After pay vote, Disney investors question Iger's rich deal

By Ross Kerber

BOSTON, March 16 (Reuters) - Walt Disney Co Chairmanand Chief Executive Robert Iger stands to earn up to $423million over four years, according to a new analysis of acompensation package rejected by shareholders, and someinvestors want to raise the bar on his performance targets.

Disney suffered a rare rebuke from its shareholders lastweek when a 52 percent majority opposed the compensation of Igerand other executives in a non-binding vote that could encouragethe board to tweak the pay package.

ISS Analytics, the data arm of proxy advisory firmInstitutional Shareholder Services, estimated that if Iger hitsmaximum goals the package would make him the 12th-highest paidU.S. CEO on an annual basis in the past 10 years.

Disney did not put a total value on Iger's pay package.

Markus Hansen, senior research analyst at Vontobel AssetManagement, which had 2.4 million Disney shares at year-end,praised Iger's performance but said the firm voted against thecompensation with the view the four-year pay package could betoo easy to collect.

Under a contract extension through 2021 Iger could receivethe full value of $100 million in stock awards tied to a deal tobuy film and television assets from Twenty-First Century Fox Inceven if Disney's total shareholder returns aremiddle-of-the-pack versus other big companies.

While the metrics are not unusual, the feedback the boardshould take from the shareholder vote is that "the amount islarge, so maybe a reduction in the amount and an increase in theperformance targets" would be in order, Hansen said.

Jacob Williams, corporate governance manager for pensionoverseer Florida State Board of Administration, said it votedits 2.2 million Disney shares against the compensation onsimilar concerns. It also had concerns about the lack of a clearsuccession plan after Iger leaves.

"You hate to see a payout of that magnitude for short-termperformance," Williams said. He said however that areorganization Disney announced on Wednesday had assuaged somesuccession concerns.

To be sure, some investors would be pleased if Iger earnedthe top number. Ross Gerber, CEO of Gerber Kawasaki Wealth andInvestment Management, said he voted 150,000 shares for Disney'scompensation plan because other media companies also pay welland Iger's Fox deal looks smart.

"If he succeeds, then you pay the guy," Gerber said.

Compensation consultant Brent Longnecker said the vote couldspur the board to re-examine Iger's performance goals, though hedid not expect major change.

"I assume they won't ignore it," Longnecker said of thevote.

Asked about the pay estimate and investor concerns, a Disneyspokesman referred to comments after the vote from Aylwin Lewis,chair of the company's compensation committee.

Lewis had said the board will take the vote result underadvisement for future CEO compensation. Iger is "imperative" forDisney to keep as it absorbs Fox, Lewis said, with the CEO'svalue illustrated by a total shareholder return of 414 percentduring his tenure. Iger became CEO in 2005.

Iger made $36.3 million in the twelve months ended Sept. 30.

The analysis by ISS Analytics done at the request of Reutersshowed the agreement could yield Iger roughly $423 million overfour years if he hits all goals, or $274 million as the basecase targeted by the board.

The analysis assumed that the Fox deal closes early nextyear and excluded elements such as stock appreciation. After thedeal closes, Iger's target annual pay would be about $55 millionper year including salary and some stock awards.

That amount could rise based on performance goals, ISSfound.(Reporting by Ross Kerber; Editing by Peter Henderson andMeredith Mazzilli)