Eisner Makes an Early Exit at Disney

Michael Eisner, who departed last week as Walt Disney Co. chief executive after 21 years, has exited the company stage completely, giving up his board seat months earlier than expected.

Eisner’s resignation as a director, which clears the way for him to pursue his own creative ventures, was disclosed by the company Thursday in a regulatory filing that also detailed a performance-based compensation package that will pay his successor, Robert Iger, $2 million a year plus bonuses.

According to the filing, Eisner left the board of the Burbank media giant Sept. 30, his last day as CEO. He has been tight-lipped about his future, publicly saying only that he plans to remain in the entertainment field.

He had been expected to stick around until Disney’s annual meeting early next year, which could have created a conflict of interest had he sought to pursue non-Disney entertainment projects. Eisner also had discussed a continuing relationship with the company as consultant, but that has not happened.

The Securities and Exchange Commission filing that briefly noted his resignation said that Eisner “no longer provides any services” for the company.

Eisner had no comment, Disney spokeswoman Zenia Mucha said.

Iger, whom Eisner endorsed as his replacement, will be paid a base annual salary of $2 million during his five-year contract and will be eligible for a performance-based bonus of at least $7.25 million a year. He also will be eligible for as much as $8 million a year in “equity-based long-term incentive awards” to be determined by the board of directors.

Iger also will receive a one-time grant of 500,000 shares of Disney stock that will begin vesting in 2008 -- but only if the stock outperforms the Standard & Poor’s 500 index and if Iger meets other, unspecified goals set by the board’s compensation committee.

Eisner’s base salary was $1 million, although over his tenure he reaped hundreds of millions of dollars in bonuses and stock profits. Eisner remains one of Disney’s largest individual stockholders with 14 million shares.

Corporate compensation experts said Iger’s deal meant that if he didn’t perform, he wouldn’t get paid the big bucks.

David Leach, managing director of Los Angeles-based ECG Advisors, said it was “almost like a double-performance” requirement.

“What it says is not only does he have the external goal of outperforming the S&P; index, but he also has the internal goal that the compensation committee is setting for him,” Leach said.

Alan Sklover, of Sklover & Associates in New York, said Iger’s compensation package reflected Disney’s attempts to be more transparent and to distance itself from excessive compensation packages that have drawn criticism at other companies. It also is an effort to put behind controversy such as the $130-million severance package it paid to former President Michael Ovitz, who served for only 15 months in the mid-1990s before Eisner fired him.

Sklover called Iger’s total package “far more reasonable than I’d almost expect,” and said it reflected Iger’s desire “to establish himself as a positive, prudent businessman who wants to be at Disney for the long haul” and is willing to put his performance on the line.

“I think this is almost a conscious decision to take less than expected and therefore earn admiration and respect,” Sklover said.

Disney stock fell 14 cents Thursday to $24.09 a share.