Boards must—of course—respect the annual springtime assertion of shareholder voices, given that they represent at least a portion of the owners. But we can also call out opportunistic grandstanding for what it is. On that score, this year’s standout performance was Abigail Disney’s attack on the compensation plan of the company bearing her surname.
If you somehow missed it, Abigail Disney wrote a Washington Post piece entitled “It’s Time to Call Out Disney— And Anyone Else Rich Off Their Workers’ Backs.” In it, she conceded that, yes, CEO Bob Iger and others do deserve bonuses because “they have led the company brilliantly,” but, she goes on to say “that the people who contribute to its success also deserve a share of the profits they have helped make happen.”
“The company has never been more profitable,” she says, but the leadership team that made that profit should surrender their “seven- and eight-figure paychecks” because the sums are just too large.
The usual suspects emerged to applaud on cue. “What would be truly heroic,” tweeted presidential candidate Senator Bernie Sanders, “is if Disney used its profits from Avengers to pay all of its workers a middle class wage instead of paying its CEO Bob Iger $65.6 million, over 1,400 times as much as the average worker at Disney makes.” (Paradoxically, when millionaire Sanders was asked to explain his own unshared wealth with campaign aides, merit mattered. “I didn’t know that it was a crime to write a good book that turns out to be a bestseller.”)
The timing of Abigail Disney’s attack —just before Disney’s Avengers $1 billion opening broke attendance records in 18 countries—is rich in irony, even if she doesn’t see it. Disney, under Iger, is responsible for 11 of the 12 biggest box office openings of all time, largely because Iger engineered the greatest string of acquisitions in the history of the media industry, successfully buying—and integrating—the creative engines of Marvel, Pixar and Lucasfilm, all while reviving Disney’s own legendary studio and theme parks. His purchase of 21st Century Fox reshaped the industry and his Disney-plus direct distribution has blunted threats from Netflix and Amazon.
The market has applauded with fanboy enthusiasm. Disney’s stock recently traded at an all-time high of $138 a share, up from $24 when Iger took the reins in 2005 (the company’s market cap exploded $76 billion in the last month alone). Total shareholder return during Iger’s tenure is 572 percent, compared to 217 percent for the S&P 500. Investors aren’t the only winners. Disney added more than 70,000 jobs under Iger.
As a result, Iger’s performance-based total compensation hit $64.6 million. Generous? Absolutely. But consider some benchmarks. Ten hedge fund CEOs— creating no new jobs or products or services—earned between $1 billion and $2 billion last year. Even among media peers, Iger is hardly the highest paid. Discovery’s David Zaslav made $156 million, Liberty Global’s Michael Fries made $142 million. Fired Viacom CEO Philippe Dauman was paid $72 million— despite plunging performance in all business units and a crashing stock price. Even scandalized CBS chief Les Moonves made more: $70 million.
Disney’s market cap under Iger is $246 billion—almost 10 times the size of all these competitors combined. And don’t be fooled by rhetoric, Abigail Disney’s family cares. They’ve been consumed by internal inheritance battles. Her father waged a book-worthy campaign forcing out her cousin, then lobbied to sell Disney to Comcast for $60 billion before Iger stepped in and increased the company’s value fourfold.
Remember when the fight over CEO pay revolved around performance? Now, Abigail Disney and her supporters seem to be saying performance doesn’t matter, either— it’s only about the pay. Perhaps a simpler way this Disney heiress could ease her guilt about being to the mouse house born would be by donating the returns she’s earned under Iger. As for the board, it can easily soothe any crisis of conscience by asking a simple question: Which is more offensive? Earning a large sum for a tough job done well—or inheriting great wealth without doing anything, then complaining?