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Disney Revises CEO Bob Iger's Pay Package

The Walt Disney Co (DIS) announced more rigorous benchmarks required for its Chief Executive Robert Iger to collect a $100 million equity grant in 2021 that had been criticized by shareholder advisory groups.

The company and Mr. Iger have agreed to adjustments that establish meaningfully more rigorous performance goals: As revised, no units will be earned if the Company's Relative TSR is less than or equal to the 25th percentile, the level at which the target number of units is earned has increased from the 50th percentile to the 65th percentile, and the maximum number of units that can be earned (at the 75th percentile) has decreased from 150% to 125%.

Under the new arrangement, Iger will collect the full amount of shares tied to the equity grant only if his company's total shareholder return outperforms 65% of companies in the S&P 500. The original agreement granted the payment if Disney outperformed the 50th percentile.

To maintain the initial negotiated value of the Extension PSU Award with the addition of more challenging performance criteria that reduce the likelihood of earning the units, the target number of units subject to the award has been increased to 937,599 units, as determined by applying a Monte Carlo simulation and the price of the Company's common stock established for purposes of applying the exchange ratio under the 21st CF Merger Agreement.

The company and Iger have also agreed that annual performance share unit awards granted to Iger following the closing under the 21st Century Merger Agreement will include the limitation to 100% of the target number of units if the Company's TSR over the relevant performance period is negative.

In March, Disney shareholders in a nonbinding advisory vote rejected a compensation plan for Iger and other executives, with 52% of shareholders voting no on a plan that would have paid the CEO up to $48.5 million a year in total compensation from 2018 to 2021. The additional $100 million equity grant—which the advisory firm Institutional Shareholder Services had called "excessive"—would follow in 2021 if Disney shareholder return met those S&P targets.

The compensation was tied to Disney's $71.3 billion acquisition of major assets of 21st Century, a deal that is expected to close in early 2019.

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