Disney CEO Underpaid?
Mr. Iger, who assumed the top job in October 2005, also received long-term incentive pay of $4 million; 411,000 stock options hypothetically valued at $3 million, and about $666,000 to cover costs including security, personal air travel and car benefit. Mr. Iger also exercised $8 million of expiring options over the period.
Total it all up and it's about $32 million in compensation. Sounds like a lot, but what happened to Disney's stock during that time? It went from $23/share in October 2005 to about $35 today (more than a 50% increase), and Disney's market capitalization went from about $48 billion to $73 billion, an increase of $25 billion in value for shareholders. Iger's $32 share of the increased $25 billion value for shareholders is about 1/10 of 1% (.13%).
Assuming that Iger played an important role in creating $25 billion of additional shareholder value, it's not a bad deal for shareholders to pay him only $32 million. For every $1 of CEO pay to Iger, shareholders got $781.25 in increased value, not a bad deal. Perhaps Iger is underpaid?
Thanks to David Boaz at Cato.