Disney has made it more difficult for CEO Bob Iger to receive his bonus after he steps down from his position in 2021.
We found out in an SEC filing on Monday the Walt Disney Company amended Iger’s current contract, which expires in 2021. While the change to the contract has no effect on Iger’s current compensation, it does affect the potentially large bonus that the CEO will receive when his tenure with The Walt Disney Company ends in a few years.
The Hollywood Reporter wrote that although there is no way to predict what the price of Disney stock will be by the end of 2021, based on Monday’s stock price and whether Disney’s shares outperform 75 percent of the other stocks on the S&P 500, Iger would potentially receive a bonus of approximately $135 million, before the amendment to his contract. Now that his contract has been amended, he will potentially receive only $119 million.
The Hollywood Reporter also stated that on the other hand, if Disney stock underperforms and falls into the bottom quartile, Bob Iger will receive no bonus at all, in contrast to the $79 million he might have received under the old contract.
The Walt Disney Company stated that they amended Iger’s contract to “establish more rigorous performance requirements for his equity award than those reflected in the original contract.” The amendment is designed to reward Iger with a bonus if the acquisition of 21st Century Fox proves successful and leads to better than the average stock increases in line with the top 25% of the S&P 500 Index.
“The decision to implement more rigorous performance criteria reflects feedback received directly from shareholders and underscores Mr. Iger’s and the board’s confidence that the current strategic direction of the company will generate significant value for our shareholders,” The Walt Disney Company stated.
The Walt Disney Company rejected Iger’s compensation plan back in March at the company’s annual shareholder meeting. In the current contract, Iger’s base salary of $3 million will be boosted to $3.5 million, and those numbers were not amended in the SEC filing.
What do you think of the amendments to Disney CEO Bob Iger’s tenured contract?
Source: The Hollywood Reporter