Walt Disney Co. shareholders approved a huge new contract Tuesday for Chairman Michael Eisner amid accusations that the company exploits foreign workers while fattening the wallets of top executives.
Shareholders overwhelmingly approved Eisner’s new pact, which easily could be worth $300 million over the next decade. Speaking to a crowd of about 10,000, Eisner defended the deal as strictly performance-based.
Other company officials who took the floor at Disney’s annual shareholders meeting were subjected to occasional boos, accusations of arrogance and claims that the morale of rank-and-file workers is sagging.
Before the meeting, dozens of picketers outside the hockey rink where Disney’s Mighty Ducks play supported an anti-sweatshop resolution, which was defeated.
Signs compared Eisner’s salary to that of foreign workers who make Disney’s licensed merchandise.
“It would take a Haitian 16.8 years to earn Eisner’s hourly income of $9,783,” said one sign.
Inside, Eisner and other officials defended the stock and salary package on grounds of the company’s spectacular performance. Since 1984, when Eisner became chief executive, the total value of Disney stock has soared from $2 billion to $50 billion.
Eisner went out of his way to take personal responsibility for the debacle involving his friend Michael Ovitz, who spent 14 months as Disney’s president in a botched attempt to carve out a role as Eisner’s second in command.
Disney bought out the last four years of his contract for $38.8 million in cash, plus stock options that easily could be worth more than $100 million over the next few years.
Eisner said Disney rewards risk-taking and is willing to tolerate the mistakes that inevitably result.
“I’d like to think this mistake thing doesn’t apply to me,” Eisner said, but he admitted the Ovitz affair was a mistake.
“It won’t happen again,” he said.
He noted that Wall Street and the media applauded Ovitz’s hiring. Eisner said he and Disney’s board also thought it was in the company’s best interests at the time.
Shareholders voted about 7-1 in favor of Eisner’s new contract. By about the same margin, five directors were re-elected, despite accusations that the board shows too little independence from Eisner.
The margin also was about 7-1 to defeat resolutions requiring Disney to do more to police foreign workplaces for sweatshop abuses and to examine Disney’s compensation policies to tie them more precisely to job performance.
Sponsors of those two shareholder resolutions included Protestant pension funds and orders of Roman Catholic nuns.
The stock options are “welfare for the rich,” said one spokesman for the groups. Another said Disney “was not upholding the values of the Magic Kingdom” in failing to provide better wages to Third World workers.
Eisner stepped aside during the discussion of his pay and the shareholder resolutions, leaving Disney Director of Corporate Operations Sanford M. Litvack to endure the often barbed audience questions.
Minutes into the discussion about Eisner’s pay, Litvack tried and failed to cut off discussion. He then brought up a Disney board member expert in compensation, Raymond Watson, to finish answering questions.
Watson said that the board’s decision on Eisner’s contract was unanimous. He said that Eisner’s base salary of $750,000 per year was the lowest of any head of an entertainment company. He noted that the 10-year contract will ensure that Eisner won’t work for anyone else for the rest of his career.
Litvack launched a lengthy defense of Disney’s policies regarding foreign workers. He described a code of conduct that licensees and contractors must sign. The company aggressively enforces the code, he said.
Loud cheers went up when someone in the audience called Litvack arrogant, and boos erupted when he denied that morale among Disney’s workers had suffered because of recent benefit cutbacks.