Union asks Disney Shareholders to Prohibit Future "Golden Parachutes"

[jcb]

One of the unions (Unite) that represents Disney employees (at the Disneyland resorts - where there has not been a union contract for almost three years) has filed a document with the SEC (not the college football conference) which asks shareholders to approve a "shareholder initiative" which would prohibit future "golden parachutes" for Disney executives.

These type of proposals stand little chance of passage. Shareholders tend to receive union proposals such as this about like MacBeth welcomed Banquo's ghost (they tend to welcome unions even less). What was interesting are the proposal's calculation of the severance payments Iger would have received:

If our Company's CEO Robert Iger had been terminated at the end of fiscal 2009 by the Company pursuant to its termination rights, or had Mr. Iger resigned with good reason, he would have received a total of $48.6 million. This amount would have consisted of a cash payment of $18.6 million, stock options valued at $3.3 million, and restricted stock valued at $26.7 million.

Timing wise, it's hard not to see this as another tactic in the union negotiations at WDW and the DL resorts. Even so, it is not unusual for union's to push for changes prior to the company's annual meeting.

The union also wants to change how Disney measures good performance of senior executives when it is considering whether to award stock options.

The filed proposal can be read here: http://www.sec.gov/Archives/edgar/data/1001039/000103442611000001/disneyrevised.htm

The LA Times had a story about it while some of us were cruising: http://latimesblogs.latimes.com/ent...g-to-give-shareholders-a-greater-voice-i.html

 

[Disney Dad Canada]

The union has no business judging how execs do their job. That's for the shareholders to decide. maybe if the unions spent less time bashing Disney and more time caring for their constituents they would be better off.

 

[WaltD4Me]

The union has no business judging how execs do their job. That's for the shareholders to decide. maybe if the unions spent less time bashing Disney and more time caring for their constituents they would be better off.

Maybe so, but a Golden Parachute isn't really a judgement of a CEO's job. It's what he can get when leaving the company even if after he ran it into the ground and gets fired or resigns when he can't take the heat anymore. Not referring to Bob Iger specifically, but people are understandly upset about the huge amounts of money some CEO's left their companies with, while leaving the company itself in ruins. I understand that things like this have to be offered in order to get the talent, but I also understand the fustration of the company employees.

 

[Cheshire Figment]

Not how they do their job that they are asking, but how they are compensated.

Disney has about 52,000 employees at WDW. About half are part time. For 48 million dollars, they could give every person who works at WDW at 50¢ per hour pay raise. For me that would be about a 6% raise.

Remeber a few years ago when a very senior executive left after about two years and was given $90 Million in severance!

 

[Disney Dad Canada]

Maybe so, but a Golden Parachute isn't really a judgement of a CEO's job. It's what he can get when leaving the company even if after he ran it into the ground and gets fired or resigns when he can't take the heat anymore. Not referring to Bob Iger specifically, but people are understandly upset about the huge amounts of money some CEO's left their companies with, while leaving the company itself in ruins. I understand that things like this have to be offered in order to get the talent, but I also understand the fustration of the company employees.

These are usually part of the negotiating when hiring a CEO in the first place. Without these guarantees, your talent pool of applicants would be second rate at best.

Comparing what CEOs make verses rank and file is meaningless. CEOs are there to please the shareholders, and it is the shareholders that decide these packages. "Running a company into the ground" is also a meaningless statement without hard numbers.

 

[WaltD4Me]

These are usually part of the negotiating when hiring a CEO in the first place. Without these guarantees, your talent pool of applicants would be second rate at best.

Comparing what CEOs make verses rank and file is meaningless. CEOs are there to please the shareholders, and it is the shareholders that decide these packages. "Running a company into the ground" is also a meaningless statement without hard numbers.

As I said, I do understand that in order to get talent companies do have to offer these packages. Perhaps though if all companies banded together and put a stop to the Golden Parachute packages and offered all that money as performance incentive instead we'd all be better off. I know that won't ever happen, but there you go.

 

[Disney Dad Canada]

As I said, I do understand that in order to get talent companies do have to offer these packages. Perhaps though if all companies banded together and put a stop to the Golden Parachute packages and offered all that money as performance incentive instead we'd all be better off. I know that won't ever happen, but there you go.

And in a perfect world unions wouldn't hand out pamphlets saying Disneyland is full of pedophiles and make disgusting propaganda movies. Both sides are far from perfect.

 

[jcb]

I'll try to clear up and respond to a few points. If you disagree, just ignore me, as nothing I say is really all that important.

Unions will typically buy a shares of stock in a company so that they can have a representative attend the shareholders meeting (which is this March) and do make proposals such as this. As shareholders they have the right to make the proposal but the wisdom of it is another matter. As union campaigns go, it is pretty innocuous. I've seen far worse. When you have failed to get your membership a contract for almost three years, you have to do something to show that you are not irrelevant.

Companies can't really band together about any employee compensation. Pixar and several other hi-tech companies found that out when they entered into an agreement to not raid each others employees. The Justice Department politely told them that violated the antitrust laws and last year the companies entered into consent decrees. There is, however, a difference between an agreement (which is illegal) and "parallel conduct" (the most common example of which is how the gas stations at an interstate exit all seem to charge just about the same price per gallon). So if all companies stopped paying astronomical compensation to executives, that would not be illegal. Given todays Wall Street driven economic climate, don't look for that to happen.

I probably should have emphasized that the $48 million mentioned in the Unite filing was total compensation, it included stock options and restricted stock. It wasn't all cash. (At that it was Unite's calculation, which is likely to be inflated.) Stock options are one way companies reward employees (particularly management employees) and since the price per share is usually tied to company performance that is one way companies tend to encourage solid performance by executives. It isn't an exact science, however, and at its worst, poor performers have been known to cash in stock options before the bad news hit the market.

And since a severance payment is typically a one time/year event, the comparison to what it would mean in terms of an hourly increase for CMs is not all that exact. Wage increases are multi-year commitments. I expect Cheshire Figment knows this (given that he is an accountant) but was trying to put the total package amount into perspective. For that reason, I don't think the comparison is meaningless.

 

[k5jm]

Jack, doesn't a publicly traded company have to file all of it's senior management's compensation in it's yearly 10K filing?

 

[jcb]

Mike, I believe you are correct but compliance with securities laws is outside my field so don't take me as definite. I think that was added as part of Sarbanes Oxley.

Disney appears to have filed the employment agreements with Iger, Rasulo and Staggs (among others) as well as the compensation for directors, with the SEC. If so, I'll post links to them later.

 

[woodleygrrl]

Jack, doesn't a publicly traded company have to file all of it's senior management's compensation in it's yearly 10K filing?

Actually the company only has to disclose the executive compensation of its top five highest paid employees, not all of their executives.

Jennifer
Proud member of the Laborers' Union and the filer of nearly 50 shareholder proposals a year on behalf of our pension funds

 

[jcb]

Actually the company only has to disclose the executive compensation of its top five highest paid employees, not all of their executives.

Jennifer
Proud member of the Laborers' Union and the filer of nearly 50 shareholder proposals a year on behalf of our pension funds

So Jennifer, you didn't challenge my assertion that union shareholder proposals are rarely, if ever, adopted and that they usually are designed to serve some other purpose. Just because I'm curious (and like to know when I'm wrong) can you say whether any of the 50 proposals you've made have been adopted. I don't mean to put you on the spot, but feel free to say I'm all wet if you want.

 

[jcb]

I really didn't realize what I was promising when I said I would post links to the employment agreements for Executives of

but here goes. (Remember the podcast where Bawd listed all the liquor prices from Rix Lounge?) I'll state the name, the job title and current base or minimum guaranteed salary (which, while considerable, is only part of the total compensation an executive receives). The link will be to the employment agreement that Disney filed with the Securities and Exchange Commission.

Robert A. Iger, President and Chief Executive Officer, base salary (as of 1/31/08): $2,000,000. Amended and Restated Employment Agreement of 1/31/08.

James A. Rasulo, Senior Executive Vice President, Chief Financial Officer, base salary (as of 1/1/10): $1,400,000. Employment Agreement of 1/1/10.

Thomas O. Staggs, Chairman, Walt Disney Parks and Resorts Worldwide, base salary (as of 4/1/10): $1,400,000. Amended and Restated Employment Agreement of 4/1/08.
Amended Employment Agreement of 1/1/10.

Alan N. Braverman, Senior Executive Vice President, General Counsel and Secretary of the Company, minimum guaranteed salary (as of 10/1/08): $1,100,000. Employment Agreement of 10/1/08.

Kevin A. Mayer, Executive Vice President, Corporate Strategy, Business Development, and Technology of the Company, minimum guaranteed salary (as of 10/1/08): $700,000. Employment Agreement as of 10/1/08.

Jayne Parker, Executive Vice President and Chief Human Resources Officer, Annual Base Salary (as of 9/1/09): $550,000. Employment Agreement of 9/1/09.

The executives also have "annual incentive bonus" provisions. For Iger, the *target* incentive for FY 2008 was "no less than $10,000,000." If you want to torture yourself further, I think this is the link to Disney's executive incentive plan. Basically, three members of the Board of Directors set performance targets for each executive. I would be surprised if these performance targets were publicly available.

Disney has recently upped the retainer paid to its directors. Per the filing, each director receives $80,000 annual plus $10,000 for each committee. There are also stock options.

Please let me know if the links are wrong.

 

[woodleygrrl]

So Jennifer, you didn't challenge my assertion that union shareholder proposals are rarely, if ever, adopted and that they usually are designed to serve some other purpose. Just because I'm curious (and like to know when I'm wrong) can you say whether any of the 50 proposals you've made have been adopted. I don't mean to put you on the spot, but feel free to say I'm all wet if you want.

Our proposals are routinely adopted. According to securities regulations, shareholder proposals have to be filed "for a proper purpose". That is, they must include an issue that would benefit ALL shareholders should they be adopted. One could not file a shareholder proposal on say, Disney must work 100% union, or Disney's executive compensation must be below a certain level.
We file shareholder proposals on a number of topics that include asking the company to adopt a CEO succession planning policy, to promote board of director independence, and to adopt a "pay for superior performance" executive compensation program just to name a few. Most of the time we engage corporations and those proposals will never make it to the ballot because the Board will adopt them before hand.

it would be against SEC regulations for a shareholder proposal to be filed for any reason other than to promote the long-term financial health of the company. you can't file a shareholder proposal because you want to get a contract or you want to organize workers at a company. Trustees of these pension funds that file shareholder proposals are fudiciaries and are held to a high legal standard.

I don't want to participate in this thread if it is going to be about Union bashing or whatnot but I would be happy to educate on shareholder activism generally.

Jennifer

 

[jcb]

I don't want to participate in this thread if it is going to be about Union bashing or whatnot but I would be happy to educate on shareholder activism generally.

Jennifer,

I can assure you I didn't start the thread to bash unions. I simply thought folks would be interested in some of the severance package amounts the union proposal cited. I was midway through writing the first post before I realized it was filed by Unite. No doubt some posters will, from time to time, bash Unions (and sometimes they deserve bashing), but Disney management gets bashed a whole lot more. The boards benefit from all sorts of views, yours included.

 

[woodleygrrl]

Jennifer,

I can assure you I didn't start the thread to bash unions. I simply thought folks would be interested in some of the severance package amounts the union proposal cited. I was midway through writing the first post before I realized it was filed by Unite. No doubt some posters will, from time to time, bash Unions (and sometimes they deserve bashing), but Disney management gets bashed a whole lot more. The boards benefit from all sorts of views, yours included.

Appreciate it, Jack!