Eisner trades up

Disney topper uses options in $695 mil deal

The Walt Disney Co. announced Wednesday that chairman Michael Eisner has sold roughly 4 million shares of Disney stock, following his exercising of options on some 7.3 million shares granted in January 1989.

He exercised options to buy stock worth $695 million in a deal that marked one of the largest sales ever for a corporate exec. Disney spokesman John Dreyer said Eisner had made another slightly smaller sale of personal shares in 1992. Even with Wednesday’s divestiture, Eisner retains options on an additional 9 million shares.

Eisner sold the shares to Goldman, Sachs and Co., which will in turn peddle the shares to institutional and individual buyers. Disney shares closed Wednesday at $95.19.

At that price, Eisner could have conceivably cleared $565.4 million before taxes. But sources said it was unlikely that Goldman, Sachs paid the market price, since it intends to sell the stock.

Of the 4 million shares sold, the Mouse topper will use roughly 2.6 million shares to cover taxes. He will use the revenue from the additional 1.4 million shares sold for personal estate planning.

Of the remaining exercised block, Eisner will retain ownership of 1.6 million, bringing his personal total to 3.6 million shares. He will also donate about 300,000 shares to the Eisner Family Foundation (a charity for underprivileged children) and use an additional 1.4 million shares to cover the cost of exercising the options.

Eisner’s options allowed him to buy Disney stock at $17.14 for 5.5 million shares and $19.64 for the additional 1.8 million.

Eisner conceded in a statement that the large block sale may “provoke much discussion,” but he decided to do it because the stock was trading so high.

Eisner said he intends to continue to hold his 3.6 million shares.

“A significant portion of the option shares were used to cover the exercising of the options, and an even larger portion were sold to cover the income taxes payable on such exercise,” Eisner said.

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