Bob Iger compensation for 2013

[MichWolv]

I know that, It's just that some believe that ordinary stockholders are welcome at shareholders meetings, these days they are not welcome especially since some of them may ask inconvenient questions and make motions from the floor which the BoD does not agree with at the same time forcing them to go on the record with the

This of course is one of the major issues with US corporate governance these days in that other than institutional investors who by definition have an interest in the status quo. stockholders have no voice in the companies they purportedly own.

As for non-binding resolutions what is the point anyway, And preselected slates of candidates for BoD`by the BoD, no the shareholders should be able to nominate whomever they so desire there does need to be some regulation on the actual slate like the name must have been nominated by at least X percent of shareholders to prevent those whose only interest is disrupting the process.

US Corporate governance had best reform itself quickly otherwise it may find that Congress will do it for them and the result will not be pretty or workable.

You see, I actually agree with much of the stuff that isn't hyperbole here. Non-binding resolutions do seem silly to me. On the other hand, some companies have responded to them in the past, so perhaps they aren't entirely useless. And I agree that shareholders ought to be able to nominate directors far more easily than they actually can. I also agree that Congress is likely to step in at some point.

Institutional investors actually do not always want the status quo. Some, of course, do, but others scare the heck of corporations far more than little retail stockholders.

 

[MichWolv]

So if you do some research, you see that, in the not too distant past, a CEO made no more than 20 times what the average salary of a person working for that company made. e.g. if the average is 25,000, then the CEO usually did not make more than 500,000. Now, the margin is over 400 times the average salary! Bob Iger's pay is a whopping 557 times greater than the average salary that a Disney employee makes - $56,800 - according to payscale.com. I, for one, think that CEO pay has gotten way out of hand, and needs to be reined in. Oh, and just for comparison, Warren Buffet's salary is only 490,000 per year, or only 9 times his companies average. Maybe more companies should follow HIS lead! Oh wait, they won't, because the good 'ol boy network says that, hey make me CEO today, and I'll get you a CEO position over here, and we'll vote each other outrageous salaries, and laugh all the way to our private islands in the Carribean!

I'm going to jump in here not to dispute or disagree with any of this, but to give a few thoughts on just how tough regulating business is. And I'm going to try to do this without tipping my hand as to what my personal views are, because they aren't relevant to the points I'm trying to make.

Assume for a moment that most of the public agrees with you that CEO pay is ridiculous. Assume also that the regulators and politicians agree with this. And assume that the CEOs who are receiving this pay are not getting it by doing anything illegal, deceitful, or underhanded. Instead, they are negotiating with the board of directors and getting these huge pay packages with all kinds of incentive pay tied to stock price the way anybody else negotiates the price of their services -- they just happen to be "winning" the negotiations.

Government has a lot things it could do to intervene in this situation:
1) Jawbone and speechify but otherwise let the market operate. Shareholders do have the power to change this, although it is very difficult to wield. Doing this continues the American tradition of free markets, but tries to alert the public to what's happening and puts a bit of pressure on companies to change.
2) Make changes to make it easier for shareholders to wield the power they already have. This involves changes to corporate governance regulations and securities law. Such rule changes invariably have unintended consequences and must go a rigorous process to be enacted.
3) Force companies to at least disclose the level of CEO pay, comparisons to average workers, etc. This tries to leverage off the "full and fair disclosure" regime that allows investors to make choices not to invest in companies that do things they don't agree with.
4) Impose some sort of a "luxury tax" on compensation that is considered "excessive". This makes paying CEOs huge amounts even more expensive. This could be done by declaring compensation over a certain amount not tax deductible for the company, by requiring some sort of penalty tax to be paid, or by imposing a very high tax rate on the CEOs who receive such "excessive" salaries. These and similar structures seek to make huge compensation packages more expensive without actually making them illegal, hoping that by changing the cost dynamics, the markets will then work to moderate compensation packages. This is the major league baseball approach and would require an act of congress.
5) Require "large" compensation packages to go through a shareholder vote in order to be paid. This would be a method that, instead of trying to give shareholders the ability to use authority they already have, would explicitly give shareholders new authority. This could be enhanced if need be by not allowing insider votes to count in the matter of executive pay.
6) Actually limit CEO pay, either in terms of dollars, percentage of revenue, comparison to what others in the company make, an index related to profitability or growth of the company, or some combination of factors. Doing this would require an act of Congress, as no regulator has the authority today (except for banks and insurance companies), and would require decisions on what factors to base the limits on, how variable compensation (like stock options and other equity awards) should be valued, etc. This the "salary cap" approach, and the cap could be hard (like the NFL) or soft (like the NBA).
7) Limit the ability of companies who pay CEOs excessively to do business with the government, or to obtain other benefits from the government, such as pension benefit guarantees, flood insurance, research funding, etc.

So, the question then, presuming that a significant majority agrees that CEO pay should be reined in, is how best to bring that about. The alternatives laid out above represent the major categories of things that could be done, although they certainly don't include everything. They all have significant policy implications and significant drawbacks.

So what's a true and honest public servant to do? I don't think there's an easy answer that hasn't already been tried.

 

[mp2bill]

But, dare I say, Tuba is right.

Exactly a year ago, Disney's stock stood at $38.30/share. Today, it closed at $76.40/share. That's literally a 100% increase in share price. While I don't know how that compares, historically, to other calendar years (and lets also keep in mind, Disney's fiscal year is not the calendar year)...but all being said a 100% increase to the stock price should be the goal of every CEO.

You don't think the Disney cast members had anything to do with the increase in share price?

 

[ford91exploder]

I'm going to jump in here not to dispute or disagree with any of this, but to give a few thoughts on just how tough regulating business is. And I'm going to try to do this without tipping my hand as to what my personal views are, because they aren't relevant to the points I'm trying to make.

Assume for a moment that most of the public agrees with you that CEO pay is ridiculous. Assume also that the regulators and politicians agree with this. And assume that the CEOs who are receiving this pay are not getting it by doing anything illegal, deceitful, or underhanded. Instead, they are negotiating with the board of directors and getting these huge pay packages with all kinds of incentive pay tied to stock price the way anybody else negotiates the price of their services -- they just happen to be "winning" the negotiations.

Government has a lot things it could do to intervene in this situation:
1) Jawbone and speechify but otherwise let the market operate. Shareholders do have the power to change this, although it is very difficult to wield. Doing this continues the American tradition of free markets, but tries to alert the public to what's happening and puts a bit of pressure on companies to change.

2) Make changes to make it easier for shareholders to wield the power they already have. This involves changes to corporate governance regulations and securities law. Such rule changes invariably have unintended consequences and must go a rigorous process to be enacted.
3) Force companies to at least disclose the level of CEO pay, comparisons to average workers, etc. This tries to leverage off the "full and fair disclosure" regime that allows investors to make choices not to invest in companies that do things they don't agree with.
4) Impose some sort of a "luxury tax" on compensation that is considered "excessive". This makes paying CEOs huge amounts even more expensive. This could be done by declaring compensation over a certain amount not tax deductible for the company, by requiring some sort of penalty tax to be paid, or by imposing a very high tax rate on the CEOs who receive such "excessive" salaries. These and similar structures seek to make huge compensation packages more expensive without actually making them illegal, hoping that by changing the cost dynamics, the markets will then work to moderate compensation packages. This is the major league baseball approach and would require an act of congress.
5) Require "large" compensation packages to go through a shareholder vote in order to be paid. This would be a method that, instead of trying to give shareholders the ability to use authority they already have, would explicitly give shareholders new authority. This could be enhanced if need be by not allowing insider votes to count in the matter of executive pay.
6) Actually limit CEO pay, either in terms of dollars, percentage of revenue, comparison to what others in the company make, an index related to profitability or growth of the company, or some combination of factors. Doing this would require an act of Congress, as no regulator has the authority today (except for banks and insurance companies), and would require decisions on what factors to base the limits on, how variable compensation (like stock options and other equity awards) should be valued, etc. This the "salary cap" approach, and the cap could be hard (like the NFL) or soft (like the NBA).
7) Limit the ability of companies who pay CEOs excessively to do business with the government, or to obtain other benefits from the government, such as pension benefit guarantees, flood insurance, research funding, etc.

So, the question then, presuming that a significant majority agrees that CEO pay should be reined in, is how best to bring that about. The alternatives laid out above represent the major categories of things that could be done, although they certainly don't include everything. They all have significant policy implications and significant drawbacks.

So what's a true and honest public servant to do? I don't think there's an easy answer that hasn't already been tried.

My thoughts point by point

1 - So far this is not working very well as it is increasingly difficult for shareholders to gain any meaningful control over the company they supposedly own.

2 - Not a bad idea - but would need careful crafting to prevent unintended consequences this is best approached in an incremental manner to minimize disruptions which could be harmful to the market as a whole

3 - This is an EXCELLENT idea as it gives investors a much clearer picture of the resources devoted to executive compensation and allows for direct comparison between companies in the same market segment. the compensation multiple might be useful as it also gives a measure of overall compensation of employees

4 - As I recall the over 1M compensation being tax deductible is a relatively recent change, This needs to be indexed to inflation otherwise we get into the problems AMT has. Reverting to the previous non deductibility is a good idea although the 1M needs to be recomputed in current dollars.

5 - Definitely - Allows the actual owners of the company to make the decision, If the shareholders feel the compensation package is justified then it's justified, My major complaint is the owners of the company (shareholders) have no control over a very large discretionary expense.

6 - I think this approach is a last resort because I'm a free markets and transparency guy and this politicizes compensation which is a bad idea. Recently a similar idea was defeated in Switzerland where the problem is much less extreme.

7 - This is a good idea in that it encourages companies which do business with the government to be frugal, But setting the bar for 'excessive' will be a tremendously complex exercise and would be best as a series of technical measures. ie a company running 1B > in the red and having C-Level compensation of > 100M could be safely construed as having excessive compensation.

There is no easy answer especially since corporate donations flow so freely to politicians so there is little will to actually fix the issues. non-US companies are far more competitive on the world market and one factor is the amount of time and treasure devoted to executive compensation which is far higher in the US than anywhere else in the world and the companies economic performance do not seem to justify the differential.

 

[Cesar R M]

Exactly, Although I don't think the act of becoming a CEO of public company should enrich to the point that your descendents will never have to work again. A CEO is just another employee.

It's different when you are the FOUNDER of a company like Apple, Facebook or Twitter and the IPO makes you rich as you risked everything to create the company and at this point you collect the rewards for the risk taken.

A CEO of an existing company takes no risk, They are just a highly compensated employee.

Agree, many CEOS have sank huge companies, and they still got their "bonuses".
they just retired ultra rich while thousands lost their jobs.
Its amazing it seems to be a "no strings attached no risk job".
The seek for "maximize" instant profit over anything (specially stabilization of the company) can sink economies.

I'm going to jump in here not to dispute or disagree with any of this, but to give a few thoughts on just how tough regulating business is. And I'm going to try to do this without tipping my hand as to what my personal views are, because they aren't relevant to the points I'm trying to make.

Assume for a moment that most of the public agrees with you that CEO pay is ridiculous. Assume also that the regulators and politicians agree with this. And assume that the CEOs who are receiving this pay are not getting it by doing anything illegal, deceitful, or underhanded. Instead, they are negotiating with the board of directors and getting these huge pay packages with all kinds of incentive pay tied to stock price the way anybody else negotiates the price of their services -- they just happen to be "winning" the negotiations.

Government has a lot things it could do to intervene in this situation:
1) Jawbone and speechify but otherwise let the market operate. Shareholders do have the power to change this, although it is very difficult to wield. Doing this continues the American tradition of free markets, but tries to alert the public to what's happening and puts a bit of pressure on companies to change.
2) Make changes to make it easier for shareholders to wield the power they already have. This involves changes to corporate governance regulations and securities law. Such rule changes invariably have unintended consequences and must go a rigorous process to be enacted.
3) Force companies to at least disclose the level of CEO pay, comparisons to average workers, etc. This tries to leverage off the "full and fair disclosure" regime that allows investors to make choices not to invest in companies that do things they don't agree with.
4) Impose some sort of a "luxury tax" on compensation that is considered "excessive". This makes paying CEOs huge amounts even more expensive. This could be done by declaring compensation over a certain amount not tax deductible for the company, by requiring some sort of penalty tax to be paid, or by imposing a very high tax rate on the CEOs who receive such "excessive" salaries. These and similar structures seek to make huge compensation packages more expensive without actually making them illegal, hoping that by changing the cost dynamics, the markets will then work to moderate compensation packages. This is the major league baseball approach and would require an act of congress.
5) Require "large" compensation packages to go through a shareholder vote in order to be paid. This would be a method that, instead of trying to give shareholders the ability to use authority they already have, would explicitly give shareholders new authority. This could be enhanced if need be by not allowing insider votes to count in the matter of executive pay.
6) Actually limit CEO pay, either in terms of dollars, percentage of revenue, comparison to what others in the company make, an index related to profitability or growth of the company, or some combination of factors. Doing this would require an act of Congress, as no regulator has the authority today (except for banks and insurance companies), and would require decisions on what factors to base the limits on, how variable compensation (like stock options and other equity awards) should be valued, etc. This the "salary cap" approach, and the cap could be hard (like the NFL) or soft (like the NBA).
7) Limit the ability of companies who pay CEOs excessively to do business with the government, or to obtain other benefits from the government, such as pension benefit guarantees, flood insurance, research funding, etc.

So, the question then, presuming that a significant majority agrees that CEO pay should be reined in, is how best to bring that about. The alternatives laid out above represent the major categories of things that could be done, although they certainly don't include everything. They all have significant policy implications and significant drawbacks.

So what's a true and honest public servant to do? I don't think there's an easy answer that hasn't already been tried.

nice!

I still think there will never be things like these laws.. because the current leaders of the world are in bed with top corps in all countries.

 

[The Mom]

I think most of us can agree that people in certain occupations are overpaid, such as CEO, professional athlete, and internet forum moderator.

"I can't believe I get paid for doing this!" Steve Martin

And I really can't believe it, because all I get is free PML membership and a Christmas card every year - with no return address.

 

[Master Yoda]

"I can't believe I get paid for doing this!" Steve Martin

And I really can't believe it, because all I get is free PML membership and a Christmas card every year - with no return address.

I am sure "Secret Underground Lair" would raise a few eyebrows at the post office.

 

[LuvtheGoof]

Probably the only way that CEO compensation will be changed is when the CEOs themselves realize that they are simply an employee as well.

 

[Cesar R M]

"I can't believe I get paid for doing this!" Steve Martin

And I really can't believe it, because all I get is free PML membership and a Christmas card every year - with no return address.

heey! something is something !

 

[PirateFrank]

You don't think the Disney "cast members" had anything to do with the increase in share price?

Irrelevant. Completely. Not trying to diminish the value that an organization's low-level employees have on its output, stock price or perceived value, but a run of the mill cast member doesn't have any formal responsibility over Disney's stock price. What they do may affect the stock price in some very, minuscule way (which may or may not affect the stock in the aggregate) But their actions don't have distinct and measurable results to the stock price. Sorry. I know you were hoping I'd go "Gee, you got me." But its just not true.

Once you compare a CM's role with with the policy and decision making that occurs at governance and upper management level, you *do* have people who's actions result in measurable changes to the stock price and (here's the important part) charged with the responsibility over the stock price. Iger's job description likely outlines a direct responsibility over the stock price as charged by his direct report, the Board of Directors. A cast member helping guests out of their ECVs and onto the boats at the Jungle Cruise, does not have such a responsibility outlined in his/her job description. There might be some rah-rah team mission statement that communicates to CMs that "what they do really matters" and they're just as important as Bobby is. But at the end of the day, if the stock price tanks 50% due to internal issues, said Cast Member's job isn't at risk anywhere near the the way Iger's is.

 

[draybook]

So if you do some research, you see that, in the not too distant past, a CEO made no more than 20 times what the average salary of a person working for that company made. e.g. if the average is 25,000, then the CEO usually did not make more than 500,000. Now, the margin is over 400 times the average salary! Bob Iger's pay is a whopping 557 times greater than the average salary that a Disney employee makes - $56,800 - according to payscale.com. I, for one, think that CEO pay has gotten way out of hand, and needs to be reined in. Oh, and just for comparison, Warren Buffet's salary is only 490,000 per year, or only 9 times his companies average. Maybe more companies should follow HIS lead! Oh wait, they won't, because the good 'ol boy network says that, hey make me CEO today, and I'll get you a CEO position over here, and we'll vote each other outrageous salaries, and laugh all the way to our private islands in the Carribean!

A Caribbean WITHOUT stupid Johnny Depp animatronics in it.....ah one can dream.

 

[matt9112]

And I'm equally sure we could replace them all with European/Chinese/Indian executives who would do a equally good job at far lower compensation levels which would leave more money to be distributed to the shareholders or to be used to expand or increase R&D efforts.

possible..but not likely there's a reason Chinese company's will hire an English speaking american to be a "face" at meetings and such. there's also reasons why people from the aforementioned country's all go to school in the west. for reasons that would take to long to discuss america still produces the best execs. so where as we may have lost the benefit of labor down the chain a bit (Americans ask for too much money) that is not the case at the upper tiers of management.

 

[matt9112]

A Caribbean WITHOUT stupid Johnny Depp animatronics in it.....ah one can dream.

but i love captain jack...

 

[matt9112]

I think most of us can agree that people in certain occupations are overpaid, such as CEO, professional athlete, and internet forum moderator.

if somebody could do it better for less they would (that's how globalization works) if some kid of the street could offer EVERYTHING iger can for minimum wage....well Harvard might go out of business.

 

[matt9112]

I am sure "Secret Underground Lair" would raise a few eyebrows at the post office.

can you engineer said lair? i am in the market.

 

[copcarguyp71]

I think most of us can agree that people in certain occupations are overpaid, such as CEO, professional athlete, and internet forum moderator.

 

[gsimpson]

While I agree with the post about Wall Street loving short term gains, Iger actually seems to play the long game more often than not. The Marvel and Lucasfilm purchases were not/are not short term pay off. He has stated his strategy of building long term "brands" that Disney will be able to profit from over a multi-decade ark. Most people who are going for the quick buck tend to sell off assets/divisions, not collect more of them.

No one deserves to be that rich!

I find this interesting, many people feel it is fine for George Clooney, Lady Gaga, or Tiger Woods to make millions upon millions but someone who keeps hundreds of thousands employed and millions of folks retirement accounts viable doesn't deserve the money. Of course I DO NOT know if the posted believes the sports stars/celebs are entitled to the money of if they also fall into the no one deserves category.

 

[Cesar R M]

While I agree with the post about Wall Street loving short term gains, Iger actually seems to play the long game more often than not. The Marvel and Lucasfilm purchases were not/are not short term pay off. He has stated his strategy of building long term "brands" that Disney will be able to profit from over a multi-decade ark. Most people who are going for the quick buck tend to sell off assets/divisions, not collect more of them.



I find this interesting, many people feel it is fine for George Clooney, Lady Gaga, or Tiger Woods to make millions upon millions but someone who keeps hundreds of thousands employed and millions of folks retirement accounts viable doesn't deserve the money. Of course I DO NOT know if the posted believes the sports stars/celebs are entitled to the money of if they also fall into the no one deserves category.

You keep saying "who keeps hundreds of thousands".
That is not always true. the CEOs nowadays will and do pull the maneuver of culling a big chunk of the company workforce all the time to improve their ratting.
Most CEOS dont give a damn about normal employees ( as they can be replaced easily.)
Every current ceo wants more for less or close to nothing.
Aka force employes to work HARDER for LESS. so they can justify paying themselves MORE.

most CEO jobs are also of no risk. I have yet to see a CEO going to jail for destroying a huge company. They 99% of the time get a huge hefty bonus after being removed.
Id say the CEO position of a corporation is of the few jobs that pay them for screwing up something.

 

[Matt_Black]

Agree, many CEOS have sank huge companies, and they still got their "bonuses".

Heck, BP gave themselves huge bonuses after causing one of the worst environmental disasters in U.S. history because statistically it was a safer year or something, which is kind of like rewarding yourself because you only mugged somebody once that year instead of all the crimes you normally commit.

 

[unkadug]

Heck, BP gave themselves huge bonuses after causing one of the worst environmental disasters in U.S. history because statistically it was a safer year or something, which is kind of like rewarding yourself because you only mugged somebody once that year instead of all the crimes you normally commit.

It saved the legal team countless hours...where do you think that money should go? the stock holders? that would be UN-American...oh wait!