Walt Disney’s shareholders have given it a cartoon smackdown. They voted 52 percent to 44 percent against plans for Chief Executive Bob Iger’s compensation. He made $36 million last year and has a new contract under which he will be paid plenty extra in the future if Disney successfully acquires parts of Twenty-First Century Fox in a $52 billion deal. Investors are right, though – it’s a pay deal too far.

As always, thanks to the U.S. Securities and Exchange Commission, the vote was non-binding. But the rebuke was crystal clear. At last year’s annual meeting, 84 percent of votes cast were in favor of the compensation proposals for Iger and other top executives, according to Disney’s proxy statement. Across the Russell 3000 in 2017, only 35 companies – 1.5 percent – lost their so-called “say on pay” votes, according to consultants Semler Brossy.

Aside from the size of Iger’s pay packet, there are two other problems. One is the idea of paying him extra just for doing a deal, even a large one. Under his latest contract, Iger could make tens of millions more if the Fox transaction is completed. Making sensible acquisitions is part of a CEO’s job. Better to pay him only for the results of the merger: a successful integration, achieving cost cuts and so on.

Also, the Magic Kingdom defended Iger’s compensation by saying it was “imperative” that he should be the one to shepherd the Fox transaction, a view shared by Fox Chairman Rupert Murdoch. The company recently extended his contract for a fourth time, until 2021, to ensure he remains in place – even though it’s by no means a sure thing the deal gets done. The regulatory environment is a toss-up and the competition is fierce. Comcast's Brian Roberts just injected himself into an already complicated deal by announcing plans for a potential bid for the majority of UK-based Sky, a stake currently owned by Fox.

It’s worrisome that the board considers Iger so indispensable – he could, after all, be run over by a bus tomorrow. True, shareholders have done well under his tenure. But that’s no excuse for Disney’s serial punting of the succession problem. No single person has the magic touch forever.

On Twitter https://twitter.com/jennifersaba


- Based on the preliminary results of Walt Disney’s March 8 annual meeting, 52 percent voted against compensation plans for Chief Executive Bob Iger and other top executives in a non-binding vote, with 44 percent voting in favor.

- Iger’s total compensation for 2017 was $36.3 million, down about 17 percent from 2016.

- In December, his contract was extended through 2021 when Disney announced plans to acquire film and TV businesses from Twenty-First Century Fox in a $52.4 billion deal. Under the extension, Iger is eligible for salary and bonuses totaling $48.5 million when the transaction is completed, according to a regulatory filing.

- In a statement following the vote, the chair of Disney’s board compensation committee, Aylwin Lewis, said: “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.” He added: “The board accepts the result of today’s non-binding vote and will take it under advisement for future CEO compensation.”

- For previous columns by the author, Reuters customers can click on


(Editing by Richard Beales and Martin Langfield)

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