Disney cuts CEO pay, adds Twitter co-founder to board

Mon Dec 23, 2013 6:07pm EST

Jack Dorsey, chairman of Twitter and CEO of Square, takes part in the Techonomy Detroit panel discussion held at Wayne State University in Detroit, Michigan September 17, 2013. REUTERS/Rebecca Cook

Jack Dorsey, chairman of Twitter and CEO of Square, takes part in the Techonomy Detroit panel discussion held at Wayne State University in Detroit, Michigan September 17, 2013.

Credit: Reuters/Rebecca Cook

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(Reuters) - Walt Disney Co has slashed Chief Executive Bob Iger's fiscal 2013 compensation by 15 percent with a bonus cut, and named Twitter Inc co-founder Jack Dorsey an independent board director.

Dorsey, widely credited with creating Twitter alongside fellow co-founders like Ev Williams, Biz Stone and Noah Glass, will stand for election at Disney's March 18 annual meeting, Disney said in a statement on Monday.

At 36, Dorsey, who is also CEO of fast-growing payments startup Square, will be by far the media conglomerate's youngest board member.

Dorsey, who sent the company's first tweet in 2006 - "just setting up my twttr" - spent the past few years molding San Francisco-based Square into a billion-dollar payments company whose matchbox-sized card readers are a common sight in coffee shops, corner stores and food trucks across the country.

In November, Twitter's initial public offering valued Dorsey's roughly 4.9 percent stake in the messaging service at about $1 billion.

"Jack Dorsey is a talented entrepreneur who has helped create groundbreaking new businesses in the social media and commerce spaces," said Iger, who is also Disney's chairman. "The perspective he brings to Disney and its Board is extremely valuable."

SMALLER BONUS

Iger's bonus was reduced by $3 million because Disney's "strong" results did not outperform his targets "by the same extraordinary amount as in fiscal 2012," the board said in a proxy filed with the U.S. Securities and Exchange Commission on Monday.

The reduced 2013 salary also included what Disney said was an increase in the discount rate that caused "a change in the value of his pension benefit of $3.1 million."

The Disney board did not change Iger's $2.5 million salary from 2012 when he earned $40.2 million.

In awarding Iger a $13.6 million cash performance bonus, the board's compensation committee said Disney did beat Iger's four financial performance measures taken together. But the weighted average of 112 percent of the targets fell below the 132 percent in 2012.

Those measures include segment operating income, diluted earnings per share on an adjusted basis, after-tax free cash flow, and return on invested capital.

Disney also said on Monday that Judith Estrin, a former Cisco Systems Inc chief technology officer, will retire from the board at the March 18 annual meeting. The company cited its tenure policy, which limits board service to 15 years.

(Reporting by Ronald Grover; additional reporting by Gerry Shih; Editing by Richard Chang)

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Comments (1)
BBM2014 wrote:
You say “Disney did beat Iger’s four financial performance measures taken together.”

The company’s filing says “While the Company delivered strong growth in fiscal 2013 against each of the four financial measures, that growth was insufficient to generate a performance factor of 100% on two of the four measures (segment operating income at 92% and adjusted EPS at 99%). The shortfall in these two measures was offset by the exceptional growth in after-tax free cash flow (performance factor of 158%). Also, the growth in return on invested capital yielded a performance factor of 108%. Taking all four into account, the weighted financial performance factor was 112% compared to 132% in fiscal 2012.”

Seems as if Disney didn’t meet the required 100% performance factor on two of those four measures. So I don’t think it is accurate to say the company “beat Iger’s four financial performance measures taken together.” Taking all four into account, the weighted financial performance factor was 112% compared to 132% in fiscal 2012.

Dec 24, 2013 4:13am EST  --  Report as abuse
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