Iger, Eisner Get Bigger Payouts in ’05

Walt Disney Co. Chief Executive Robert Iger got not only a big promotion last year but also a pretty nice raise.

According to the company’s proxy statement made public Wednesday, Iger’s annual salary jumped 33% to a minimum of $2 million when he took over as CEO in October.

Under his new five-year employment agreement, Iger also will be eligible for an annual bonus of $7.25 million, depending on Disney’s growth. He also received 500,000 shares of restricted stock that is tied to Disney’s long-term performance.

That pay bump comes after Iger earned a $1.5-million salary, $7.7-million bonus and $500,000 restricted stock grant as Disney president, the No. 2 job, during the 2005 fiscal year ended Sept. 30. He also received stock options for 274,241 shares.

Departing CEO Michael Eisner didn’t do so badly himself, according to the filing.

Eisner earned a $9.1-million bonus in the fiscal year, up from $7.2 million a year earlier, on top of his $1-million salary. It’s one of Eisner’s bigger payouts, although it pales in comparison with the $576 million he reaped in fiscal 1998, when he exercised stock options he had accumulated for years.

The proxy was the first to be released under Iger’s tenure as chief executive. Under Eisner, Disney’s executive pay was one of the most closely scrutinized in corporate America. In recent years, Disney has sought to mollify critics by tying bonuses more closely to performance.

Shareholder reaction to the disclosures was largely muted.

“While these payments may seem eye-popping, it seems more closely aligned with the company’s performance and is less likely to raise the ire of shareholders than in years past,” said Patrick McGurn, senior vice president of Institutional Shareholder Services, which advises many Disney investors.

Eisner, once one of America’s highest-compensated executives, could have received a much larger payout, he said. “Shareholders are moving on,” McGurn said.

Greg Taxin, chief executive of proxy advisory firm Glass Lewis, said of the payments: “It doesn’t look like there’s anything out of line, given the size and the performance of the business.”

In justifying Eisner’s pay, Disney’s board noted his role in creating an “effective and seamless transition,” the “successful opening” of the new theme park in Hong Kong and the company’s improved financial performance. Disney’s net income rose 8% to $2.5 billion in fiscal 2005.

Eisner retired effective Sept. 30 after 21 years, leaving with one year left on his contract. Nonetheless, he will continue to receive a $7.5-million bonus through September 2007. He may get the same amount in 2008, although he would forfeit the money if he joined another media company.

The ongoing compensation complies with Eisner’s employment contract. The board and Eisner, however, agreed that he would not serve as a consultant to Disney, which was provided for under the pact. Eisner announced this week that he would be taking a job as a talk-show host on CNBC.

Eisner still owns 14.24 million Disney shares, making him the second-largest individual shareholder after Roy E. Disney.

Disney’s chief financial officer, Thomas Staggs, got a $2.1-million bonus and a $500,000 stock grant in 2005, in addition to his salary of $987,500.

The company also disclosed that it paid $4.3 million in legal expenses and fees stemming from a shareholder lawsuit over how current and former directors handled the hiring and firing of former President Michael Ovitz in the mid-1990s.