The board of directors of Walt Disney Co. (NYSE: DIS) tried to support a massive pay package it gave to CEO Robert Iger in exchange for him remaining in his job as the entertainment company buys Twenty-First Century Fox Inc. (NYSE: FOXA), a deal that may not go through. The contract renewal is worth in excess of $100 million.
A majority of Disney shareholders voted not to support the payout, though the vote is not binding on the Disney board. Shareholders rejected Iger’s package by a vote of 52% against to 44% in favor, with 5% abstaining.
Aylwin B. Lewis, chair of the board’s Compensation Committee, commented:
When considering the strategic acquisition of 21st Century Fox, and its direct contribution to long-term shareholder value, the Board decided it was imperative that Bob Iger remain as Chairman and CEO through 2021 to provide the vision and proven leadership required to successfully complete and integrate the largest, most complex acquisition in the Company’s history. 21st Century Fox similarly believed that Bob’s continued stewardship was essential for the deal. Bob’s track record of creating tremendous value for shareholders speaks for itself, with a total shareholder return of 414% and an increase in Disney’s market capitalization from $46 billion to $156 billion during his tenure. The Board accepts the result of today’s non-binding vote and will take it under advisement for future CEO compensation. We believe that the terms of Bob’s extension are in the best interests of our company and our shareholders, and essential to Disney’s ability to effectively maximize long-term value from this extraordinary acquisition.
As compensation for American public company CEOs has routinely reached tens of millions of dollars, shareholder activists, and in some cases institutional investors, have attacked boards for the size of those pay packages. The Disney vote and board’s reaction show that, once again, the complaints have fallen on deaf ears.