Disney’s merger with 20st Century Fox is set to continue as Disney alters its current agreement with Bob Iger, slashing his potential bonus by $13.5 million. While CEO Bob Iger helped orchestrate the deal between Disney and Fox, sidestepping Comcast in a major bidding war, his salary has been an issue of controversy since March.
Bidding War and Merger
Disney won a hard-fought bidding war against controversial telecoms giant Comcast last summer with Comcast dropping a $66 billion bid after being outbid yet again. Disney’s winning bid to merge with Fox came to $71.3 billion, and the two media corporations are now set to unite under one banner moving forward.
Comcast conceded defeat but set its sights on acquiring 61% of European broadcasting firm Sky instead, with the remainder owned by Fox.
The Disney/Fox merger was originally slated for as early as this month before being delayed by Brazilian regulatory authorities who took longer than expected due to issues surrounding ownership of a Fox sports channel. Now approved, the deal is set to close by Q2 2019. Disney will acquire all of 20th Century Fox’s film and TV divisions, with major franchises like “Home Alone”, “Alien,” Predator,” and “The Simpsons” changing hands to Disney.
Disney is also being granted the film and TV rights to several Marvel characters as well the Fox Searchlight studio which has produced numerous Oscar-winning movies in the last ten years.
Disney did not give an official reason for the drastic reduction of CEO Bob Iger’s earning potential, although shareholders raised concerns over his salary in March, stating that it was too high. Iger earned $65.6 million for his performance last year with a pay rise extending his tenure as CEO for the next three years and a stock bonus of over $35 million.
However, Disney kept his base salary at $3 million this year, scrapping a proposed $500,000 raise. The company also cut his cash bonus potential almost in half with a reduction from $20 million to $12 million, as well as reducing his long-term incentive pay from $25 million to $20 million according to yesterday’s securities filing.
Disney announced at a Houston shareholder meeting last year that 52% of shareholders had voted against the company’s compensation plan for its CEO as well as for other executives, with 44% in favor and four abstentions. The plan would have awarded Iger up to $48.5 million a year over four years and a $100 million equity grant. The compensation committee board chair, Alywin Lewis, stated that while the vote was non-binding, it would be given consideration.
The board accepts the result of today’s non-binding vote and will take it under advisement for future CEO compensation.
Iger Denies Being Snubbed
Iger, who has been CEO since 2005 and chairman since 2012, stated on Monday that the decision to slash his by tens of millions of dollars was mutual.
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.
The securities filing comes days before the annual shareholder meeting at which time shareholders will hold another non-binding vote to give the company insight into how shareholders feel executives should be compensated.