Disney’s Eisner Gets $7.25-Million Bonus

Walt Disney Co. Chief Executive Michael Eisner faced a shareholder revolt in 2004 that cost him his chairman’s title, but the year wasn’t all bad: He got a $7.25-million bonus.

The money marks Eisner’s first cash bump since 2000, coming on top of his $1-million salary and $57,473 in other compensation, according to a Securities and Exchange Commission filing Thursday.

Eisner’s pay in 2004 rose 13% for the fiscal year ended Sept. 30, with Disney’s board citing a “greatly improved performance.” Gains at ESPN and theme parks fueled an 85% profit increase.

By historical standards, however, Eisner’s 2004 payout was relatively modest. Since he was tapped to turn around Disney in 1984, Eisner has frequently ranked among the most highly paid corporate executives, once reaping as much as $576 million, largely from stock options.

More recently Eisner’s pay package has lagged behind those of other media moguls. News Corp. President Peter Chernin earned $16.3 million in salary and bonuses during the company’s fiscal year ended June 30.

“He’s on the low side compared to his peers, and this time his performance is pretty good,” pay expert Graef Crystal said of Eisner.

Still, the bonus drew sharp criticism from Roy E. Disney and Stanley P. Gold, who led a campaign to oust Eisner last year, arguing that Disney’s profit and stock price had lagged long term. The bonus “flies in the face of both logic and propriety,” said Clifford Miller, a spokesman for the two former board members.

President and Chief Operating Officer Robert Iger got a bigger payout. Iger’s total pay rose 73% to $12 million, including a $6.5-million bonus and $3.45 million in incentive pay.

The board is expected to name a new CEO by June, and Iger is viewed as a leading contender. In a photograph in the company’s annual report, also released Thursday, Iger is shown front and center with a team of executives posing at Disneyland. Eisner is conspicuously absent.

In its filing, Disney disclosed that it has paid Eisner an allowance of $10,000 a month toward the expense of maintaining an apartment in New York.

Because of “business-related security concerns,” the company said, it spent $716,335 for security advice and personal protection for Eisner in 2004 and $18,663 for security systems and equipment installed in his residences and automobiles. The security tab for Iger included $471,646 for advice and services and $2,470 for equipment and systems.

Disney further disclosed that it advanced $4.2 million to cover legal fees and expenses incurred by former and some current Disney directors being sued by shareholders over their role in the hiring and firing of former Disney President Michael Ovitz.

Also Thursday, Disney’s board said it amended its guidelines to permanently separate the offices of chairman and CEO.

“This represents a significant victory for Disney shareholders and corporate governance advocates,” Connecticut Treasurer Denise Nappier said.

The roles were split after a contentious annual meeting in March in which 45% of the shares were withheld from voting in support of Eisner’s reelection to the board. He remained CEO, but former Sen. George J. Mitchell was named chairman. Activists pushed to keep the jobs split.

Directors, however, can undo the change “if the board concludes that the best interests of shareholders would otherwise be better served.”