Despite its woeful stock price and continuing earnings slump, Walt Disney Co.'s board granted Chairman and Chief Executive Michael Eisner a $5 million restricted stock bonus for fiscal 2002 and awarded both restricted stock and cash bonuses to other top executives.
Mr. Eisner, who receives an annual salary of $1 million, didn't receive a cash bonus for 2002, according to Disney's annual proxy statement, which was filed with the Securities and Exchange Commission yesterday. The restricted stock grant is intended to replace a cash bonus as Mr. Eisner's performance-based compensation for a year in which Disney continued to lag and key board members pressured him for improvement. Mr. Eisner received no bonus, or any other performance-based compensation, in 2001.
Mr. Eisner in the past has been a symbol of rich stock-option grants, having realized a $569.8 million gain from an options exercise in 1997. But all of his more than 21 million Disney options are now priced well below Disney's current stock price, making them worthless for the time being. While not directly comparable to conventional options grants, the restricted stock should eventually put money in Mr. Eisner's pocket regardless of whether the company's stock rises or falls. The restricted stock units were priced at Monday's Disney share price of $16.74, with half of them vesting in two years and the other half at the end of his current contract in 2006.
In the Disney filing, the board's compensation committee said it awarded the $5 million restricted stock bonus after taking into account "the effectiveness and quality of Mr. Eisner's leadership of the company in a difficult economic environment that challenged all of the company's major businesses, and in particular Mr. Eisner's continuing efforts to set the groundwork for strengthening the company's future performance."
Disney President Robert Iger, meanwhile, was paid a $3 million bonus and granted $1 million in restricted stock, on top of his $1 million salary. Mr. Iger was also awarded 1.75 million Disney options, priced at $21.05. Chief Financial Officer Thomas Staggs and Chief Strategic Officer Peter Murphy both received $750,000 bonuses, and $425,000 restricted stock awards, to go with their $700,000 salaries.
Disney has been fighting an earnings malaise for five years. Its net income of $1.28 billion in fiscal 2002 was less than the $1.3 billion in net income the company reported in 1999. The 2002 results represented an improvement from 2001, when Disney posted a loss after taking about $900 million in charges related to the downsizing of its Internet business. But on a pro forma basis, Disney's earnings were down from 2001, as the company was pummeled by poor ratings on its ABC network and slow attendance at its theme parks in the wake of the 2001 terrorist attacks. Disney's lagging stock price put Mr. Eisner under pressure from key board members to right the ship.
Mr. Eisner's compensation has at times taken a hit because of the company's faltering performance, but at other times he has been rewarded in spite of it. Disney's board denied Mr. Eisner a cash bonus for the years 2001 and 1999, for example. But in 2000, when Mr. Eisner told shareholders that he believed the company's performance had returned "to the kind of growth we have enjoyed for most of the past 16 years," the board awarded him an $11.5 million bonus and raised his base salary to $1 million from $750,000.
In his annual letter to shareholders, Mr. Eisner reiterated the company's recent projection that earnings will grow 25% to 35% in fiscal 2003, and "continued strong growth" in 2004. He said the company's fundamentals are strong, but rattled off a list of obstacles that include the fallout from terrorist threats, the pending war with Iraq and the sluggish economy.
"The past years have been disappointing in terms of earnings and stock price," Mr. Eisner wrote. But he added that during the tough times, the company has been preparing for future growth by both cutting costs and making strategic investments in areas where it feels it has a strong advantage.
http://sg.biz.yahoo.com/030129/72/36x09.html
Mr. Eisner, who receives an annual salary of $1 million, didn't receive a cash bonus for 2002, according to Disney's annual proxy statement, which was filed with the Securities and Exchange Commission yesterday. The restricted stock grant is intended to replace a cash bonus as Mr. Eisner's performance-based compensation for a year in which Disney continued to lag and key board members pressured him for improvement. Mr. Eisner received no bonus, or any other performance-based compensation, in 2001.
Mr. Eisner in the past has been a symbol of rich stock-option grants, having realized a $569.8 million gain from an options exercise in 1997. But all of his more than 21 million Disney options are now priced well below Disney's current stock price, making them worthless for the time being. While not directly comparable to conventional options grants, the restricted stock should eventually put money in Mr. Eisner's pocket regardless of whether the company's stock rises or falls. The restricted stock units were priced at Monday's Disney share price of $16.74, with half of them vesting in two years and the other half at the end of his current contract in 2006.
In the Disney filing, the board's compensation committee said it awarded the $5 million restricted stock bonus after taking into account "the effectiveness and quality of Mr. Eisner's leadership of the company in a difficult economic environment that challenged all of the company's major businesses, and in particular Mr. Eisner's continuing efforts to set the groundwork for strengthening the company's future performance."
Disney President Robert Iger, meanwhile, was paid a $3 million bonus and granted $1 million in restricted stock, on top of his $1 million salary. Mr. Iger was also awarded 1.75 million Disney options, priced at $21.05. Chief Financial Officer Thomas Staggs and Chief Strategic Officer Peter Murphy both received $750,000 bonuses, and $425,000 restricted stock awards, to go with their $700,000 salaries.
Disney has been fighting an earnings malaise for five years. Its net income of $1.28 billion in fiscal 2002 was less than the $1.3 billion in net income the company reported in 1999. The 2002 results represented an improvement from 2001, when Disney posted a loss after taking about $900 million in charges related to the downsizing of its Internet business. But on a pro forma basis, Disney's earnings were down from 2001, as the company was pummeled by poor ratings on its ABC network and slow attendance at its theme parks in the wake of the 2001 terrorist attacks. Disney's lagging stock price put Mr. Eisner under pressure from key board members to right the ship.
Mr. Eisner's compensation has at times taken a hit because of the company's faltering performance, but at other times he has been rewarded in spite of it. Disney's board denied Mr. Eisner a cash bonus for the years 2001 and 1999, for example. But in 2000, when Mr. Eisner told shareholders that he believed the company's performance had returned "to the kind of growth we have enjoyed for most of the past 16 years," the board awarded him an $11.5 million bonus and raised his base salary to $1 million from $750,000.
In his annual letter to shareholders, Mr. Eisner reiterated the company's recent projection that earnings will grow 25% to 35% in fiscal 2003, and "continued strong growth" in 2004. He said the company's fundamentals are strong, but rattled off a list of obstacles that include the fallout from terrorist threats, the pending war with Iraq and the sluggish economy.
"The past years have been disappointing in terms of earnings and stock price," Mr. Eisner wrote. But he added that during the tough times, the company has been preparing for future growth by both cutting costs and making strategic investments in areas where it feels it has a strong advantage.
http://sg.biz.yahoo.com/030129/72/36x09.html