NEW YORK — Buffeted by shareholder ire and allegations that Michael Eisner exerted too much control, the Walt Disney Co. board Thursday formally amended its guidelines with an eye to keeping the jobs of chairman and CEO separate — meaning the Mouse House could be looking to fill not only Eisner’s job, but Disney chair George Mitchell’s as well.
It was a busy day for Disney. Conglom also disclosed in a Securities & Exchange Commission filing that Eisner received a base salary of $1 million in 2004 and an all-cash bonus of $7.3 million. While the base salary was the same as in 2003, his bonus was up by a healthy $1 million, reflecting the company’s improved performance.
In 2003, Eisner’s bonus was paid only in stock. Also, company disclosed it spent roughly $735,000 on security for Eisner in 2004.
Eisner’s possible successor, Disney prexy-chief operating officer Robert Iger, outdistanced his boss in terms of total compensation, topping out at $12 million in 2004, up sizably from the $6.9 million he earned in 2003, according to the filing. Iger’s package, however, did include a $3.5 million payout from restricted shares granted in 2002.
Proxy statement also detailed what financial remuneration Eisner would get if he left the conglom before his contract is up in September 2006, including the immediate vesting of all options, a consultant agreement “at a fee to be mutually agreed, which may be nominal,” plus continuation of the benefits and/or perquisites provided to him during his term as CEO.
Separately, Eisner dispatched a largely cheery letter to shareholders extolling the company’s successes last year, omitting any mention of his tangled and fading relationship with Miramax or the Disney shareholders trial, which resumes next week in Delaware. The letter accompanied the company’s 2004 annual report.
Eisner took only one potshot, and that was at former Disney board members and ardent foes Stanley Gold and Roy Disney.
“The past several years were influenced by the horror of 9/11, a worldwide recession, two wars, a downturn in tourism, an unsolicited and below-market offer by Comcast … and an unusually intense publicity campaign against the board and management by two dissident former directors,” Eisner wrote.
Flurry of activity came one month before the Feb. 11 Disney shareholders meeting in Minneapolis, which is assured of being somewhat less heated, at least when it comes to Connecticut treasurer Denise Napier. She had filed a shareholder resolution on behalf of the Connecticut Retirement Plans & Trust Funds forcing the board to keep the jobs of Disney chair and CEO separate.
Based on the board’s action amending company guidelines, Napier said Thursday that she was withdrawing the resolution.
“This represents a significant victory for Disney shareholders and corporate governance advocates and is certainly in the best interest of the company,” Napier said. “In my view, the company needs two strong leaders — one to lead the board and one to lead the management team.”
Disney, however, stressed that the amended guidelines don’t preclude one person from serving as chair-CEO, as Eisner did for decades before being stripped of the title of chair last year amid a firestorm of complaint from several major shareholders.
Chair still open
According to the amended Disney guidelines, the chair “shall be an independent director unless the board concludes … the best interests of the shareholders would otherwise be better served.” If one person were named chair-CEO, the board would provide a written proxy statement as to the reasons and appoint an independent lead director with specific leadership responsibilities.
Under Disney’s own rules, the CEO is not considered independent.
“The board policy, now embodied in the guidelines, embraces principles of good corporate governance that the company is committed to pursuing,” Mitchell said.
The Mouse House is the only major media and entertainment company that has a separate CEO and chair.
The amended guidelines could throw a wrench into the search process that already has begun for Eisner’s replacement should the board indeed conclude that his successor should only serve as CEO and not chair. Mitchell has said he intends to step down in early 2006.
Eisner’s replacement is expected to be named this summer, although his contract doesn’t run out until 2006. It’s unclear whether he would leave early.
While Disney prexy-chief operating officer Iger is considered a leading candidate to succeed Eisner, other names mentioned include News Corp. prexy-chief operating officer Peter Chernin and Viacom co-prexy/co-chief operating officer Leslie Moonves.
According to the annual meeting proxy statement filed with the SEC on Thursday, Iger saw his base salary rise from $1.4 million in 2003 to $1.5 million last fiscal year. His annual cash bonus increased from $4 million in 2003 to $6.5 million. In addition to the $3.5 million long-term payout, Iger’s package included $500,000 in other compensation.
Disney spent $716,335 on security advice and personnel protection for Eisner in 2004, and $18,663 on security systems and equipment. That was down from the roughly $837,000 spent in 2003.
For Iger, Mouse House spent $471,646 on security advice and personnel and $2,470 on security systems last year and equipment, just slightly more than what was spent in 2003.
Disney’s proxy statement was unusually detailed, providing a number of sections and subtitles that seemed designed to provide transparency, including such subheads as “Does this company have a code of ethics?” and “How do shareholders communicate with the board?”
In his letter to shareholders included in the annual report, Eisner listed Disney’s many accomplishments in 2004, which include such box office hits as “National Treasure”; the turnaround of ABC thanks to hit frosh shows “Desperate Housewives” and “Lost”; the expanding successes of ABC’s cable properties; and a revival in theme park attendance.
According to the glossy annual report, Disney is continuing to predict double-digit earnings growth through 2007.
Disney shares were up 4¢ to close at $27.44 in trading Thursday.
(Jill Goldsmith contributed to this report.)