At Disney’s Annual Shareholder Meeting, CEO Pay and Virus Decisions Loom Large

Source: Disney

Investors will be watching Walt Disney’s annual meeting today as new chief executive officer, Bob Chapek, is introduced and the company addresses concerns about possible park closures due to the coronavirus.

The meeting, taking place in North Carolina, also comes after the company’s stock has fallen 24.7% since the start of the year. Disney’s bottom line is under attack as the virus keeps visitors away from theme parks and cruises.

At the meeting, shareholders will be looking for answers about why CEO Bob Iger is stepping down. The timing will also be a topic of discussion as the virus’ spread challenges Disney to consider shuttering parks and delaying 2020’s slate of theatrical releases.

Iger’s compensation will also be an issue. As reported in Bloomberg, three shareholder-advisory firms are urging investors to reject Disney’s executive-compensation plan, saying it is out of line with what peers offer. According to Institutional Shareholder Services, Iger’s pay is twice that of his peers. This is a critical issue because even though Iger handed the reigns to Chapek, his employment agreement will remain unchanged.

In a company filing, Disney disagreed with Institutional Shareholder Services assessment, saying, “More than 90% of Mr. Iger’s compensation is performance-based, and under his leadership since 2005, Disney has delivered total shareholder return of 559%, compared to just 223% for the S&P 500 as of fiscal year-end 2019.”

The Florida State Board of Administration, which manages pension assets for Florida state and other local authority employees and had 2.3 million shares of Disney as of the end of 2019, voted against the compensation plan this year. “It seems to be maximized for payout without sufficient ties to the performance levels,” said Jacob Williams, corporate governance manager with the organization.

Furthermore, at its 2017 annual meeting, Disney suffered a rare rebuke when a majority of shareholders opposed its executive pay in a non-binding vote. Some industry analysts believe this could happen at this year’s annual meeting as well.

For today’s meeting, Bloomberg believes Chapek, the former head of theme parks, will see an annual target salary of $25 million.

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Source: Equities News