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Disney's CEO pay sequel outperforms the original

Reuters

By Jennifer Saba

(The author is a Breakingviews columnist.)

NEW YORK, March 4 ( Breakingviews) - Walt Disney's chief-executive pay sequel outperforms the original. That's because it took a shareholder revolt to cajole the board into canning some $13 million extra a year from boss Bob Iger's compensation.

On Monday three days before the company's next annual shareholder meeting, Disney pared back his salary, bonus and annual long-term incentive award.

It's the right thing to do. It's a regular part of any CEO's job to evaluate deals - and then to integrate any acquisition as deftly as possible. That should not be an excuse to bump up pay, which can create the wrong incentives and lead to poor M&A decisions.

The reduction will hardly leave Iger struggling. His total compensation package hit a whopping $66 million last year. A chunk of that is due to the incentive plan granted him when he renewed his contract through 2021. Securing that, at least, requires hitting a number of targets- though the board has tinkered with those, too. Given how intricate the formulas for CEO pay have become, it's little wonder the obvious egregious increases spark the most investor ire. On that, at least, Disney's shareholders should be mollified.

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CONTEXT NEWS

- Walt Disney on March 4 reduced Chairman and Chief Executive Bob Iger's annual compensation by $13.5 million for the remainder of his contract, which ends in 2021. Iger's total compensation in 2018 was $65.6 million, according to Disney's proxy statement, including a long-term incentive plan tied to renewing his contract. In 2017 he earned $36 million.

- Disney is buying Twenty-First Century Fox's entertainment and international assets for $71 billion. That deal has yet to close.

- At Disney's annual meeting in March last year 52 percent of shareholders voted against the $48.5 million post-Fox pay deal, though the decision was not binding on the company.

- Iger said in a statement: "I am proud to be leading the Walt Disney Company through this important time and believe the changes I, with the board, have made are in the best interest of the company."

- Disney's next annual shareholder meeting is on March 7.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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