.

In determining annual bonuses granted to executive officers, Disney's compensation committee says in the proxy statement that it took into account, among other factors, Disney's "greatly improved performance during fiscal 2004 as measured by, among other things, its 72% growth in earnings per share before the cumulative effect of an accounting change and improvements in segment operating income and free cash flow."

The committee says it also took into account "a review of compensation paid for comparable positions at other large, publicly held corporations, with particular focus on major entertainment companies."

Regarding Eisner's and Iger's security systems and services, Disney says the measures are incurred as a result of business-related concerns, not for the personal benefit of the executives, and thus should not be classified as compensation.

The security measures, says Disney, amounted to $837,000 for Eisner and $417,000 for Iger in fiscal 2003.

In 2004, Disney did classify as compensation the $17,900 cost of leasing a car for Eisner, as well as the $39,600 cost of supplying company aircraft to Eisner for non-business use. Disney says it requires Eisner to use company aircraft for both business-related and non-business use due to business-related security concerns.

Among the disclosures about related-party transactions that Disney made in the proxy statement, the company said that Iger's father-in-law, Eugene Bay, is the principal of a marketing company that does work for Disney's ESPN network. Bay, whose firm made $151,000 from ESPN in 2004, has worked with ESPN since 1990. That relationship, notes Disney, predates Iger's marriage to Bay's daughter.

Disney also said it provided $253,000 worth of secretarial and auto transportation services to Thomas Murphy, who retired as Disney director in March. The company also provided an office to Murphy reflecting an internal cost allocation of $87,000 to the company, but no incremental expense, the company says.

Disney, which has been providing the office and transportation services to Murphy for years, settled enforcement proceedings with the

Securities and Exchange Commission

based on Disney's failure to disclose information about Murphy's arrangement and about certain other relationships with directors.