Walt Disney shareholders voted down a non-binding resolution on a pay plan that could increase chief executive Bob Iger’s compensation by more than $100m.
The rebuke at the company’s annual meeting represented the first time that Disney shareholders have rejected a “say on pay” resolution. It also marked the first time this year an S&P 500 company has lost such a vote, according to Institutional Shareholder Services, the shareholder advisory group.
The non-binding advisory resolution was opposed by 52 per cent of investors, while 44 per cent voted in favour and 4 per cent abstained. Disney’s board accepted the vote and said it would “take it under advisement for future CEO compensation”.
Mr Iger received $36.3m in 2017, a 17 per cent decline from the previous year due to a smaller performance-based cash bonus.
His package could increase to $48.5m this year as part of a new contract extending his tenure to 2021 that was signed in December, when Disney announced a $66bn deal to acquire the entertainment assets of 21st Century Fox, including its film studios and 39 per cent stake in Sky, the pan-European broadcaster. It was the fourth time Mr Iger has extended his contract. He was previously due to step down in 2019.
The new agreement lifts his base salary to $3m in 2018 and $3.5m once the Fox deal closes. After the closing, he will be eligible for a $20m annual incentive bonus and a $25m award grant, and could receive more than 900,000 restricted and performance-based stock units, worth over $100m based on Disney’s share price.
Proxy advisers including Institutional Shareholder Services and Glass Lewis had recommended voting against the pay plan.
“The substantial payments to Bob Iger in connection with his contract extension and the upcoming 21st Century Fox merger are concerning,” ISS said in its report.
The company said Mr Iger’s stewardship was an important element of its acquisition plans. It said its total shareholder return had been 414 per cent since he became chief executive 13 years ago.
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“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. 21st Century Fox similarly believed that Bob’s continued stewardship was essential for the deal,” said Aylwin Lewis, chair of the compensation committee.
“We believe that the terms of Bob’s extension are in the best interests of our company and our shareholders, and essential to Disney’s ability to effectively maximise long-term value from this extraordinary acquisition.”
The meeting also saw shareholders elect Safra Catz, co-chief executive of software company Oracle, and Francis deSouza, chief executive of Diagnostics company Illumina, to Disney’s board. They replaced Sheryl Sandberg, Facebook chief operating officer, and Jack Dorsey, Twitter chief executive, who stepped down ahead of Disney’s planned launch of streaming video services, which will compete with their companies’ offerings.