DEF 14A 1 d249883ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934

 

Filed by the Registrant 

Filed by a Party other than the Registrant 

Check the appropriate box:

    Preliminary Proxy Statement

    Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

    Definitive Proxy Statement

    Definitive Additional Materials

    Soliciting Material under §240.14a-12

 

The Walt Disney Company
(Name of Registrant as Specified In Its Charter)
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

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Table of Contents

LOGO


Table of Contents

 

Letter to the Shareholders

 

JANUARY 19, 2022

 

Dear Fellow Shareholders,

The past year represented a period of significant growth for The Walt Disney Company on several fronts. Fiscal 2021 marked a year of successful leadership transitions, the advancement of our environmental and social efforts, the reopening of additional parks and experiences, and the continued execution of our direct-to-consumer (“DTC”) strategy. Having recently assumed the role as Chairman of the Board after serving as independent Lead Director since 2018, I am excited to continue working closely with my fellow Board members, our CEO Bob Chapek and our talented management team. We are proud of the dedication of the entire Disney team as we continue to navigate the uncertainties of the COVID-19 pandemic this past year, and look forward to continuing to deliver shareholder value, storytelling and creative experiences around the world.

Bob Iger stepped down from his role as Executive Chairman at the end of 2021. The impact Bob had during his time at the Company is difficult to overstate. During his tenure as CEO, Bob initiated the Company’s DTC efforts; expanded our geographic presence including opening our first theme park and resort in Mainland China; and furthered Disney’s rich history of storytelling through landmark acquisitions of Pixar, Marvel, Lucasfilm and 21st Century Fox. Bob carried the same level of dedication into his role as Executive Chairman, where he oversaw Disney’s creative endeavors, providing audiences with engaging stories and compelling characters. Alan Braverman, former General Counsel and Secretary, Zenia Mucha, former Chief Communications Officer, and Jayne Parker, former Chief Human Resources Officer, also retired during the past year. I want to thank each of these tremendous leaders for their years of continued service and contributions to Disney, and for their role as valued mentors to so many colleagues.

Last year, we were excited to announce that Amy Chang and Calvin McDonald joined the Disney Board as independent directors. Both Amy and Calvin bring a nuanced understanding of the power of combining technology and the consumer experience – Amy’s expertise includes technology to understand consumer trends and demands, and Calvin has deep experience with brand innovation and connecting with consumers across various digital channels. Their additional perspectives and experiences have already been valuable additions to the Board. We will continue to compose the Board of Directors with appropriate skills and experiences to oversee our strategy and stay ahead of the rapidly evolving media and entertainment landscape.

The Board is focused on the Company’s efforts to promote a long-term sustainable business and to maintain a workplace in which all employees and cast members feel welcomed and supported. In 2020, the Company established measurable environmental goals, which we aim to achieve by 2030, and enhanced our environmental, social and governance (“ESG”) reporting, including alignment with relevant Sustainability Accounting Standards Board guidelines. Beginning with our 2021 corporate social responsibility report, which will be published in 2022, we will share our progress against the 2030 goals. As part of our 2030 goals, the Company is committed to achieving net zero emissions for our direct operations (Scopes 1 and 2) by 2030, and is actively working to define a science-based reduction goal for our Scope 3 emissions footprint by the end of 2022.

In 2021, the Company launched the Reimagine Tomorrow Digital Hub, an outgrowth of the efforts of the Company’s CEO Diversity and Inclusion Council and Creative Inclusion Council, supporting efforts for improved diversity, equity and inclusion at Disney, and amplifying underrepresented voices. We also understand the importance of transparency of disclosure regarding the diversity of our workforce. In an effort to support this, we published our demographic data on our website and our EEO-1 report reflecting calendar 2019 and 2020 demographic data.

Engaging with our shareholders and sharing direct feedback with the Board is an invaluable practice. We are pleased with the positive support we’ve heard during engagements in 2021 regarding responsiveness to feedback on our executive compensation program and progress we have made on our sustainability reporting, diversity and inclusion efforts and succession planning. We look forward to continuing our dialogue with you, our shareholders, and incorporating your feedback into our discussions as we strive to grow Disney in a responsible and inclusive way.

 

 

Sincerely,

 

LOGO      

 

SUSAN E. ARNOLD

Chairman of the Board

        LOGO


Table of Contents

 

Letter to the Shareholders

 

JANUARY 19, 2022

 

Dear Fellow Shareholders,

 

Looking back over the past year, I am incredibly proud of the work our management team, our business leads and our broader workforce delivered, executing our strategy and fulfilling our mission of entertaining, informing and inspiring people around the globe. During a time when the world is navigating an ever-changing set of challenges presented by the COVID-19 pandemic, we have continued to tell the world’s most original and enduring stories, connecting global audiences and guests to their favorite characters in a way that only Disney can.

In October 2020, we announced the reorganization of our media and entertainment businesses in an effort to accelerate our DTC strategy, which continues to be our top priority. We are extremely pleased with the success of our DTC services, which is a testament to our talented content and distribution teams and their ability to adapt to meet consumer needs.

Our parks, experiences and products business, which has been the most extensively impacted by the pandemic, showed improvement in fiscal 2021 driven by the reopening of our parks and resorts and investments in sophisticated technology and tools to expand our services. We have put into action many new guest-centric services and in fiscal 2021 were able to introduce exciting attractions that have been in development over the past several years. These developments, combined with the continued growth of our DTC offering, will further provide our guests and consumers with streamlined access to new, immersive storytelling experiences. At the same time, ESPN continues to lead the way with innovative programming that brings audiences the sports they love in personalized and customized ways.

Our Board and senior management team are committed to operating Disney as a responsible corporate citizen. We are reducing the environmental impact of our offerings and operations by implementing sustainable design features across our physical footprint, working to transition to renewable and low carbon energy sources, investing in natural climate solutions and many more initiatives to support a more sustainable world. We have also furthered our commitment to diversity, equity and inclusion through our Reimagine Tomorrow endeavor. This past year, we established additional initiatives and programs to support an inclusive workplace for our employees and communities for our guests, but know there is more work to be done. We look forward to updating you on our progress in these areas.

I want to take a moment to acknowledge Bob Iger and his distinguished career at Disney. Bob has left an indelible mark on the Company, and his contributions will last for generations to come. I am excited to continue working with Susan Arnold, now in her new position as Chairman of the Board. Susan has been an extraordinary leader throughout her tenure on the Board, bringing deep experience and adept judgment across an impressive range of topics that have helped support our business and drive significant shareholder value.

Additionally, I am proud to welcome new members to our management team: Paul Richardson has joined us as Chief Human Resources Officer, Geoff Morrell will assume the newly created position of Chief Corporate Affairs Officer (effective January 24, 2022), and Horacio Gutierrez will be joining us February 1, 2022 as General Counsel. I look forward to collaborating with each of them as we strive to deliver unforgettable experiences and stories and drive long-term value for all Disney stakeholders. I also want to thank Alan Braverman, Zenia Mucha and Jayne Parker for their dedicated service to The Walt Disney Company.

I am more excited for the future of Disney today than I have been at any point during my 28 years here at the Company. Our talented management team’s steadfast commitment to the Company’s vision has allowed us to be a part of so many lives through the magic of storytelling, and our robust pipeline of content, including new films and series from Disney, Pixar, Marvel, Star Wars and National Geographic, lays the foundation for that to continue.

On behalf of the senior management team at Disney, we want to thank you for your continued support and commitment to the Company. We are excited about the many opportunities ahead for our businesses and employees, and look forward to creating even more magical experiences for our guests and consumers.

 

Sincerely,

 

LOGO

 

ROBERT A. CHAPEK

Chief Executive Officer

  LOGO


Table of Contents

Notice of 2022 Annual Meeting

 

 

 

The 2022 annual meeting of shareholders of The Walt Disney Company will be held:

WEDNESDAY, MARCH 9, 2022 10:00 A.M. PACIFIC TIME

virtually at www.virtualshareholdermeeting.com/DIS2022

 

PROPOSAL

   FOR MORE
INFORMATION
   BOARD
RECOMMENDATION

Proposal 1: Election of the eleven nominees named in the proxy statement as Directors, each for a term of one year.

  

 

Page 72

  

 

LOGO

 

 

 

For each nominee

 

Proposal 2: Ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accountants for fiscal 2022.

  

 

 

Page 73

  

 

 

 

LOGO

 

 

 

 

For

Proposal 3: Consideration of an advisory vote to approve executive compensation.

  

 

 

Page 74

  

 

 

 

LOGO

 

 

 

 

For

Proposal 4: Shareholder proposal, if properly presented at the meeting, requesting an annual report disclosing information regarding lobbying policies and activities.

  

 

Pages 75-76

  

 

 

 

LOGO

 

 

 

 

Against

Proposal 5: Shareholder proposal, if properly presented at the meeting, requesting amendment of the Company’s governing documents to lower the stock ownership threshold to call a special meeting of shareholders.

  

 

Pages 77-78

  

 

 

 

LOGO

 

 

 

 

Against

Proposal 6: Shareholder proposal, if properly presented at the meeting, requesting a diligence report evaluating human rights impacts.

  

 

Pages 79-80

  

 

 

 

LOGO

 

 

 

 

Against

Proposal 7: Shareholder proposal, if properly presented at the meeting, requesting a report on both median and adjusted pay gaps across race and gender.

  

 

Pages 81-82

  

 

 

 

LOGO

 

 

 

 

Against

Proposal 8: Shareholder proposal, if properly presented at the meeting, requesting a workplace non-discrimination audit and report.

  

 

Pages 83-84

  

 

 

 

LOGO

 

 

 

 

Against

Shareholders of record of The Walt Disney Company common stock (NYSE: DIS) at the close of business on January 10, 2022, are entitled to vote at the meeting and any postponements or adjournments of the meeting. A list of these shareholders is available at the offices of the Company in Burbank, California.

January 19, 2022

Burbank, California

 

LOGO   

Jolene E. Negre

Associate General Counsel and

Assistant Secretary

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be Held on March 9, 2022

The proxy statement and annual report to shareholders and the means to vote by internet are available at www.ProxyVote.com/Disney.

 

Attendance at the Meeting

Register to attend the virtual meeting by visiting www.ProxyVote.com/Disney and selecting “Shareholder Meeting Registration.” To attend on the day of the meeting, you must be a shareholder on the record date. You will be able to attend the annual meeting as well as vote during the meeting by visiting www.virtualshareholdermeeting.com/DIS2022 and entering the 16-digit number included in your proxy card.

Participation in the meeting is limited due to the capacity of the host platform and access to the meeting will be accepted on a first come, first served basis once electronic entry begins. If you cannot attend the meeting, it will be webcast and available on our Investor Relations website. Electronic entry to the meeting will begin at 9:00 a.m. PT and the meeting will begin promptly at 10:00 a.m. PT. If you encounter difficulties accessing the virtual meeting, please call the technical support number that will be posted at www.virtualshareholdermeeting.com/DIS2022.

Your Vote is Important

Please vote as promptly as possible by using any of the following methods:

 

LOGO

INTERNET

Visit www.ProxyVote.com/Disney.

You will need the 16-digit number included in your proxy card, voter instruction form or notice.

 

LOGO

SCAN

You can scan this QR code to vote with your mobile phone. You will need the 16-digit number included in your proxy card, voter instruction form or notice.

 

LOGO

PHONE

Call 1-800-690-6903 or the number on your voter instruction form. You will need the 16-digit number included in your proxy card, voter instruction form or notice.

 

LOGO

MAIL

Send your completed and signed proxy card or voter instruction form to the address on your proxy card or voter instruction form.

 

LOGO

AT THE VIRTUAL MEETING

See information regarding

Attendance at the Meeting.

 


Table of Contents

Table of Contents

 

 

PROXY SUMMARY     1  

Proxy Voting Roadmap

    1  

Fiscal 2021 Overview

    2  

Board of Directors

    5  

Shareholder Engagement and Responsiveness

    6  

Compensation Structure and Philosophy

    9  

Shareholder Proposals

    9  

Commitment to Diversity, Equity & Inclusion

    10  

Commitment to Sustainability

    12  
CORPORATE GOVERNANCE AND BOARD MATTERS     13  

Governing Documents

    13  

The Board of Directors

    13  

Board Leadership

    21  

Committees

    23  

The Board’s Role in Risk Oversight

    24  

Management Succession Planning

    25  

Director Selection Process

    25  

Director Independence

    26  
DIRECTOR COMPENSATION     27  
EXECUTIVE COMPENSATION     31  

Letter from the Compensation Committee

    31  

Compensation Discussion and Analysis

    32  

Compensation Tables

    47  

Pay Ratio

    65  

Other Compensation Information

    65  

Compensation Committee Report

    69  
AUDIT-RELATED MATTERS      70  

Audit Committee Report

     70  

Policy for Approval of Audit and Permitted
Non-Audit Services

     71  

Auditor Fees and Services

     71  
ITEMS TO BE VOTED ON      72  

Election of Directors

     72  

Ratification of Appointment of Independent
Registered Public Accountants

     73  

Advisory Vote on Executive Compensation

     74  

Shareholder Proposals

     75  

Other Matters

     85  
INFORMATION ABOUT VOTING AND THE MEETING      86  

Shares Outstanding

     86  

Attendance at the Meeting

     86  

Voting

     86  
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS      88  
OTHER INFORMATION      89  

Stock Ownership

     89  

Delinquent Section 16(a) Reports

     90  

Electronic Availability of Proxy Statement
and Annual Report

     90  

Mailings to Multiple Shareholders
at the Same Address

     91  

Proxy Solicitation Costs

     91  

Shareholder Communications

     92  
ANNEX A — RECONCILIATION OF NON-GAAP MEASURES      A-1  
 

 

The Walt Disney Company (500 South Buena Vista Street, Burbank, California 91521) is providing you with this proxy statement relating to its 2022 Annual Meeting of Shareholders. We began mailing a notice on January 19, 2022 containing instructions on how to access this proxy statement and our annual report online, and we also began mailing a full set of the proxy materials to shareholders who had previously requested delivery of the materials in paper copy. References to the “Company”, “Disney”, “we” or “our” in this proxy statement refer to The Walt Disney Company and, as applicable, its consolidated subsidiaries. The Company’s website and social media feeds and the information contained or linked therein or otherwise connected thereto are not part of or incorporated by reference into this proxy statement.

 

THE WALT DISNEY COMPANY NOTICE OF 2022 ANNUAL MEETING AND PROXY STATEMENT          i


Table of Contents

Proxy Summary

 

 

 

This summary highlights certain information in this proxy statement. As it is only a summary, please review the complete proxy statement and fiscal 2021 annual report before you vote.

Proxy Voting Roadmap

 

PROPOSAL

  FOR MORE
INFORMATION
  BOARD
RECOMMENDATION

Proposal 1: Election of Eleven Directors

 

The Board of Directors and the Governance and Nominating Committee believe that the eleven nominated directors encompass a range of talents, skills and expertise sufficient to provide sound and prudent guidance with respect to all of the Company’s operations and interests and the interests of the Company’s shareholders. The directors reflect the diversity of the Company’s shareholders, employees, customers, guests and communities.

 

 

 

Page 72

 

 

LOGO  For each nominee  

LOGO

SUSAN E. ARNOLD

 

LOGO

MARY T. BARRA

 

LOGO

SAFRA A. CATZ

 

LOGO

AMY L. CHANG

LOGO

ROBERT A. CHAPEK

 

LOGO

FRANCIS A. DESOUZA

 

LOGO

MICHAEL B.G. FROMAN

 

LOGO

MARIA ELENA LAGOMASINO

LOGO

CALVIN R. MCDONALD

 

LOGO

MARK G. PARKER 

 

LOGO

DERICA W. RICE

 

Proposal 2: Ratification of Independent Accountants

 

The Board of Directors believes the continued retention of PricewaterhouseCoopers LLP is in the best interests of the Company and its shareholders. The Board of Directors is submitting the selection of PricewaterhouseCoopers LLP to our shareholders for ratification as a matter of good corporate practice.

 

 

         Page 73                

 

 

 

 

  LOGO  For                          

 

 

Proposal 3: Advisory Resolution on Executive Compensation

           Page 74  

 

 

 

  LOGO  For

 

 

See Executive Compensation starting at page 31 for additional information.

 

 

 

 

 

 

LOGO

 

LOGO

 

*   Target mix for fiscal 2021 compensation.

 

**  Target mix for fiscal 2021 compensation. Includes target compensation for all named executive officers other than Mr. Chapek and Mr. Iger. Mr. Iger’s target fiscal 2021 compensation was 91% performance-based and equity: 9% base salary, 33% target annual incentive, 29% stock options and 29% performance-based restricted stock units (“PBUs”).

 

For fiscal 2022, the Compensation Committee determined to increase PBUs to 50% of the overall long-term incentive grant value for the named executive officers other than the CEO and Executive Chairman, who already had 50% in the form of PBUs. This shift reflects a meaningful increase in at-risk compensation, as evidenced by the actual results realized with respect to recent PBU grants. For example, annual grant PBUs vesting in the last four years have resulted in below target payouts, 85%, 96%, 62% and 48%, for shares vesting in December 2018, 2019, 2020 and 2021, respectively. The 2017 extension PBU grant for Mr. Iger had a payout of 69% and the fiscal 2020 return on invested capital (“ROIC”) test resulted in 0% payout for the first annual performance period in respect of that award. The Committee believes this PBU structure strongly aligns pay and performance, which is underscored by the decision to further increase the weighting of PBUs for other NEOs.

 

 

THE WALT DISNEY COMPANY NOTICE OF 2022 ANNUAL MEETING AND PROXY STATEMENT          1


Table of Contents

PROXY SUMMARY

 

 

PROPOSAL

                  FOR MORE
                INFORMATION
          BOARD
        RECOMMENDATION

SHAREHOLDER PROPOSALS

       

Proposal 4:

Shareholder proposal, if properly presented at the meeting, requesting an annual report disclosing information regarding lobbying policies and activities.

 

 

Pages 75-76

 

LOGO Against

Proposal 5:

Shareholder proposal, if properly presented at the meeting, requesting amendment of the Company’s governing documents to lower the stock ownership threshold to call a special meeting of shareholders.

 

 

Pages 77-78

 

LOGO Against

Proposal 6:

Shareholder proposal, if properly presented at the meeting, requesting a diligence report evaluating human rights impacts.

 

 

Pages 79-80

 

LOGO Against

Proposal 7:

Shareholder proposal, if properly presented at the meeting, requesting a report on both median and adjusted pay gaps across race and gender.

 

 

Pages 81-82

 

LOGO Against

Proposal 8:

Shareholder proposal, if properly presented at the meeting, requesting a workplace non-discrimination audit and report.

 

 

Pages 83-84

 

LOGO Against

Fiscal 2021 Overview

Fiscal 2021 was a year of transition for the Company marked by leadership succession; a reorganization of our media and entertainment businesses; and the ongoing recovery from the COVID-19 pandemic in both our media and entertainment and our parks, experiences and products businesses. Despite the continuing impact of the COVID-19 pandemic, the Company made meaningful progress on its long-term strategic initiatives and delivered strong shareholder value, all while supporting the health and safety of its employees, customers and communities.

Business and Performance

The Company focused on continuing to execute its long-term strategy to drive future growth while also devoting substantial energy in responding to the human and business impacts of the COVID-19 pandemic. While the disruption to our businesses caused by the COVID-19 pandemic continues to impact the Company’s operations, we have been resilient, as reflected in the Company’s strong financial performance in fiscal 2021. On a reported basis:

 

   

Revenue increased 3% to $67,418 million from $65,388 million in the prior year.

 

   

Diluted Earnings Per Share (“EPS”) from continuing operations for the year was income of $1.11, compared to a loss of $1.57 in the prior year.

 

   

Net income from continuing operations attributable to Disney increased to income of $2,024 million, compared to a loss of $2,832 million in the prior year.

 

   

Income from continuing operations before income taxes increased to income of $2,561 million from a loss of $1,743 million in the prior year.

 

   

Income from continuing operations before income taxes is the comparable GAAP measure to total segment operating income, which decreased 4% to $7,766 million from $8,108 million in the prior year.

The Compensation Committee has designed a compensation program that produces a strong pay and performance alignment. This was evidenced by the payouts in fiscal 2020, which resulted in a significant reduction in executive pay in the face of challenging Company performance due to the impact of the COVID-19 pandemic. This was also evidenced in fiscal 2021, for which payouts aligned with strong performance across many key financial, strategic, diversity and inclusion and other goals.

See Annex A for a discussion of how we define and calculate total segment operating income and a reconciliation of total segment operating income to the most directly comparable GAAP measure, income from continuing operations before income taxes. See our Annual Report on Form 10-K for more information on our fiscal 2021 performance.

 

2          THE WALT DISNEY COMPANY NOTICE OF 2022 ANNUAL MEETING AND PROXY STATEMENT


Table of Contents

PROXY SUMMARY

 

 

The Company’s ten-year total shareholder return (“TSR”) outperformed the Standard & Poor’s (“S&P”) 500 by 192 percentage points.

 

 

LOGO

Even in the face of the COVID-19 pandemic disruption, the Company has continued to significantly advance its transformative long-term strategic goals, including as shown below.

STRATEGICALLY EVOLVING TO MEET CONSUMER DEMANDS & DELIVERING CONSISTENT SHAREHOLDER VALUE

 

 

LOGO

 

THE WALT DISNEY COMPANY NOTICE OF 2022 ANNUAL MEETING AND PROXY STATEMENT          3


Table of Contents

PROXY SUMMARY

 

 

COVID-19 Response

Throughout these challenging times, the Company has continued to support its employees, customers and communities; responded to the associated business impacts; and developed protocols both for determining whether our businesses could resume operations and for responsible operations when they do resume. The key actions included:

 

   

Enhanced health and safety measures for our customers and workforce, including vaccination requirements

 

   

Enhanced health, wellness and family resources for our employees, including on-site vaccination stations

 

   

Support for our communities with community giving, including in-kind and cash support

 

   

Delivery of world-class content and experiences for our consumers through flexible and creative content distribution approaches

 

   

Enhanced Company Diversity, Equity and Inclusion (“DEI”) efforts through our Reimagine Tomorrow endeavor

Executive Leadership

In fiscal 2021, Mr. Chapek, as Chief Executive Officer, delivered strong performance given the unprecedented challenges resulting from the COVID-19 pandemic and meaningful shareholder value, driven by exceptional execution of the Company’s key strategic initiatives.

Since March 2020, Mr. Chapek has adeptly managed the significant disruption to the Company’s businesses resulting from the COVID-19 pandemic and guided the Company’s new management team leading our direct-to-consumer (“DTC”) efforts. In fiscal 2021, under Mr. Chapek’s leadership, the Company made significant progress on its long-term strategic plan with the following achievements:

 

   

Reorganized media and entertainment businesses to align with Mr. Chapek’s strategic goals of accelerating the DTC strategy and centralizing distribution and commercialization activities

 

   

Increased subscribers at Disney+, Hulu and ESPN+

 

   

Continued expansion of the Company’s DTC efforts internationally, launching DTC platforms in several key international markets

 

   

Took meaningful and innovative steps at our parks and experiences business while reopening our parks, including the development of Disney Genie and new Magic Key offerings

In fiscal 2021, Mr. Iger successfully directed the Company’s creative endeavors, which are the cornerstone of the Company’s strategy and fuel the continued growth and expansion of Disney+ and the Company’s other DTC platforms. This effort took on greater complexity with production delays impacting content creation as a result of the COVID-19 pandemic, a challenge Mr. Iger deftly managed. Under Mr. Iger’s leadership, the Company made significant progress on its creative initiatives that are essential to the success of the Company’s DTC and other distribution platforms. The Company created a pipeline across numerous franchises resulting from close creative collaboration between Disney’s content creators and Mr. Iger, released compelling original content for Disney+ and the Company’s other DTC platforms and created content for traditional theatrical releases and linear networks. Mr. Iger also nurtured a talented team of creative executives who will continue to lead these efforts under Mr. Chapek’s direction. As planned when he was named Executive Chairman in February 2020, Mr. Iger’s tenure as Executive Chairman ended on December 31, 2021, at the expiration of his employment agreement.

In fiscal 2021, our other NEOs also showed exceptional performance both in managing the Company in the face of new challenges resulting from the COVID-19 pandemic and in driving transformation of our businesses, building long-term value.

 

4          THE WALT DISNEY COMPANY NOTICE OF 2022 ANNUAL MEETING AND PROXY STATEMENT


Table of Contents

PROXY SUMMARY

 

 

Board of Directors

The Board of Directors of The Walt Disney Company (the ‘‘Board’’) is currently composed of eleven talented directors with diverse skill sets and professional backgrounds, as reflected in their biographies in the section of this proxy statement titled “Corporate Governance and Board Matters – The Board of Directors.”

Board Diversity

 

 

LOGO

Board Refreshment

 

 

LOGO

Working closely with the full Board, the Governance and Nominating Committee develops criteria for open Board positions, taking into account the needs of the Board and Company at the time. During fiscal 2021, Amy Chang and Calvin McDonald joined the Board. Ms. Chang brings vast expertise in the tech industry as a veteran technology executive and Mr. McDonald has a wealth of experience in scaling brand-name retailers through innovation and finding new ways to connect with consumers across various channels. Effective as of December 31, 2021, Mr. Iger retired from the Board. The current term of office of all of the Company’s directors expires at the 2022 Annual Meeting. For more information regarding these matters and our corporate governance, see the section of this proxy statement titled “Corporate Governance and Board Matters.”

Board Oversight

In direct response to shareholder feedback, the Board has recently updated several aspects of its risk oversight. For more information regarding these matters, see the section of this proxy statement titled “Corporate Governance and Board Matters—The Board’s Role in Risk Oversight.” In particular, the current Chairman of the Board, Susan E. Arnold, is an independent Director. The Board has also specifically delegated oversight of certain risks to its committees. The Governance and Nominating Committee oversees the Company’s environmental, social and governance programs and reporting, including with respect to environmental and sustainability policies and initiatives. The Compensation Committee oversees the Company’s workforce equity matters. The Audit Committee oversees cybersecurity and data security risks and mitigation strategies. In addition, the Audit Committee reviews the Company’s policies and practices with respect to risk assessment and risk management.

 

THE WALT DISNEY COMPANY NOTICE OF 2022 ANNUAL MEETING AND PROXY STATEMENT          5


Table of Contents

PROXY SUMMARY

 

 

Shareholder Engagement and Responsiveness

Below are overviews of the Company’s engagement process, feedback from investors and responsive Company actions.

Investor Engagement Process

During fiscal 2021, including following the 2021 Annual Meeting, members of management and the Board continued their strong level of engagement with shareholders. Our Investor Relations team engaged regularly throughout the 2021 calendar year with investors of all sizes from around the world. In addition to these regular conversations, our Investor Relations team also held two formal rounds of engagement sessions, which included Board members, in the winter/spring and the fall with top shareholders to hear and respond to feedback. The feedback gathered during these conversations helped inform the Board’s thinking, in particular, about compensation as well as other environmental, social and governance (“ESG”) practices and disclosure. Through our engagement conversations, we heard directly from many of our largest shareholders—including several that had previously expressed concerns with quantum and structure of our executive compensation program—that they were pleased with the cumulative changes to the executive compensation program over the years and supportive of the current structure of our program.

 

                   

In calendar 2021, our Investor Relations team and/or the Board, including members of the Compensation Committee, spoke with 15 of our top 20 shareholders, including 9 of the top 10 shareholders, and contacted approximately 85% of our largest 50 shareholders, seeking input on compensation and governance matters. Throughout the year, we have reached out to a wide range of our shareholder base, representing over 46% of our total shares outstanding, to engage and collect feedback on these topics.

 

Even since our 2021 Annual Meeting in March 2021, we have contacted approximately 70% of our largest 50 shareholders to offer engagement with our management team (including Investor Relations) and Board.

     

CONTACTED

~85%

OF OUR LARGEST

50 SHAREHOLDERS IN CALENDAR 2021

             

 

LOGO

 

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PROXY SUMMARY

 

 

Commitment to Investor Engagement

In response to shareholder feedback, the Board has modified our CEO and NEO compensation structures, meaningfully reduced CEO pay quantum, enhanced the performance rigor in our incentives and enhanced our ESG reporting and oversight. Below we summarize feedback the Company received from investors and actions the Company took in response.

 

WHAT WE HEARD  

 

 

 

 

 

 

 

  WHAT WE DID
     

ESG Executive Leadership

 

Enhance executive leadership of ESG by integrating ESG into overall corporate affairs.

 

       

2021

 

Dec. 2021: We created the role of Chief Corporate Affairs Officer, reporting to the CEO, to oversee corporate communications, global public policy, government relations, ESG and corporate social responsibility (“CSR”) functions and appointed Geoff Morrell, effective as of January 24, 2022. The Executive Vice President, CSR will report to both Mr. Morrell and Mr. Chapek.

 

Independent Chairman

 

Chairman of the Board should be an independent director.

   

 

Dec. 2021: The Board elected Susan E. Arnold, an independent director, to serve as Chairman of the Board, effective December 31, 2021.

 

Cybersecurity

 

Continue to provide strong cybersecurity oversight.

   

 

Dec. 2021: The Board memorialized the Audit Committee’s oversight of cybersecurity and data security risks in the Audit Committee’s charter.

 

Pay for Performance

 

Increase PBU performance rigor.

 

Increase PBUs as proportion of long-term incentive grants for non-CEO NEOs.

   

 

Nov. 2021: The Compensation Committee increased target payout for the relative TSR test of PBUs for all NEOs to the 55th percentile of S&P 500 companies for fiscal 2022.

 

Nov. 2021: The Compensation Committee set PBUs at 50% of overall long-term incentive grant value for all NEOs for fiscal 2022.

Expanded Diversity Disclosure

 

Expand disclosures relating to workforce diversity.

   

 

Nov. 2021: The Company published our U.S. Employer Equal Opportunity (“EEO-1”) data for calendar years 2019 and 2020.

 

Sept. 2021: The Company launched the Reimagine Tomorrow Digital Hub and Diversity Dashboard.

Board ESG Oversight and Executive Leadership

 

A Board committee should oversee the Company’s ESG efforts.

 

Increase management resources for ESG programs.

   

 

Sept. 2021: The Board delegated oversight of ESG programs and reporting to the Governance and Nominating Committee.

 

Feb. 2021: We created the role of Executive Vice President, CSR, reporting directly to the CEO, and appointed Jennifer Cohen.

 

Sustainability Accounting Standards Board (“SASB”) Disclosures

 

Consider SASB disclosures as a framework for reporting sustainability information.

    Feb. 2021: We enhanced our transparency on several ESG areas of interest by publishing our first set of disclosures informed by the SASB framework in our annual CSR Report.

 

Provide EEO-1 Disclosure

 

EEO-1 data should be disclosed.

   

 

Jan. 2021: The Company committed to publish our EEO-1 data for calendar years 2019 and 2020.

 

Reduce Overlapping Metrics

 

Reduce overlapping metrics in short- and long-term incentive programs and consider adding a capital return measure to the long-term incentive program.

   

 

FY 2021: The Compensation Committee removed ROIC from annual bonus program; continued to use ROIC as a PBU metric in the long-term incentive program.

 

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PROXY SUMMARY

 

 

WHAT WE HEARD  

 

 

 

 

 

 

 

  WHAT WE DID
 

Align Annual Bonus Program with Strategic Business Direction and Incorporate ESG Metrics

 

Ensure financial metrics are motivating and measuring executives against the most applicable metrics to drive long-term shareholder value.

 

Incorporate diversity and inclusion metrics into annual bonus program.

       

 

FY 2021: The Compensation Committee removed adjusted EPS as a financial metric to better align with market practice and incorporated adjusted revenue as a financial metric to reflect the importance of driving new and existing revenue growth.

 

FY 2021: The Compensation Committee incorporated diversity and inclusion (e.g. representation, retention and content), which has the highest weighting among non-financial metrics, into the fiscal 2021 bonus plan.

 

 

Board Composition and Nomination

 

Provide insight into the skills and experiences each Director brings to the Board in a matrix format.

       

 

FY 2021: Added a Director Skills and Experiences matrix to this proxy statement.

     
             

Environmental Goals

 

Should commit to measurable environmental goals.

       

2020

 

Dec. 2020: Committed to measurable goals for 2030 across emissions, water, waste, materials and sustainable design to maintain accountability against our sustainability strategy. For more information on the Company’s environmental goals, see “Commitment to Sustainability.”

Board CSR Oversight

 

A Board committee should have oversight over workforce equity matters.

   

Dec. 2020: The Board delegated oversight of workforce equity matters to the Compensation Committee.

 

Reduce Target CEO Compensation upon Succession

 

New CEO compensation should be reset closer to peer median.

    Feb. 2020: 15 days before our 2020 annual meeting, Bob Chapek succeeded Bob Iger as CEO and the Compensation Committee established Mr. Chapek’s CEO target pay, reducing the CEO target pay by 29% (or $10M) below the 25th percentile of media peers1.
     
             

Reduce Pay Quantum

 

CEO overall compensation levels remain high.

 

Increases in CEO’s annual compensation going into effect after the closing of the Twenty-First Century Fox, Inc. (“TFCF”) transaction were too large.

       

2019

 

Dec. 2019: Reduced CEO overall compensation level by eliminating $5 million completion bonus.

 

Mar. 2019: Made several changes to annual compensation levels that reduced total annual target compensation by $13.5 million.

     
             

Enhance Performance Rigor

 

CEO’s one-time performance-based equity award should have more rigorous performance criteria.

       

2018

 

Nov. 2018: Made several changes to one-time equity award to enhance rigor, including raising target performance to the 65th percentile and capping payouts. Future performance-based equity awards were also capped.

             

 

  1

  Based on media peer group (GOOG, AAPL, T, CMCSA, DISCA, NFLX, VIAC) excluding CEOs with de-minimis total target compensation (FB, AMZN).

 

 

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PROXY SUMMARY

 

 

Compensation Structure and Philosophy

The Compensation Committee firmly believes in pay for performance. In fiscal 2021, 90% or more of Mr. Chapek’s and Mr. Iger’s target annual total direct compensation was comprised of equity compensation and/or compensation dependent on the Company’s financial results and the performance of Disney stock, creating close alignment between incentives and shareholder value creation.

 

 

LOGO

For fiscal 2022, target payout for the relative TSR test of PBUs for all NEOs is set at the 55th percentile of the S&P 500 companies. Additionally, in fiscal 2022, PBUs represent 50% of the overall long-term incentive grant value for all NEOs.

More detail regarding our strategic priorities and our performance metrics can be found in the section of this proxy statement titled “Executive Compensation – Compensation Discussion and Analysis.”

Shareholder Proposals

In this year’s proxy statement, you will find five shareholder proposals, as detailed above. The Board recommends that shareholders vote against all five shareholder proposals. Detailed information about these proposals, including the reasons for the Board’s recommendation against each proposal, can be found in the section of this proxy statement titled “Items to Be Voted On – Shareholder Proposals.”

 

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PROXY SUMMARY

 

 

Commitment to Diversity, Equity & Inclusion

The Company’s Reimagine Tomorrow endeavor furthers the Company’s longstanding commitment to diversity, equity and inclusion. This initiative is an outgrowth of the efforts and stewardship of the Company’s CEO Diversity and Inclusion Council and Creative Inclusion Council. Reimagine Tomorrow seeks to accelerate progress towards a diverse and inclusive workplace, leverage the Company’s resources to advance opportunities for diverse communities, amplify underrepresented voices and untold stories and champion the importance of representation in media and entertainment. The Company aims to achieve these goals in supporting our people, content, community and culture.

 

    
PEOPLE
    

Progressing towards a workforce reflective of the diverse markets we serve.

 

•  Black Talent Network promoted career opportunities and exposure to the Company’s leaders for Black U.S. Vice Presidents across the Company.

 

•  A DEI learning curriculum to prioritize inclusive practices throughout the hiring lifecycle for both talent acquisition and hiring leaders.

 

•  Executive Incubator Program, a two-year program with the goal to create a pipeline of next-generation creative executives, exposed 13 associates from diverse and varied perspectives to various aspects of the Disney General Entertainment business in fiscal 2021.

 

•  Disney on the Yard, a historically Black colleges and universities (“HBCU”) pipeline development initiative, has engaged nearly 800 HBCU students, 200 HBCU alumni and 600 employees to date since 2019. We have hired 113 HBCU professional interns, including 23 Disney United Negro College Fund scholars in fiscal 2021.

 

 

CONTENT

Championing a multitude of voices and perspectives to forge meaningful connections with our consumers, including reimagining the way we tell stories and who tells them.

 

•  Disney Launchpad Shorts Incubator program provided a platform for diverse writers and directors to create short films for Disney+. Its mission is to empower filmmakers from underrepresented backgrounds with diverse perspectives, expose them to the studio system and deliver up to six original, live-action shorts for initial exhibition on Disney+.

 

•  The Company’s film and television productions have continued to focus on diversity in creative roles in front of and behind the camera and strengthening inclusive storytelling with a diverse roster of actors and filmmakers and culturally relevant stories including: Shang-Chi and the Legend of the Ten Rings, The Wonder Years and Reservation Dogs.

 

•  The Onyx Collective, a new content brand on Hulu, curates a slate of entertainment by creators of color and underrepresented groups.

 

•  We assessed our content, products, and experiences for accurate representation under the advisement of a third-party council of experts from organizations including the African American Film Critics Association, Geena Davis Institute on Gender in Media, GLAAD Media Institute, Coalition of Asian Pacifics in Entertainment, IllumiNative, NALIP and RepectAbility.

 

•  Through The Stories Matter Initiative, the Company reviewed over 6,000 titles from our global library to determine appropriate advisories for content that includes negative depictions or mistreatment of people or cultures. We also launched an accompanying, consumer-facing, educational website for transparency that is available on our Company website.

 

•  The Africa Story Lab builds skills and provides on-set apprenticeships to Africa’s next generation of storytellers, particularly those from historically underrepresented groups.

 

•  Black Consumer Experience initiative, led by Mr. Chapek, continued our efforts across our various business units to deepen engagement with Black consumers, enhance consumer insights and strategic planning and drive accountability.

 

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PROXY SUMMARY

 

 

COMMUNITY
    

Using our resources to advance equality, access and economic opportunity for all.

 

•  In fiscal 2021, we aimed to direct more than 50% of our annual charitable giving to programs that serve Asian American, Pacific Islander, Black and African American, Hispanic and Latin, Native American and Indigenous and multicultural communities – as well as women, veterans, people with disabilities, and those who identify as LGBTQ+.1

 

•  The Company supported various organizations committed to advancing equality, access and economic opportunity, as provided in more detail in our Reimagine Tomorrow Digital Hub.

 

•  The Company was a founding sponsor of the groundbreaking industry incubator National Association of Latino Independent Producers (“NALIP”) Producers Pipeline Program, addressing the underrepresentation of Hispanic and Latin creatives in the entertainment industry.

 

•  The Company supported non-profit programs to expand access and opportunities for emerging and mid-career entertainment professionals with disabilities.

 

•  Through the Disney Dreamers Academy, approximately 100 Black high school students participated in a four-day learning experience at Walt Disney World.

 

•  Disney Tinker Lab supported learning through experimentation and story creation with digital media in schools in Latin America.

 

•  Marvel launched a three-year partnership with The Prince’s Trust charity offering mentorship for young people aged 16-30 from underserved and underrepresented backgrounds.

 

•  ESPN awarded more than $1 million of its youth sports grants to benefit Black youth in fiscal 2021.

 

•  The Company set a goal to spend at least $1 billion annually with diverse suppliers by 2024.

 

 

CULTURE

Creating an inclusive workplace through education and engagement efforts.

 

•  The Company sponsored over 90 Business Employee Resource Groups globally, representing 9 communities: Asian and Pacific Islander, Black and African American, people with disabilities, Hispanic and Latin, LGBTQ+, Multicultural, Native American and Indigenous, Veterans and Military and Women.

 

•  The Company hosted 10 virtual events through our Reimagine Tomorrow Conversation Series, a series designed to elicit meaningful and authentic dialogue on diversity, equity and inclusion issues with employees and internal and external experts to support and sustain our progress on inclusion; and Brave Conversations, a program to encourage discussions and empower leaders to address and provide a safe space for employees in response to current events.

 

•  500+ employees volunteered to serve as Belonging Advocates to instill greater inclusion in their work areas.

 

•  Our parks and resorts introduced a new Inclusion Key as one of the guiding principles for cast members, to better create a culture of belonging and demonstrate our deep commitment to making everyone who experiences Disney welcome. The Company also updated the policies that guide how our cast members show up to work to remain relevant in today’s workplace and enable cast members to better express their cultures and individuality at work.

 

•  Our focus on disability inclusion has built acumen and inclusive practices across our businesses, including training workshops, captioning, audio descriptions and accessible meeting protocols. Community engagement on over 150 consultations have impacted casting, storytelling and marketing of specific productions like Eternals and Everything’s Gonna Be Okay.

 

 

TRANSPARENCY & ACCOUNTABILITY
    

Making our intentions clear to our employees and the public.

 

•  The Company launched the Reimagine Tomorrow Digital Hub in September 2021, with the goal of providing greater transparency on our diversity, equity and inclusion commitments, efforts and progress. For more information, visit our Reimagine Tomorrow Digital Hub.

 

•  The Company published its EEO-1 data for calendar years 2019 and 2020.

 

•  The Company’s Compensation Committee determined that diversity and inclusion objectives have the highest weighting among the executive compensation bonus plan’s non-financial Other Performance Factors.

 

1 

Charitable giving that we report includes grants specifically directed towards historically underrepresented and protected communities including Asian American, Pacific Islander, Black and African American, Hispanic and Latin, Native American and Indigenous, LGBTQ+, People with Disabilities, Veterans and Women. We also include grants to organizations where a percentage of their services reach underrepresented and protected communities. If the organization spends a majority of their efforts on these communities, we count the entire grant and if the organization does not spend a majority, we count a proration of the grant. For grants to these two types of organizations, we rely on their self-reported percentages regarding communities served. On a sample basis, we validate the percentages that are reported.

 

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Table of Contents

PROXY SUMMARY

 

 

Commitment to Sustainability

The Company is committed to protecting the planet and delivering a positive environmental legacy for future generations as we operate and grow our businesses. We are committed to enhancing our sustainability practices and holding ourselves accountable to our environmental strategy and believe this aligns with our long-term strategy and commitment to being a responsible company. To that end, we have developed measurable goals for 2030, grounded in science and an assessment of where the Company’s operations have the most significant impact on the environment, as well as the areas where it can most effectively mitigate that impact. Our 2030 goals include achieving net zero greenhouse gas emissions for our direct operations (Scopes 1 and 2), producing or purchasing 100% zero carbon electricity for our direct operations and working to achieve zero waste to landfill at our wholly owned and operated parks and resorts. We also announced our intention to define a science-based reduction goal for the Company’s Scope 3 emissions footprint by the end of 2022. The complete set of our 2030 goals is available at our environmental sustainability website. Progress towards our 2030 goals, including qualitative updates and select quantitative measures, will be reported annually with Disney’s 2021 CSR report, which will be published in 2022.

 

LOGO   LOGO   LOGO   LOGO   LOGO

Zero

Emissions

 

Water and

Oceans

 

Reducing

Waste

 

Lower Impact

Products

 

Building

Sustainably

 

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Table of Contents

Corporate Governance and Board Matters

 

 

 

Governing Documents

The Board has adopted Corporate Governance Guidelines, which set forth a flexible framework within which the Board, assisted by its committees, directs the affairs of the Company. The Guidelines address, among other things, the composition and functions of the Board, Director independence, stock ownership by and compensation of Directors, management succession and review, Board leadership, Board committees and selection of new Directors.

The Company has Standards of Business Conduct, which are applicable to all employees of the Company, including the principal executive officer, the principal financial officer and the principal accounting officer. The Board has a separate Code of Business Conduct and Ethics for Directors, which contains provisions specifically applicable to Directors.

Each committee of the Board is governed by a charter adopted by the Board.

The Corporate Governance Guidelines, the Standards of Business Conduct, the Code of Business Conduct and Ethics for Directors and each of the Audit, Compensation and Governance and Nominating Committee charters are available on the Company’s Investor Relations website under the “Corporate Governance” heading at www.disney.com/investors and in print to any shareholder who requests them from the Company’s Secretary. If the Company amends or waives the Code of Business Conduct and Ethics for Directors or the Standards of Business Conduct with respect to the principal executive officer, principal financial officer or principal accounting officer, it will post the amendment or waiver at the same location on its website.

The Board of Directors

The current members of the Board are set forth below under the section titled “Directors.” The Board met 6 times during fiscal 2021. Each Director attended at least 75% of the meetings of the Board and committees on which such Director served that occurred while such Director served on the Board or the committees. All then-serving directors attended the Company’s 2021 annual shareholder meeting. Under the Company’s Corporate Governance Guidelines, each Director is expected to dedicate sufficient time, energy and attention to ensure the diligent performance of such Director’s duties, including by attending meetings of the shareholders of the Company and meetings of the Board and committees of which such Director is a member.

 

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Table of Contents

CORPORATE GOVERNANCE AND BOARD MATTERS

 

 

Director Skills and Experience Matrix

The Directors offer a diverse range of skills and experiences relevant to the Board’s oversight role. The following table summarizes the key skills and experiences of each Director that our Board considered important in its decision to nominate or re-nominate that individual to our Board. Further details about each Director’s qualifications are set forth in their individual biographies.

 

 

LOGO

 

CONTINUES ON NEXT PAGE u

 

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CORPORATE GOVERNANCE AND BOARD MATTERS

 

 

Skills and Experience Definitions

    

Executive Management Experience

Experience as an executive member of corporate management

Finance and Accounting

High-level expertise in finance and accounting, such as those who have experience as an operating executive with responsibility for all or a portion of a company’s financial reporting, in the financial sector or private equity or as an audit committee member for publicly traded companies, or have an educational background or training in accounting or finance

Global Business Operations

Experience working in global markets and understanding the nuances of international business environments

Marketing and Brand Management

Experience supporting and enhancing corporate brand or deploying targeted marketing

Risk Management

Experience assessing risk and reviewing measures to address and mitigate material risks

Business Development, Mergers and Acquisitions (“M&A”) and Growth

Experience implementing organic and inorganic strategies, increasing revenue, building strategic partnerships to promote growth, identifying acquisition and business combination targets and analyzing cultural and strategic fit

ESG Experience

Experience in ESG initiatives and practices

Diversity

Enhances the overall representation on the Board of gender, ethnic, racial or cultural perspectives that reflect the diversity of the Company’s shareholders, employees, customers, guests and communities

Retail and Direct-to-Consumer Product Development

Expertise in the creation of new products or managing DTC product release

Technology and Innovation

Experience in technology-related business, technological functions or experience implementing innovative technological business strategies, as well as an understanding of emerging technology trends

Cyber Security

Experience in the development of technology and processes that protect the storage of information and maintain confidentiality

 

 

 

 

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Table of Contents

CORPORATE GOVERNANCE AND BOARD MATTERS

 

 

Directors

 

  Susan E. Arnold     
            
   
    FORMER OPERATING EXECUTIVE, THE CARLYLE GROUP
             
    

LOGO

 

Age: 67

Director since: 2007

Committees:

Governance and Nominating (Chair)

Executive (Chair)

     

Experience:

2013–2021 Operating Executive, The Carlyle Group (a global investment firm)

2007–2009 President—Global Business Units, Procter & Gamble (a consumer goods company)

2006 Vice Chair of Beauty and Health, Procter & Gamble

2004–2006 Vice Chair of Beauty, Procter & Gamble

2002–2004 President, Global Personal Beauty Care and Global Feminine Care, Procter & Gamble

 

Former Public Company Directorships:

NBTY, Inc. (2013–2017)

McDonald’s Corporation (2008–2016)

 

Qualifications:

Ms. Arnold contributes to the mix of experience and qualifications the Board seeks to maintain through her experience as an executive of Procter & Gamble and her public company board experience. At Procter & Gamble, Ms. Arnold was a senior executive responsible for major consumer brands in a large, complex retail and global brand management company. As a result of this experience, Ms. Arnold brings to our Board in-depth knowledge of brand management and marketing, environmental sustainability, product and business development, international consumer markets, finance and executive and risk management, including executive compensation and management leadership. Ms. Arnold is also our longest tenured member of the Board, bringing continuity to balance Board refreshment.

 

    

                     

 

  Mary T. Barra     
            
   
    CHAIR AND CHIEF EXECUTIVE OFFICER, GENERAL MOTORS COMPANY
             
  

 

LOGO

 

Age: 60

Director since: 2017

Committees:

Compensation

     

Experience:

2016–Present Chair and Chief Executive Officer, General Motors Company (an automotive
  manufacturing company)

2014–2016      Chief Executive Officer, General Motors Company

2013–2014      Executive Vice President, Global Product Development,
     Purchasing and Supply Chain, General Motors Company

2011–2013      Senior Vice President, Global Product Development, General Motors Company

2009–2011      Vice President, Global Human Resources, General Motors Company

2008–2009      Vice President, Global Manufacturing Engineering, General Motors Company

 

Other Public Company Directorships:

General Motors Company (2014–Present)

 

Former Public Company Directorships:

General Dynamics Corporation (2011–2017)

 

Qualifications:

Ms. Barra contributes to the mix of experience and qualifications the Board seeks to maintain through her experience as a leader of the General Motors Company and her public company board experience. In her roles at General Motors, Ms. Barra has been responsible for overseeing and managing executive teams and a sizeable worldwide work force, with an emphasis on development and marketing of technology-based consumer-facing products and on human resources. In addition, Ms. Barra is chair of the Business Roundtable. As a result of this experience, Ms. Barra brings to our Board experience in ESG thought leadership and an understanding of worldwide consumer markets, brand management, changing technology and the challenges and risks facing large public companies with complex global retail operations, as well as business development and finance and accounting.

      
                     

 

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CORPORATE GOVERNANCE AND BOARD MATTERS

 

 

  Safra A. Catz     
            
   
    CHIEF EXECUTIVE OFFICER, ORACLE CORPORATION
             
  

 

LOGO

 

Age: 60

Director since: 2018

Committees:

Audit (Chair)

     

Experience:

2014–Present Chief Executive Officer, Oracle Corporation (a computer technology corporation)

2011–2014       President and Chief Financial Officer, Oracle Corporation

2008–2011       President, Oracle Corporation

2005–2008       President and Chief Financial Officer, Oracle Corporation

2004–2005       President, Oracle Corporation

1999–2004       Various positions, Oracle Corporation

 

Other Public Company Directorships:

Oracle Corporation (2001–Present)

 

Former Public Company Directorships:

HSBC Holdings (2008–2015)

 

Qualifications:

Ms. Catz contributes to the mix of experience and qualifications the Board seeks to maintain through her experience as both a chief executive and chief financial officer of Oracle Corporation. At Oracle, Ms. Catz has been responsible for leadership of a complex, global technology company, with an emphasis on acquisition strategy and integration of acquired companies, and also led Oracle’s financial function, which has a complexity and breadth comparable to that of the Company. In addition, she is a member of the Business Roundtable. As a result of this experience, Ms. Catz brings to our Board valuable insights regarding the management of a complex, global organization and related risks with particular insights in acquisitions, experience in a wide range of financial and accounting matters, brand management, experience in ESG thought leadership and an understanding of the rapidly changing technological landscape that affects our businesses, including the protection of electronically stored data.

 

    

                     

 

  Amy L. Chang     
            
   
    FORMER EXECUTIVE VICE PRESIDENT, CISCO SYSTEMS, INC.
             
  

 

LOGO

 

Age: 45

Director since: 2021

Committees:

Governance and Nominating

     

Experience:

2018–2020 Executive Vice President and General Manager, Collaboration, Cisco Systems, Inc. (a networking hardware company)

2013–2018 Founder and Chief Executive Officer, Accompany, Inc. (a relationship intelligence platform company)

2005–2012 Global Head of Product, Google Ads Measurement; various additional positions,
Google, Inc. (a technology company)

 

Other Public Company Directorships:

Margeta, Inc. (2021–Present)

Procter & Gamble (2017–Present)

 

Former Public Company Directorships:

Cisco Systems, Inc. (2016–2018)

Splunk, Inc. (2015–2017)

 

Qualifications:

Ms. Chang contributes to the mix of experience and qualifications the Board seeks to maintain through her experience as a former executive vice president at Cisco Systems, Inc. and her experience on other public company boards. In her roles at various technology companies, Ms. Chang has led product teams, developed and implemented business strategies and overseen growth of technology business. Through her experience, Ms. Chang provides our Board with an understanding of emerging technology trends and cybersecurity processes, as well as experience in implementing innovative technological business strategies, brand management and global business operations. By serving on other public company boards, she also contributes important insight and guidance to the Board regarding its responsibilities, as well as best practices in corporate governance, ESG initiatives and risk management.

      
                     

 

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Table of Contents

CORPORATE GOVERNANCE AND BOARD MATTERS

 

 

  Robert A. Chapek     
            
   
    CHIEF EXECUTIVE OFFICER, THE WALT DISNEY COMPANY
             

  

 

LOGO

 

Age: 62

Director since: 2020

Committees:

Executive

     

Experience:

2020–Present Chief Executive Officer, The Walt Disney Company

2018–2020      Chairman of Disney Parks, Experiences and Products, The Walt Disney Company

2015–2018      Chairman, Walt Disney Parks and Resorts, The Walt Disney Company

2011–2015      President, Disney Consumer Products, The Walt Disney Company

2009–2011      President, Distribution, Walt Disney Studios, The Walt Disney Company

1993–2009      Various positions, The Walt Disney Company

 

Qualifications:

Mr. Chapek contributes to the mix of experience and qualifications the Board seeks to maintain through his years of leadership experience and his role as Chief Executive Officer of The Walt Disney Company. Mr. Chapek’s nearly 30 years at the Company have been marked by growth and transformation. Mr. Chapek has successfully implemented groundbreaking business models and identified new revenue streams to achieve business objectives and sustain long-term growth. As a result of this experience, Mr. Chapek brings to our Board valuable insights regarding the management of a complex, global organization with particular insights in global consumer products operations, film content distribution strategies, and complex development projects across Disney Parks, as well as experience in managing risks, ESG initiatives and implementing innovative technological business strategies. The Company has agreed in Mr. Chapek’s employment agreement to nominate him for reelection as a member of the Board at the expiration of each term of office during the term of the agreement, and he has agreed to continue to serve on the Board if elected.

 

    

                     

 

  Francis A. deSouza     
            
   
    PRESIDENT AND CHIEF EXECUTIVE OFFICER, ILLUMINA, INC.
             

  

 

LOGO

 

Age: 51

Director since: 2018

Committees:

Audit

     

Experience:

2016–Present President and Chief Executive Officer, Illumina, Inc. (a biotechnology company)

2013–2016      President, Illumina, Inc.

2011–2013      President, Products and Services, Symantec Corporation (a cybersecurity company)

2009–2011      Senior Vice President, Enterprise Security Group, Symantec Corporation

PRIOR       Founder of various technology businesses

 

Other Public Company Directorships:

Illumina, Inc. (2014–Present)

 

Former Public Company Directorships:

Citrix Systems, Inc. (2014–2016)

 

Qualifications:

Mr. deSouza contributes to the mix of experience and qualifications the Board seeks to maintain through his experience as chief executive officer of Illumina, Inc. and his prior experience at Symantec Corporation and other technology companies. At Illumina, Symantec, and the other companies where he has worked, Mr. deSouza has overseen growth and maturation of technology businesses and gained in-depth experience in the management of technology-oriented businesses, including cybersecurity businesses, and products. As a result of this experience, Mr. deSouza brings to our Board an understanding of the risks and opportunities involved in the development of diverse and changing businesses and extensive insight into technological developments that affect our business, including cybersecurity matters, and knowledge of brand management, international business operations, finance and accounting and ESG practices.

 

    

                     

 

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  Michael B. G. Froman     
            
    VICE CHAIRMAN AND PRESIDENT, STRATEGIC GROWTH, MASTERCARD INCORPORATED
                
    

LOGO

 

Age: 59

Director since: 2018

Committees:

Governance and Nominating

     

Experience:

2018–Present Vice Chairman and President, Strategic Growth, Mastercard Incorporated (a financial
 services company)

2013–2017      United States Trade Representative, Executive Office of the President

2009–2013      Assistant to the President and Deputy National Security Advisor
     for International Economic Policy, Executive Office of the President

1999–2009      Various positions (including Chief Executive Officer of CitiInsurance and
     Chief Operating Officer of alternative investments business), Citigroup (an investment
     banking company)

 

Qualifications:

Mr. Froman contributes to the mix of experience and qualifications the Board seeks to maintain through his experience in international affairs in both the public and private sector, his background in finance, and his experience in managing large and complex global businesses, with an emphasis on strategic growth. In addition, he is a Distinguished Fellow of the Council on Foreign Relations. As a result, he brings to our Board extensive knowledge of the international markets in which we participate, factors affecting international trade, finance, executive and brand management, balancing risks and opportunities in a dynamic marketplace and managing and implementing ESG policies, all of which support our strategic focus on innovation in changing markets and global growth.

   
                     

 

  Maria Elena Lagomasino     
            
    CHIEF EXECUTIVE OFFICER AND MANAGING PARTNER, WE FAMILY OFFICES
                
    

LOGO

 

Age: 72

Director since: 2015

Committees:

Governance and Nominating

Compensation (Chair)

     

Experience:

2013–Present Chief Executive Officer and Managing Partner, WE Family Offices (an office serving high-net    worth families)

2005–2012      Chief Executive Officer, Genspring Family Offices, LLC, an affiliate of Suntrust Banks, Inc.

2001–2005      Chairman and Chief Executive Office, JP Morgan Private Bank, a division of JP
     Morgan Chase & Co. (an investment banking company)

1983–2001      Various positions (most recently Managing Director,
     Global Private Banking Group), The Chase Manhattan Bank

 

Other Public Company Directorships:

The Coca-Cola Company (2008–Present)

 

Former Public Company Directorships:

Avon Products, Inc. (2001–2016)

Trustee of the National Geographic Society (2007–2015)

 

Qualifications:

Ms. Lagomasino contributes to the mix of experience and qualifications the Board seeks to maintain through her experience in leading a variety of firms in the wealth management industry and her experience on public company boards. In addition, she is a member of the Council on Foreign Relations and is the founder of the Institute for the Fiduciary Standard. In leading firms in the wealth management industry, she has gained a deep understanding of finance, investment and capital markets and experience in leading complex organizations and in evaluating the strategies of businesses in a variety of industries with varying size and complexity. Her experience at JP Morgan Private Bank included management of that firm’s international operations and this experience contributes an understanding of conducting business internationally, particularly in Latin America. Through her service on public company boards, she brings to our Board extensive experience with and a keen understanding of business development, global brands, ESG practices and risk management, as well as her ability to use her experience in providing insight and guidance in overseeing executive management, including executive compensation.

   
                     

 

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  Calvin R. McDonald     
            
   
    CHIEF EXECUTIVE OFFICER, LULULEMON ATHLETICA INC.
             
    

LOGO

 

Age: 50

Director since: 2021

Committees:

Compensation

     

Experience:

2018–Present Chief Executive Officer, lululemon athletica inc. (an athletic apparel company)

2013–2018       President and Chief Executive Officer, Sephora Americas, a division of the LVMH group
      of luxury brands

2011–2013       President and Chief Executive Officer, Sears Canada (a department store company)

 

Other Public Company Directorships:

lululemon athletica inc. (2018–Present)

 

Former Public Company Directorships:

Sephora Americas (2013–2018)

 

Qualifications:

Mr. McDonald contributes to the mix of experience and qualifications the Board seeks to maintain through his experience as chief executive officer of lululemon athletica inc., and his extensive experience in helping large organizations scale, innovating how brands engage with customers and managing executive teams. As chief executive officer of lululemon athletica, he is responsible for the growth, development and consumer product operations of an international business. As a result of this experience, Mr. McDonald brings to our Board a deep understanding and knowledge of management leadership and executive management, including executive compensation, in addition to finance and accounting, risk management and ESG initiatives.

      
                     

 

  Mark G. Parker     
            
   
    EXECUTIVE CHAIRMAN, NIKE, INC.
             
    

LOGO

 

Age: 66

Director since: 2016

Committees:

Compensation

     

Experience:

2020–Present Executive Chairman, NIKE, Inc. (a footwear manufacturing company)

2006–2020       President and Chief Executive Officer, NIKE, Inc.

1979–2006       Various positions (including product research, design and development,
      marketing and brand management), NIKE, Inc.

 

Other Public Company Directorships:

NIKE, Inc. (2006–Present)

 

Qualifications:

Mr. Parker contributes to the mix of experience and qualifications the Board seeks to maintain through his experience in various positions at NIKE, Inc. Through this experience he has gained substantial insights in designing, producing and marketing consumer products and in managing major consumer brands sold throughout the world. At NIKE, Mr. Parker has also managed a complex, global organization and its growth and brings to our Board his knowledge and skills in financial and executive management, executive compensation and management leadership and an understanding of risk management and ESG practices.

      
                     

 

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CORPORATE GOVERNANCE AND BOARD MATTERS

 

 

  Derica W. Rice     
            
   
    FORMER EXECUTIVE VICE PRESIDENT, CVS HEALTH CORPORATION
             
    

LOGO

 

Age: 56

Director since: 2019

Committees:

Audit

     

Experience:

2018–2020 Executive Vice President, CVS Health Corporation (a pharmacy company)

2018–2020 President, CVS Caremark, the pharmacy benefits management business of CVS Health Corporation

2006–2017 Chief Financial Officer and Executive Vice President of Global Services, Eli Lilly and Company (a pharmaceutical company)

2003–2006 Vice President and Controller, Eli Lilly and Company

1990–2005 Various Executive Positions, Eli Lilly and Company

 

Other Public Company Directorships:

The Carlyle Group Inc. (2021–Present)

Bristol-Myers Squibb Company (2020–Present)

Target Corporation (2007–2018); (2020–Present)

 

Qualifications:

Mr. Rice contributes to the mix of experience and qualifications the Board seeks to maintain through his experience in various positions at CVS Health Corporation and Eli Lilly and Company and his other public company board experience. Mr. Rice led the pharmacy benefits management business of CVS Health and had extensive experience in the business operations and financial function at Eli Lilly, including serving as Eli Lilly’s chief financial officer. As such, he brings practical knowledge of executive management of complex, worldwide businesses, brands, strategies and consumer products, and extensive experience in a wide range of financial and accounting matters, including management of worldwide financial operations, financial oversight, risk management and the alignment of financial and strategic initiatives. Through his service on other public company boards, he brings to our Board a broad understanding of ESG practices.

      
                     

Board Leadership

 

The current Chairman of the Board, Susan E. Arnold, is an independent Director. The Company’s Corporate Governance Guidelines specify that the Chairman of the Board shall in the normal course be an independent Director, unless the Board determines that, in light of the circumstances then present when any such decision is made, a different structure would better serve the best interests of the shareholders. The Corporate Governance Guidelines also provide that the Board will disclose in each proxy statement the reasons for a different arrangement and appoint an independent Director as Lead Director with duties and responsibilities detailed in the Corporate Governance Guidelines.     LOGO

 

Susan E. Arnold

has been appointed

as independent

Chairman of the Board

 

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Fiscal 2021

From March 2012 through December 2021, Mr. Iger served as Chairman of the Board. In making Mr. Iger Chairman of the Board, the Board determined that doing so would promote a number of important objectives: it would add a substantial strategic perspective to the Chairman position and put in place an effective plan for the future transition of leadership while at the same time providing important continuity to Board leadership. In making these judgments, the Board took into account its evaluation of Mr. Iger’s performance as Chief Executive Officer and President and the strategic vision and perspective he would bring to the position of Chairman of the Board. The Board was uniformly of the view that Mr. Iger would provide excellent leadership of the Board in the performance of its duties and that naming him as Chairman of the Board would serve the best interests of shareholders. Mr. Iger served as Chairman of the Board and Executive Chairman through the end of the term of his employment agreement, December 31, 2021. Each year until the end of the term of Mr. Iger’s employment agreement, the independent members of the Board determined whether to elect Mr. Iger as Chairman of the Board in accordance with his employment agreement. In doing so, the Board considered whether Mr. Iger’s continuing to serve as both Chairman of the Board and Executive Chairman would be in the best interests of shareholders. Based on the past demonstrated success of this structure, both in terms of the functioning of the Board and the growth of the Company, and the continued benefits of retaining Mr. Iger’s strategic perspective in the position of Chairman of the Board through the term of his employment agreement, the Board concluded that Mr. Iger’s continuing service as Chairman of the Board remained in the best interests of shareholders.

At the time Mr. Iger became Chairman of the Board, the Board elected an independent Lead Director. The duties of the independent Lead Director were expanded in connection with the appointment of Mr. Iger as Chairman of the Board, and were further expanded in 2013 based on feedback from investors regarding Lead Director duties. Susan E. Arnold was elected independent Lead Director in March 2018 and annually thereafter until the Lead Director role was no longer required in December 2021. The duties of the Lead Director were as follows:

 

 

preside at all meetings of the Board at which the Chairman is not present, including executive sessions of independent or non-management Directors;

 

 

call meetings of the independent or non-management Directors;

 

 

serve as liaison between the Chairman and the independent and non-management Directors;

 

 

advise as to the scope, quality, quantity and timeliness of information sent to the Board;

 

 

in collaboration with the Chief Executive Officer and Chairman of the Board, and with input from other members of the Board, develop and have final authority to approve meeting agendas for the Board, including assurance that there is sufficient time for discussion of all agenda items;

 

 

organize and lead the Board’s annual evaluation of the Chief Executive Officer;

 

 

be responsible for leading the Board’s annual self-assessment;

 

 

be available for consultation and direct communication upon the reasonable request of major shareholders;

 

 

advise Committee Chairs with respect to agendas and information needs relating to Committee meetings;

 

 

provide advice with respect to the selection of Committee Chairs; and

 

 

perform such other duties as the Board may from time to time delegate to assist the Board in the fulfillment of its responsibilities.

Fiscal 2022

Effective December 31, 2021, Susan Arnold was appointed Chairman of the Board. Ms. Arnold is an independent Director and has a wealth of leadership experience and deep understanding of the Board from her experience as independent Lead Director of the Board from 2018 to 2021 and serving as a Director of the Board since 2007. The Board no longer has a Lead Director, given that the Chairman is now an independent Director. The duties of the Chairman are substantially similar to those of the independent Lead Director.

 

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CORPORATE GOVERNANCE AND BOARD MATTERS

 

 

Committees

The Board has four standing committees: Audit, Governance and Nominating, Compensation and Executive.

 

Audit Committee       

 

Safra A. Catz (Chair)

Francis A. deSouza

Derica W. Rice

  The functions of the Audit Committee are described below under the section titled “Audit-Related MattersAudit Committee Report.” The Board memorialized the Committee’s oversight of cybersecurity and data security risks in the Committee’s charter. The Audit Committee met 8 times during fiscal 2021. All of the members of the Audit Committee are independent within the meaning of SEC regulations, the listing standards of the New York Stock Exchange and the Company’s Corporate Governance Guidelines. The Board has determined that each of Ms. Catz, Mr. deSouza and Mr. Rice is qualified as an audit committee financial expert within the meaning of SEC regulations and that they have accounting and related financial management expertise within the meaning of the listing standards of the New York Stock Exchange and that Mr. Froman, who served on the Committee through January 10, 2022, is financially literate within the meaning of the listing standards of the New York Stock Exchange. The Board has determined that Mr. Rice’s simultaneous service on the audit committees of more than three public companies will not impair his ability to effectively serve on the Audit Committee.

 

Governance and Nominating Committee       

 

Susan E. Arnold (Chair)

Amy L. Chang

Michael B.G. Froman

Maria Elena Lagomasino

  The Governance and Nominating Committee is responsible for developing and implementing policies and practices relating to corporate governance, including reviewing and monitoring implementation of the Company’s Corporate Governance Guidelines. In addition, the Committee assists the Board in developing criteria for open Board positions, reviews background information on potential candidates and makes recommendations to the Board regarding such candidates. The Committee also reviews and approves transactions between the Company and Directors, executive officers, 5% or greater shareholders and their respective affiliates under the Company’s Related Person Transaction Approval Policy, supervises the Board’s annual review of Director independence and the Board’s annual self-evaluation, makes recommendations to the Board with respect to compensation of non-executive members of the Board, makes recommendations to the Board with respect to committee assignments, oversees the Board’s director education practices and reviews the Company’s political contributions activity and policy. In fiscal 2021, the Board delegated oversight of ESG matters to the Committee. The Committee met 5 times during fiscal 2021. All of the members of the Governance and Nominating Committee are independent within the meaning of the listing standards of the New York Stock Exchange and the Company’s Corporate Governance Guidelines. Mr. Froman joined the Committee during fiscal 2022.

 

Compensation Committee       

 

Mary T. Barra

Maria Elena Lagomasino (Chair)

Calvin R. McDonald

Mark G. Parker

  The Compensation Committee is responsible for the review and approval of corporate goals and objectives relevant to the compensation of the Company’s Chief Executive Officer, evaluating the performance of the Chief Executive Officer and, either as a committee or together with the other independent members of the Board, determining and approving the compensation level for the Chief Executive Officer. The Committee is also responsible for making recommendations to the Board regarding the compensation of other executive officers and certain compensation plans, and the Board has delegated to the Committee the responsibility for approving these arrangements. The Committee may delegate specific tasks to subcommittees as it determines necessary or appropriate. In fiscal 2021, the Board delegated oversight of workforce equity matters to the Committee. Additional information on the roles and responsibilities of the Compensation Committee is provided under the heading “Compensation Discussion and Analysis,” below. The Committee met 7 times in fiscal 2021. All of the members of the Committee are independent within the meaning of SEC regulations, the listing standards of the New York Stock Exchange and the Company’s Corporate Governance Guidelines.

 

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Executive Committee       

 

Susan E. Arnold (Chair)

Robert A. Chapek

  The Executive Committee serves primarily as a means for taking action requiring Board approval between regularly scheduled meetings of the Board. The Executive Committee is authorized to act for the full Board on matters other than those specifically reserved by Delaware law to the Board. In practice, the Committee rarely takes action and in fiscal 2021, the Executive Committee held no meetings. In fiscal 2022, upon Mr. Iger’s resignation, Mr. Chapek was appointed to the Committee.

The Board’s Role in Risk Oversight

As noted in the Company’s Corporate Governance Guidelines, the Board, acting directly or through committees, is responsible for “assessing major risk factors relating to the Company and its performance” and “reviewing measures to address and mitigate such risks.” In discharging this responsibility, the Board, either directly or through committees, assesses both (a) risks that relate to the key economic and market assumptions that inform the Company’s business plans (including significant transactions) and growth strategies, and (b) significant operational risks related to the conduct of the Company’s day-to-day operations.

Risks relating to the market and economic assumptions that inform the Company’s business plans and growth strategies are specifically addressed with respect to each business unit in connection with the Board’s review of the Company’s long-range plan. The Board also has the opportunity to address such risks at each Board meeting in connection with its regular review of significant business and financial developments. The Board reviews risks arising out of specific significant transactions when these transactions are presented to the Board for review or approval.

Significant operational risks that relate to ongoing business operations are the subject of regularly scheduled reports to either the full Board or one of its committees. The Board acting through the Audit Committee reviews as appropriate whether these reports cover the significant risks that the Company may then be facing.

Each of the Board’s committees addresses risks that fall within the committee’s areas of responsibility. The Audit Committee addresses general risks as well as risks arising out of financial planning and reporting, internal controls and information technology. The Audit Committee reserves time at each meeting for private sessions with the Chief Financial Officer, General Counsel, head of the internal audit department and outside auditors. The Compensation Committee addresses risks arising out of the Company’s executive compensation programs, as described in more detail in the section titled “Executive Compensation—Other Compensation Information—Risk Management Considerations” and workplace equity. The Governance and Nominating Committee addresses risks arising out of corporate governance, director compensation, investor engagement, political contributions and the Company’s ESG programs. The Governance and Nominating Committee annually reviews domestic political contribution activity as well as the procedures and controls related to political contributions. The operational risks periodically reviewed by committees are also reviewed by the entire Board when a committee or the Board determines this is appropriate.

The Board and Audit Committee receive reports on information technology risks, including cybersecurity and data security risks. Day-to-day management of data security is currently the responsibility of our Senior Vice President of Information Security and Risk Management, who works in close collaboration with our Executive Vice President of Enterprise Technology & Chief Information Officer. Both individuals hold senior executive positions and report directly to our Chief Financial Officer. Day-to-day management of our data privacy policies is currently overseen by our Senior Vice President, Global Public Policy, who reports directly to our General Counsel. The Audit Committee reviews cybersecurity and data security risks and mitigation strategies with the Chief Information Officer at least annually. In December 2021, the Board memorialized the Audit Committee’s oversight of cybersecurity and data security risks in the Audit Committee’s charter.

The independent Chairman promotes effective communication and consideration of matters presenting significant risks to the Company through her role in developing the Board’s meeting agendas, advising committee chairs, chairing meetings of the Board and facilitating communications between independent Directors and the Chief Executive Officer.

 

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Management Succession Planning

The Board considers the selection, retention and succession planning for the Chief Executive Officer of the Company to be its most important priority. The Board reserves time at every regularly scheduled Board meeting to meet in executive session without the Chief Executive Officer present during which it discusses management succession as appropriate. The Board also discusses management succession with the Chief Executive Officer present at least once each year, and more often as circumstances warrant. These discussions include evaluation of potential internal candidates for succession and focus on particular individuals as appropriate. In the course of these discussions, the Board identifies potential candidates and advises the Chief Executive Officer of the exposure these candidates should receive to maximize the ability of the Board to evaluate the candidates’ qualifications. The Board also evaluates the experience the candidates should gain to develop their ability to succeed.

At least once a year the Board discusses with management succession planning for executive officer positions. During fiscal 2021 each of Alan Braverman, Jayne Parker and Zenia Mucha notified the company of their intention to separate from the Company. Effective July 1, 2021, Paul Richardson was appointed Senior Executive Vice President and Chief Human Resources Officer. Geoff Morrell has been appointed, effective January 24, 2022, Chief Corporate Affairs Officer, a newly created position overseeing the Company’s corporate communications, government relations, global public policy, CSR and ESG functions. Effective February 1, 2022, Horacio Gutierrez has been appointed Senior Executive Vice President, General Counsel and Secretary.

Director Selection Process

Working closely with the full Board, the Governance and Nominating Committee develops criteria for open Board positions. Applying these criteria, the Committee considers candidates for Board membership suggested by Committee members, other Board members, management and shareholders. The Committee retains a third-party executive search firm to identify and review candidates, including to generate candidate pools consistent with the criteria below, upon request of the Committee from time to time.

Once the Committee has identified a prospective nominee — including prospective nominees recommended by shareholders — it determines whether to conduct a full evaluation. The Committee may request the third-party search firm to gather additional information about the prospective nominee’s background and experience and to report its findings. The Committee then evaluates the prospective nominee against the specific criteria that it has established for the position, as well as the standards and qualifications set out in the Company’s Corporate Governance Guidelines, including:

 

 

the ability of the prospective nominee to represent the interests of the shareholders of the Company;

 

 

the prospective nominee’s standards of integrity, commitment and independence of thought and judgment;

 

 

the prospective nominee’s ability to dedicate sufficient time, energy and attention to the diligent performance of the duties of a Director, including by attending shareholder meetings and meetings of the Board and applicable committees, as specifically set out in the Company’s Corporate Governance Guidelines;

 

 

the extent to which the prospective nominee helps the Board meet the standards of independence as set forth below under the section “Director Independence”;

 

 

the extent to which the prospective nominee contributes to the range of talent, skill and expertise appropriate for the Board;

 

 

the extent to which the prospective nominee helps the Board reflect the diversity of the Company’s shareholders, employees, customers and guests and the communities in which it operates; and

 

 

the willingness of the prospective nominee to meet the minimum equity interest holding guideline set out in the Company’s Corporate Governance Guidelines.

After completing this evaluation and an interview, the Committee makes a recommendation to the full Board, which makes the final determination whether to nominate or appoint the new director after considering the Committee’s report.

In selecting director nominees, the Board seeks to achieve a mix of members who together bring experience and personal backgrounds relevant to the Company’s strategic priorities and the scope and complexity of the Company’s business. For more information on the key skills and experiences that the Board considers important in selecting director nominees, see the section titled “The Board of Directors.” The current nominees’ qualifications set forth in their individual biographies under the section titled “Directors” sets out how each of the current nominees contributes to the mix of experience and qualifications the Board seeks.

 

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In making its recommendations with respect to the nomination for re-election of existing Directors at the annual shareholders meeting, the Committee assesses the composition of the Board at the time and considers the extent to which the Board continues to reflect the criteria set forth above.

During fiscal 2021, the Board appointed two new directors: Amy Chang and Calvin McDonald. Ms. Chang and Mr. McDonald were recommended by a third-party search firm. Mr. Iger also stepped down from the Board in fiscal 2022.

A shareholder who wishes to recommend a prospective nominee for the Board should notify the Company’s Secretary or any member of the Governance and Nominating Committee in writing with whatever supporting material the shareholder considers appropriate. The Governance and Nominating Committee will also consider whether to nominate any person nominated by a shareholder pursuant to the provisions of the Company’s Bylaws relating to shareholder nominations as described in the section “Other InformationShareholder Communications” below.

Director Independence

The provisions of the Company’s Corporate Governance Guidelines regarding Director independence meet and in some respects exceed the listing standards of the New York Stock Exchange. The Corporate Governance Guidelines are available on the Company’s Investor Relations website under the “Corporate Governance” heading at www.disney.com/investors.

Pursuant to the Corporate Governance Guidelines, the Board undertook its annual review of Director independence in December 2021. During this review, the Board considered transactions and relationships between the Company and its subsidiaries and affiliates on the one hand, and on the other hand, Directors, immediate family members of Directors, or entities of which a Director or an immediate family member is an executive officer, general partner or significant equity holder. The Board also considered whether there were any transactions or relationships between any of these persons or entities and the Company’s executive officers or their affiliates. As provided in the Corporate Governance Guidelines, the purpose of this review was to determine whether any such relationships or transactions existed that were inconsistent with a determination that the Director is independent.

As a result of this review, the Board affirmatively determined that all of the Directors serving in fiscal 2021 or nominated for election at the 2022 Annual Meeting are independent of the Company and its management under the standards set forth in the Corporate Governance Guidelines, with the exception of Mr. Iger and Mr. Chapek. Mr. Iger and Mr. Chapek are considered inside Directors because of their employment as senior executives of the Company during the fiscal year. Additionally, Mr. Chapek’s son provided producer services to the Company in fiscal 2021, as discussed under the section titled “Certain Relationships and Related Person Transactions” below.

In determining the independence of each Director, the Board considered and deemed immaterial to the Directors’ independence transactions involving the sale of products and services in the ordinary course of business between the Company on the one hand, and on the other, companies or organizations at which some of our Directors or their immediate family members were officers or employees during fiscal 2021. In each case, the amount paid to or received from these companies or organizations in each of the last three years was below the 2% of total revenue threshold in the Corporate Governance Guidelines. The Board determined that none of the relationships it considered impaired the independence of the Directors.

 

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Director Compensation

 

 

 

Fiscal 2021

The elements of annual Director compensation for fiscal 2021 were as follows:

 

   

Annual Board retainer

  $ 115,000

Annual committee retainer (except Executive Committee)1

  $ 10,000

Annual Governance and Nominating Committee chair retainer2

  $ 15,000

Annual Compensation Committee chair retainer2

  $ 20,000

Annual Audit Committee chair retainer2

  $ 25,000

Annual deferred stock unit grant

  $ 190,000

Annual retainer for independent Lead Director3

  $ 50,000

 

1 

Per committee.

 

2 

This is in addition to the annual committee retainer the Director receives for serving on the committee.

 

3 

This is in addition to the annual Board retainer, committee fees and the annual deferred stock unit grant.

To encourage Directors to experience the Company’s products, services and entertainment offerings personally, each non-employee Director may receive Company products and services up to a maximum of $15,000 in fair market value per calendar year plus reimbursement of associated tax liabilities. Directors’ spouses, children and grandchildren may also participate in this benefit within each Director’s limit.

The Company reimburses Directors for the travel expenses of, or provides transportation on Company aircraft for, immediate family members of Directors if the family members are specifically invited to attend events for appropriate business purposes. Family members (including domestic partners) may accompany Directors traveling on Company aircraft for business purposes on a space-available basis.

Directors participate in the Company’s employee gift matching program on the same terms as senior executives. Under this program, the Company matches contributions of up to $50,000 per calendar year per Director to charitable and educational institutions meeting the Company’s criteria.

Directors who are also employees of the Company receive no additional compensation for service as a Director.

Under the Company’s Corporate Governance Guidelines, non-employee Director compensation is determined annually by the Board acting on the recommendation of the Governance and Nominating Committee. In formulating its recommendation, the Governance and Nominating Committee receives input from the third-party compensation consultant retained by the Compensation Committee regarding market practices for Director compensation.

 

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DIRECTOR COMPENSATION

 

 

Fiscal 2022 Updates

For fiscal 2022, the Board updated the following elements of annual director compensation to better align with market practices. Prior to this update, the Board had not increased its director compensation since 2018.

 

   

Annual Governance and Nominating Committee chair retainer1

  $ 20,000

Annual Compensation Committee chair retainer1

  $ 25,000

Annual Audit Committee chair retainer1

  $ 27,500

Annual deferred stock unit grant

  $ 240,000

Annual retainer for independent Lead Director2,3

  $ 60,000

Annual retainer for independent Chairman2,4

  $ 145,000

 

1 

This is in addition to the annual committee retainer the Director receives for serving on the committee.

 

2 

This is in addition to the annual Board retainer, committee fees and the annual deferred stock unit grant.

 

3 

To be paid pro rata for service from October 3, 2021 through December 30, 2021.

 

4 

To be paid pro rata for service starting December 31, 2021 through the remainder of fiscal 2022.

The Board increased the maximum amount of Company products and services a first-year non-employee Director may receive as part of the product familiarization benefits. For one year following their respective start date, each first-year non-employee Director may receive Company products and services up to a maximum of $25,000 in fair market value plus reimbursement of associated tax liabilities. After the first anniversary of their start date, such Directors will have an additional allowance of $15,000 prorated for balance of the remaining calendar year.

The Board also amended the Directors’ participation in the Company’s employee gift matching program to decrease the maximum amount of contributions matched by the Company from $50,000 to $20,000 per calendar year.

Director Compensation for Fiscal 2021

The following table sets forth compensation earned during fiscal 2021 by each person who served as a non-employee Director during the year.

 

    

FEES

EARNED

OR PAID

IN CASH

    

STOCK

AWARDS

    

ALL OTHER

COMPENSATION

     TOTAL  

Susan E. Arnold

   $ 190,000    $ 189,607      $57,315    $ 436,922

Mary T. Barra

     125,000      189,607      50,000      364,607

Safra A. Catz

     150,000      189,607      50,215      389,822

Amy L. Chang

     43,269      64,416      15,000      122,685

Francis A. deSouza

     125,000      189,607      10,000      324,607

Michael B.G. Froman

     125,000      189,607      69,335      383,942

Maria Elena Lagomasino

     155,000      189,607      10,248      354,855

Calvin R. McDonald

     43,269      64,416             107,685

Mark G. Parker

     125,000      189,607             314,607

Derica W. Rice

     125,027      189,607      50,049      364,683

 

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DIRECTOR COMPENSATION

 

 

Fees Earned or Paid in Cash. “Fees Earned or Paid in Cash” includes the annual Board retainer and annual committee and committee-chair retainers, whether paid currently or deferred by the Director to be paid in cash or shares after service ends. Directors are permitted to elect each year to receive all or part of their retainers in Disney stock and, whether paid in cash or stock, to defer all or part of their retainers until after service as a Director ends. Directors who elect to receive deferred compensation in cash receive a credit each quarter, and the balance in their deferred cash account earns interest at an annual rate equal to 120% of the Applicable Long-Term Federal Interest Rate, as determined from time to time by the United States Internal Revenue Service. For fiscal 2021, the average interest rate was 2.99%.

The following table sets forth the form of fees received by each Director who elected to receive any portion of the compensation in a form other than currently paid cash. The number of stock units awarded is equal to the dollar amount of fees accruing each quarter divided by the average over the last ten trading days of the quarter of the average of the high and low trading price for shares of Company common stock on each day in the ten-day period. Stock units distributed currently were accumulated throughout the year and distributed as shares following December 31, 2021.

 

    

CASH

          

STOCK UNITS

 
    

PAID

CURRENTLY

     DEFERRED           

VALUE

DISTRIBUTED

CURRENTLY

    

VALUE

DEFERRED

    

NUMBER

OF UNITS

 

Mary T. Barra

                            $125,000      700

Safra A. Catz

                     $150,000             840

Francis A. deSouza

                     93,750      31,250      700

Michael B.G. Froman

                     125,000             700

Maria Elena Lagomasino

                            155,000      868

Calvin R. McDonald

                     43,269             246

Mark G. Parker

                            125,000      700

Derica W. Rice

                                  125,027      700

Stock Awards. “Stock Awards” sets forth the market value of the deferred stock unit grants to Directors and the amount reported is equal to the market value of the Company’s common stock on the date of the award times the number of shares underlying the units. Units are awarded at the end of each quarter and the number of units is determined by dividing the amount payable with respect to the quarter by the average over the last ten trading days of the quarter of the average of the high and low trading price for shares of the Company common stock on each day in the ten-day period. Each Director other than Ms. Chang and Mr. McDonald was awarded 1,064 units in fiscal 2021. Ms. Chang and Mr. McDonald were each awarded 374 units in fiscal 2021.

Unless a Director elects to defer receipt of shares until after the Director’s service ends, shares with respect to annual deferred stock unit grants are normally distributed to the Director on the second anniversary of the award date, whether or not the Director is still a Director on the date of distribution.

At the end of any quarter in which dividends are distributed to shareholders, Directors receive additional stock units with a value (based on the average of the high and low trading prices of the Company common stock averaged over the last ten trading days of the quarter) equal to the amount of dividends they would have received on all stock units held by them at the end of the prior quarter. Shares with respect to these additional units are distributed when the underlying units are distributed. Units awarded in respect of dividends are included in the fair value of the stock units when the units are initially awarded and therefore are not included in the tables above, but they are included in the total units held at the end of the fiscal year in the table below.

 

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DIRECTOR COMPENSATION

 

 

The following table sets forth all stock units held by each non-management Director serving during fiscal 2021 as of the end of fiscal 2021. All stock units are fully vested when granted, but shares are distributed with respect to the units only later, as described above. Stock units in this table are included in the stock ownership table in the section of this proxy statement titled “Other Information – Stock Ownership” except to the extent they may have been distributed as shares and sold prior to the date of the stock ownership table.

 

    

STOCK

UNITS

 

Susan E. Arnold

     23,102

Mary T. Barra

     9,934

Safra A. Catz

     3,316

Amy L. Chang

     374

Francis A. deSouza

     3,838

Michael B.G. Froman

     3,212

Maria Elena Lagomasino

     15,926

Calvin R. McDonald

     620

Mark G. Parker

     14,654

Derica W. Rice

     5,424

The Company’s Corporate Governance Guidelines encourage Directors to own, or acquire within three years of first becoming a Director, shares of common stock of the Company (including stock units received as Director compensation) having a market value of at least five times the amount of the annual Board retainer for the Director. Unless the Board exempts a Director, each Director is also required to retain stock representing no less than 50% of the after-tax value of exercised options and shares received upon distribution of deferred stock units until such Director meets the stock holding guideline described above.

Based on the holdings of units and shares on January 10, 2022, each currently serving Director complied with the minimum holding requirement on that date, except for Ms. Chang and Mr. McDonald, who have each served on the Board for less than three years.

All Other Compensation. “All Other Compensation” includes:

 

 

Reimbursement of tax liabilities associated with the product familiarization benefits. The value of the product familiarization benefits themselves and travel benefits are not included in the table as permitted by Securities and Exchange Commission (“SEC”) rules because the aggregate incremental cost to the Company of providing these benefits did not exceed $10,000 for any Director. The reimbursement of associated tax liabilities was $819 for Ms. Arnold, $215 for Ms. Catz, $4,335 for Mr. Froman, $10,248 for Ms. Lagomasino and $49 for Mr. Rice.

 

 

Interest earned on deferred cash compensation, which was less than $10,000 for each Director.

 

 

The matching charitable contribution of the Company, which was $50,000 for Ms. Arnold, $50,000 for Ms. Barra, $50,000 for Ms. Catz, $15,000 for Ms. Chang, $10,000 for Mr. deSouza, $65,000 for Mr. Froman and $50,000 for Mr. Rice. Matched amounts exceed $50,000 in a fiscal year if contributions for separate calendar years are made in the same fiscal year or if there were delays in processing earlier year matches.

 

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Executive Compensation

 

 

 

Letter from the Compensation Committee

Dear Fellow Shareholders,

Our fiscal 2021 executive compensation program, described in the section titled “Compensation Discussion and Analysis” that follows, is structured to closely align compensation to management’s performance and its execution against the Company’s long-term strategic goals and value creation for our shareholders. We are pleased by our performance in fiscal 2021 in addressing the ongoing impacts of the COVID-19 pandemic and in executing against the Company’s long-term strategies and awarded compensation accordingly. In addition, for fiscal 2021, the Committee developed the Other Performance Factors that increased emphasis on diversity and inclusion, which had the highest weighting among the Other Performance Factors.

Fiscal 2021 began with continued acute uncertainty regarding the duration and impacts of the COVID-19 pandemic. As the pandemic continues to cause disruption and uncertainty, the Company remains committed to acting responsibly for our employees and the communities we serve, including through health and safety measures at our parks, and augmented health benefit offerings for our employees.

At the same time, Bob Chapek led the Company in both navigating the significant economic and operational challenges presented by the pandemic and in reimagining the Company’s businesses. Building on the strong foundation established by former Executive Chairman, Bob Iger, Mr. Chapek led his leadership team to best position our Company in the face of rapidly changing patterns of media consumption. Mr. Chapek directed a significant increase in investment in content and the development of a distribution strategy to reach consumers with our growing content offerings. To further that end, he restructured the Disney media and entertainment businesses to support that strategy. At the parks, he oversaw the development of responsible protocols to enable guests to return to parks and cruises around the world and reconstituted the annual pass access programs and launched new technology-based products to enable guests to better navigate the parks and enhance their experience. These strategic actions have resulted in tangible shareholder value creation, with Disney’s total shareholder return outperforming the S&P 500 by 12 percentage points for fiscal 2021.

Mr. Iger, in his role as Executive Chairman, supported a smooth leadership transition and oversaw significant enhancements to our creative content, which is core to the Company’s success. Mr. Iger’s tenure as Executive Chairman ended on December 31, 2021, at the expiration of his employment agreement. We thank Mr. Iger for his leadership in the growth of the Company and his strategic vision. He created significant shareholder value over his tenure, including his more recent contributions as Executive Chairman, which resulted in a remarkable slate of content that will fuel Disney’s growth for years to come. We also welcome Susan Arnold to her new role as Chairman of the Board and look forward to continuing to work with her.

During fiscal 2021, including following our 2021 Annual Meeting, the Compensation Committee and the Company conducted extensive engagement with our investors to continue seeking input on our executive compensation practices, particularly as we continue to make leadership transitions. Throughout these discussions, our investors generally expressed support for our new CEO compensation structure and emphasized their continued focus on alignment of pay and performance. As a Board and Compensation Committee, we have heard and taken action in response to this feedback and are similarly focused on ensuring executive compensation is aligned with broader Company performance:

 

   

90% of CEO target compensation is variable or at risk based on Company and stock price performance

 

   

For fiscal 2022, 50% of target compensation for NEOs is PBUs, with target TSR payout at the 55th percentile of the S&P 500

We are pleased with the investor support we have heard during engagements following our 2021 Annual Meeting for the significant changes we have made to our CEO compensation structure in each of the last several years. The changes for fiscal 2022 incorporate the feedback we have received by increasing the performance-based component of compensation and the rigor of performance required to produce payouts. For more information on feedback from our investors and our responsive actions, see the section of the proxy statement titled “Proxy Summary—Shareholder Engagement and Responsiveness.”

We will continue to be responsive to our investors as we seek to maintain a highly performance-based executive compensation program that drives long-term value creation for our shareholders.

Sincerely,

 

LOGO

 

MARY T. BARRA

  

LOGO

 

MARIA ELENA LAGOMASINO

(Chair)

  

LOGO

 

CALVIN R. MCDONALD

  

LOGO

 

MARK G. PARKER

 

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EXECUTIVE COMPENSATION

 

 

Compensation Discussion and Analysis

Introduction

This introduction highlights key considerations that guided compensation decisions this past fiscal year. Please review the complete proxy statement, including the complete Compensation Discussion and Analysis section, and fiscal 2021 annual report before you vote.

NAVIGATING THE OPPORTUNITIES AND CHALLENGES OF FISCAL 2021

We started fiscal year 2021 coming off one of the most challenging years in the history of The Walt Disney Company where the global pandemic effectively halted many of our businesses, including our theme park and production businesses. At the same time, we were also encouraged by the unprecedented success and growth of our DTC businesses, with Disney+ leading the way.

While we started the fiscal year optimistic about the future, we still faced many uncertainties, including the impact of the ongoing pandemic, the availability and uptake of vaccines, the return of live sporting events and the capability and government support to reopen our parks, theaters and productions safely, as well as the overall impact of the pandemic on our lives and the broader economy. Despite these challenges, in fiscal year 2021 the Company successfully reopened our parks and resorts and productions with enhanced health and safety measures, developed new content and achieved tremendous subscription growth across all of our DTC platforms (Disney+, Hulu and ESPN+). All the while, the Company also supported its employees, customers and communities and responded to the associated business impact of the global pandemic. Key actions taken include:

 

 

Enhanced health and safety measures for our customers and workforce. Developed reopening strategies, practices and robust tools, including vaccination requirements, and resources to implement science-based, responsible health and safety protocols for employees, guests and productions;

 

 

Enhanced health, wellness and family resources for our employees. Offered vaccine education and on-site vaccination stations, provided paid time-off for employees to get vaccinated, implemented a new flexible work policy, and continued to support employees on furlough by covering the full cost of health benefits;

 

 

Support for our communities. Provided in-kind and cash support in response to the COVID-19 pandemic to the communities in which we operate and where our employees and cast members live and work across the globe, including donations of personal protective equipment, food and consumables, and advertising time to raise awareness of food insecurity and health and safety protocols. Continued to address racial and social issues facing our employees and communities globally, which included charitable giving to programs serving underrepresented communities;

 

 

Delivery of world-class content and experiences. Continued to deliver content and experience for our consumers through flexible and creative content distribution approaches, including expanding releases on Disney+ and simultaneously releasing content at home; and

 

 

Enhanced Company DEI efforts. Continued to strengthen our DEI commitment through our Reimagine Tomorrow endeavor. For additional details, see the section titled “Proxy Summary – Commitment to Diversity, Equity & Inclusion.

The Company is continuing to carefully monitor health and safety conditions and adapt guidelines as necessary to prioritize the safety of guests.

FISCAL 2021 PERFORMANCE HIGHLIGHTS

In fiscal 2021, as described in the preceding section and in more detail under “Individual Compensation Decisions” below, our NEOs, which are Mr. Chapek, Chief Executive Officer, Ms. McCarthy, Senior Executive Vice President and Chief Financial Officer, Mr. Iger, Executive Chairman, Mr. Braverman, Senior Executive Vice President, General Counsel and Secretary, Ms. Mucha, Senior Executive Vice President and Chief Communications Officer, and Ms. Parker, former Senior Executive Vice President and Chief Human Resources Officer, showed exceptional performance and leadership both in managing the Company in the face of the COVID-19 pandemic and in driving a transformation of our businesses, building long-term value. Despite the significant challenges, the Company’s businesses had exceptionally strong financial performance in fiscal 2021 against the measures approved by the Compensation Committee. In fiscal 2021, some of the key highlights included:

 

 

Successfully reopened all our parks across the world, while focusing on managing employee and guest health concerns;

 

 

Restructured our media and entertainment operations to evolve our traditional media distribution business to a DTC-led distribution model;

 

 

Drove nearly $2.0 billion in global box office, with our films being 5 of the top 10 domestic box office titles;

 

CONTINUES ON NEXT PAGE u

 

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EXECUTIVE COMPENSATION

 

 

 

Enhanced the Company’s diversity, equity and inclusion efforts focusing on transparency, representation, accountability, community, inclusive content and culture;

 

 

Successfully increased subscribers at Disney+, Hulu and ESPN+, while launching Disney+ in 35 new countries; and

 

 

Continued the successful integration of TFCF and Hulu.

The Compensation Committee has designed a compensation program that produces a strong pay and performance alignment. This was evidenced by the payouts in fiscal 2020, which resulted in a significant reduction in executive pay in the face of challenging Company performance due to the impact of the COVID-19 pandemic. This was also evidenced in fiscal 2021, for which payouts aligned with strong performance across many key financial, strategic, diversity and inclusion and other goals.

COMPENSATION PRACTICES

Executive Compensation Objectives and Methods: We have adopted an integrated approach to attract and retain high-caliber executives in a competitive market for talent, while ensuring we adhere to corporate governance best practices.

 

   
Shareholder engagement
and responsiveness
  

Investor Relations and members of the Board regularly engage in investor outreach. See “Proxy Summary—Shareholder Engagement and Responsiveness” above for a summary of actions taken in response to shareholder feedback. With regard to executive compensation, the Compensation Committee has addressed shareholder concerns and made changes to compensation for fiscal 2021, including:

 

•   Maintaining the structure of 50% of the CEO’s equity award as performance-based restricted stock units, in response to feedback to prioritize pay for performance

•   Further incorporating diversity and inclusion metrics into NEO compensation, in response to feedback to reflect ESG priorities in compensation design

•   Removing ROIC as an annual bonus performance metric, in response to feedback to reduce overlapping metrics in short- and long-term incentive programs

Incentive plan ESG metrics    Fiscal 2021 bonus plan incorporates one of our priority ESG issues, diversity and inclusion (e.g. representation, retention and content), which has the highest weighting among non-financial metrics.
Equity retention guidelines    NEOs must hold a meaningful amount of the Company’s stock. The CEO must hold equity valued at five times his salary within five years of becoming CEO, while other named executive officers must hold equity valued at three times their salary within five years of becoming an executive officer.
Compensation at risk    A majority of NEO compensation is tied to either short- or long-term Company performance. For the CEO, 50% of his annual equity grants will be performance-based restricted stock units and 90% of his total target compensation is tied to performance and/or equity.
Annual risk assessment    Each year, the Compensation Committee’s compensation consultant completes a risk assessment of the Company’s compensation programs. Based on this assessment for fiscal 2021, the Compensation Committee determined that risks arising from the Company’s policies and practices are not reasonably likely to have a material adverse effect on the Company.
Clawback policy    The Board may recover or cancel any bonus or incentive payments in cases such as an executive’s misconduct resulting in either financial or reputational harm.
Disallow hedging and pledging    Board members, NEOs and all other section 16 filers are prohibited from hedging and pledging the Company’s securities.
No option re-pricing or cash buyouts    The Company does not allow re-pricing or cash buyouts of underwater stock options without shareholder approval.
No excise tax gross-ups    The Company does not provide excise tax gross-ups.
Independent compensation consultant    The Compensation Committee has retained a compensation consultant whose relationship with the Company was confirmed to be independent for fiscal 2021.

 

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EXECUTIVE COMPENSATION

 

 

CHANGES FOR FISCAL 2022

In November 2021, the Compensation Committee reviewed the long-term incentive program and determined to make the following changes for fiscal 2022 long-term incentive grants made in December 2021 to better align the interests of our executives with shareholders:

 

 

Increased performance-based restricted stock units from 30% to 50% of the overall long-term incentive grant value for the named executive officers other than the CEO and Executive Chairman, who already had 50% in the form of performance-based restricted stock units. The remaining value will be delivered 25% in time-vesting restricted stock units and 25% in stock options.

 

 

For the relative TSR test of the performance-based restricted stock units, the target payout will now require Disney’s TSR performance to be at the 55th percentile of the S&P 500 companies (increased from 50th percentile). In addition, the overall maximum payout for performance-based restricted stock units will be 200% of target (increased from 150%).

Executive Compensation Program Structure — Objectives and Methods

We design our executive compensation program to drive the creation of long-term shareholder value. We do this by tying compensation to the achievement of performance goals that promote the creation of shareholder value and by designing compensation to attract and retain high-caliber executives in a competitive market for talent. We aim to provide compensation opportunities that take into account compensation levels and practices of our peers. For a more detailed description of the peer groups we use for compensation purposes, see the discussion under the heading, “Peer Groups,” set forth below. Total direct compensation is comprised of a mix of variable and fixed compensation that is heavily weighted toward variable performance-based compensation. Our performance-based compensation includes a short-term annual performance-based bonus and longer-term equity awards that deliver value based on stock price performance and, in the case of performance-based stock units, whose vesting depends on meeting performance targets. The Company enters into employment agreements with our senior executives when the Compensation Committee determines that it is appropriate to attract or retain an executive or where an employment agreement is consistent with our practices with respect to other similarly situated executives.

 

 

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EXECUTIVE COMPENSATION

 

 

The following table sets forth the elements of total direct compensation in fiscal 2021 and the objectives and key features of each element:

 

       

OBJECTIVES AND KEY FEATURES

   

LOGO   

 

 

 

LOGO

 

 

 

SALARY

 

Objectives:

The Compensation Committee sets salaries to reflect job responsibilities and to provide competitive fixed pay to balance performance-based risks.

 

Key Features:

 

•  Minimum salaries set in employment agreement

 

•  Committee discretion to adjust annually based on changes in experience, nature and responsibility of the position, competitive considerations and CEO recommendation (except in the case of the CEO and the Executive Chairman)

LOGO   

 

 

 

PERFORMANCE-BASED BONUS

 

Objectives:

The Compensation Committee structures the bonus program to incentivize performance at the high end of the financial performance measure ranges that it establishes each year. The Committee believes that incentivizing performance in this fashion will lead to long-term, sustainable gains in shareholder value.

 

Key Features:

 

•  Target bonus for each NEO set by the Committee early in the fiscal year in light of employment agreement provisions, competitive considerations, CEO recommendation (except targets for the CEO and the Executive Chairman) and other factors the Committee deems appropriate; bonus opportunity normally limited to 200% of target bonus

 

•  Payout on 70% of target determined by performance against financial performance ranges developed by the Committee early in the fiscal year

 

•  Payout on 30% of target determined by Company-wide Other Performance Factors and the Committee’s assessment of individual performance based both on other performance objectives and on CEO recommendation (except the payouts for the CEO and the Executive Chairman)

 

LOGO

 

 

 

 

EQUITY AWARDS GENERALLY

 

Objectives:

The Compensation Committee structures equity awards to directly reward long-term gains in shareholder value. Equity awards carry vesting terms that extend up to four years and include performance units whose value depends on Company performance, including performance relative to the S&P 500. These awards provide incentives to create and sustain long-term growth in shareholder value.

 

Key Features:

 

•  Combined value of options, performance units and time-based units determined by the Committee in light of employment agreement provisions, competitive market conditions, evaluation of executive’s performance and CEO recommendation (except awards for the CEO and the Executive Chairman)

 

•  Allocation of annual awards for Executive Chairman (based on award value): 50% performance-based restricted stock units; 50% stock options

 

•  Allocation of annual awards for CEO (based on award value): 50% performance-based restricted stock units; 25% time-vesting restricted stock units; 25% stock options

 

•  For fiscal 2021, the allocation of annual awards for other NEOs (based on award value): 30% performance-based restricted stock units; 30% time-vesting restricted stock units; 40% stock options. For fiscal 2022, the allocation of annual awards will be: 50% performance-based restricted stock units; 25% time-vesting restricted stock units; 25% stock options

 

 

STOCK OPTION AWARDS

 

Key Features:

 

•  Exercise price equal to average of the high and low trading prices on day of award

 

•  Option re-pricing without shareholder approval is prohibited

 

•  Ten-year term

 

•  Vest one-third per year

 

 

ANNUAL PERFORMANCE-BASED RESTRICTED STOCK UNITS

 

Key Features:

 

•  Performance-based units reward executives only if specified financial performance measures are met

 

•  Subject to performance tests, units vest three years after grant date

 

•  Half of awards vest based on three-year cumulative TSR relative to the S&P 500; the other half vest based on three-year return on invested capital, comprised of three one-year performance periods. For fiscal 2021, awards included three measurement periods of one year each due to continued financial uncertainties. Awards as described in the section entitled “Compensation Tables — Fiscal 2021 Grants of Plan Based Awards Table

 

•  Annual units awarded to executive officers are subject to the Section 162(m) test to the extent necessary and available to obtain tax deductibility by the Company of the payment

 

 

ANNUAL TIME-BASED RESTRICTED STOCK UNITS

 

Key Features:

 

•  One-third vests each year following grant date

 

•  Annual units awarded to executive officers are subject to Section 162(m) test to the extent necessary and available to obtain tax deductibility by the Company of the payments

 

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EXECUTIVE COMPENSATION

 

 

COMPENSATION AT RISK

The Compensation Committee believes that most of the compensation for NEOs should be at risk and tied to a combination of long-term and short-term Company performance. 90% of the Chief Executive Officer’s and 84% of the other NEOs’ (excluding Mr. Iger) fiscal 2021 annual target compensation is performance-based and/or equity compensation.

In establishing a mix of fixed to variable compensation, the composition of equity awards, target bonus levels, grant date equity award values and performance ranges, the Committee seeks to maintain its goal of making compensation overwhelmingly tied to performance, while also providing compensation opportunities that are competitive with alternatives available to the executive. In particular, the Committee expects that performance at the high-end of ranges will result in overall compensation that is sufficiently attractive relative to compensation available at successful competitors and that performance at the low-end of ranges will result in overall compensation that is less than that available from competitors with more successful performance.

In determining the mix between options and restricted stock units, the Committee also considers the number of shares required for each of these types of awards to deliver the appropriate value to executives.

The following charts show the percentage of the target total direct annual compensation for Mr. Chapek and all NEOs other than Mr. Chapek and Mr. Iger that varies with performance and equity versus being fixed with respect to fiscal 2021. Performance-based and equity compensation represents target performance-based bonus and equity awards while fixed compensation represents base salary.

 

 

 

LOGO

 

 

LOGO

*  Target mix for fiscal 2021 compensation.

 

**   Target mix for fiscal 2021 compensation. Includes target compensation for all NEOs other than Mr. Chapek and Mr. Iger. Mr. Iger’s target fiscal 2021 compensation was 91% performance-based: 9% base salary, 33% target annual incentive, 29% stock options and 29% PBUs.

For fiscal 2022, the Compensation Committee determined to increase PBUs from 30% to 50% of the overall long-term incentive grant value for the named executive officers other than the CEO and Executive Chairman, who already had 50% in the form of PBUs. This shift reflects a meaningful increase in at-risk compensation, as evidenced by the actual results realized with respect to recent PBU grants. For example, annual grant PBUs vesting in the last four years have resulted in below target payouts, 85%, 96%, 62% and 48%, for shares vesting in December 2018, 2019, 2020 and 2021, respectively. The 2017 extension PBU grant for Mr. Iger had a payout of 69% and the fiscal 2020 ROIC test resulted in 0% payout for the first annual performance period in respect of that award. The Committee believes this PBU structure strongly aligns pay and performance, which is underscored by the decision to further increase the weighting of PBUs for other NEOs.

 

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EXECUTIVE COMPENSATION

 

 

COMPENSATION PROCESS

The following table outlines the process for determining annual compensation awards for NEOs:

 

    SALARIES        PERFORMANCE-BASED BONUS
 

 

•   Annually at the end of the calendar year, the Chief Executive Officer recommends salaries for NEOs other than the Executive Chairman and himself for the following calendar year

 

•   Compensation Committee reviews proposed salary changes with input from its consultant (described under “Compensation Consultant”)

 

•   Committee determines annual salaries for all NEOs

 

•   Committee reviews determinations with the other non-management directors

 

 

 

 

  

 

 

 

  

 

•   Compensation Committee participates in regular Board review of operating plans and results and review of annual operating plan at the beginning of the fiscal year

 

•   Management recommends financial and other performance measures, weightings and ranges

 

•   Early in the fiscal year, the Committee reviews proposed performance measures and ranges with input from its consultant and develops performance measures and ranges that it believes establish appropriate goals

 

•   Chief Executive Officer recommends bonus targets for NEOs other than the Executive Chairman and himself

 

•   Early in the fiscal year, the Committee reviews bonus measure ranges with input from its consultant and in light of the targets established by employment agreements and competitive conditions and determines bonus target opportunity as a percentage of fiscal year-end salary for each NEO

 

•   After the end of the fiscal year, management presents financial results to the Committee

 

•   Chief Executive Officer recommends Other Performance Factor multipliers for NEOs other than himself and the Executive Chairman

 

•   Committee reviews the results and determines whether to make any adjustments to financial results, determines other performance factor multipliers and establishes bonus

 

•   Committee reviews determinations with the other non-management directors and, in the case of the Chief Executive Officer and Executive Chairman, seeks their concurrence in the Committee’s determination

 

   

 

EQUITY AWARDS

   
 

 

•   In first fiscal quarter, the Chief Executive Officer recommends grant date fair value of awards for NEOs other than the Executive Chairman and himself

 

•   Compensation Committee reviews proposed awards with input from its consultant and reviews with other non-management directors

 

•   Committee determines the dollar values of awards

 

•   Exercise price and number of options and restricted stock units are determined by formula based on market price of common shares on the date of award

 
   
   
   
   
   
   
   
   

MANAGEMENT INPUT

In addition to the Chief Executive Officer recommendations described above, management regularly:

 

 

provides data, analysis and recommendations to the Compensation Committee regarding the Company’s executive compensation programs and policies;

 

 

administers those programs and policies as directed by the Committee;

 

 

provides an ongoing review of the effectiveness of the compensation programs, including competitiveness and alignment with the Company’s objectives; and

 

 

recommends changes to compensation programs if needed to help achieve program objectives.

The Committee meets regularly in executive session without management present to discuss compensation decisions and matters relating to the design and operation of the executive compensation program.

 

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EXECUTIVE COMPENSATION

 

 

COMPENSATION CONSULTANT

The Compensation Committee retained Pay Governance LLC as the compensation consultant for fiscal 2021. The consultant assists the Committee’s development and evaluation of compensation policies and practices and the Committee’s determinations of compensation awards through various services, including providing third-party data, advice and expertise on proposed executive compensation awards and plan designs, reviewing briefing materials prepared by management and outside advisers and advising the Committee on the matters included in these materials and preparing its own analysis of compensation matters.

The Committee considers input from the consultant as one factor in making decisions on compensation matters, along with information and analyses it receives from management and its own judgment and experience.

The Committee has adopted a policy requiring its consultant to be independent of Company management. The Committee performs an annual assessment of the consultant’s independence to determine whether the consultant is independent. The Committee assessed Pay Governance LLC’s independence in November 2021 and confirmed that the firm’s work has not raised any conflict of interest and the firm is independent under the policy. Pay Governance LLC does not provide any services to the Company other than the services provided to the Compensation Committee.

Fiscal 2021 Compensation Decisions

This section discusses the specific decisions made by the Compensation Committee in fiscal 2021. These decisions were made taking into consideration the results of the most recent shareholder advisory vote on executive compensation. Based on the results of the advisory vote on executive compensation, members of management and the Board engaged in extensive outreach to shareholders. The Board took numerous actions in response to the shareholder feedback received, as described in more detail under “Proxy Summary – Shareholder Engagement and Responsiveness.

PERFORMANCE GOALS

The Compensation Committee normally develops performance goals for each fiscal year early in that year, and evaluates performance against those goals after the fiscal year has ended to arrive at its compensation decisions.

GOALS

Financial Performance

In December 2020, the Compensation Committee reviewed the annual performance-based bonus program and determined to implement several changes that were designed to support alignment with the Company’s strategic business direction and reorganization. The Committee incorporated adjusted revenue as a financial metric to incentivize performance in a challenging market by driving resiliency and innovation to generate revenue growth. Adjusted EPS and adjusted return on invested capital were removed as financial metrics to better align with market practice and to focus incentives on the three key metrics of adjusted segment operating income, adjusted after-tax free cash flow and adjusted revenue.

The Committee determined that adjusted segment operating income would have the highest weighting given the strategic importance of delivering operating income results. The relative weights for calculating the portion of the NEO bonuses that is based on financial performance is as follows:

 

 

adjusted segment operating income—50%

 

 

adjusted revenue—25%

 

 

adjusted after-tax free cash flow—25%

The Committee also developed performance ranges for each of the measures in December 2020. These ranges are used to determine the multiplier that is applied to 70% of each NEO’s target bonus. The overall financial performance multiple is equal to the weighted average of the performance multiples for each of these three measures. The performance multiple for each measure is zero if performance is below the bottom of the range and varies from 35% at the low end of the range to a maximum of 200% at the top

 

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end of the range. The Committee believes the top of each range represents extraordinary performance and the bottom represents satisfactory performance, below which no award would be provided. In addition, 30% of each NEO’s target bonus is based on performance against key strategic goals for the Company, called “Other Performance Factors”. We believe the mix between key financial and strategic factors is appropriate, given the majority of the bonus opportunity is focused on Company financial performance, while still recognizing the importance that Other Performance Factors have on establishing a successful culture that supports the Company’s strategic goals.

For fiscal 2021, in light of the significant uncertainties in the market and the impact on our businesses due to the pandemic, the Committee chose to set performance ranges that acknowledged there was significantly more downside risk than upside potential based on the environment at the time. For example, there was uncertainty about when our parks would be allowed to fully reopen, the cost of maintaining healthcare for furloughed employees and following COVID-19 protocols, uncertainty about production delays and theatrical attendance, as well as the broader impact on the economy and its effects on our businesses. While the Committee approved ranges for adjusted segment operating income and adjusted after-tax free cash flow that were lower than our fiscal 2020 results, the Committee believed the ranges appropriately took into account the uncertainties and challenges the Company had to navigate in fiscal 2021. The following table shows the performance ranges approved by the Committee for fiscal 2021 (dollars in millions):

 

     FISCAL 2021
PERFORMANCE
RANGE
 

Adjusted Segment Operating Income*

     $(3,906)-$2,194  

Adjusted Revenue**

     $55,030-$66,596  

Adjusted After-Tax Free Cash Flow***

     $(11,871)-$(4,503)  

 

*

For purposes of the annual performance-based bonuses, “adjusted segment operating income” reflects the adjustments described under “—Evaluating Performance.”

 

**

For purposes of the annual performance-based bonuses, “adjusted revenue” reflects the adjustments described under “—Evaluating Performance.”

 

***

For purposes of the annual performance-based bonuses, “adjusted after-tax free cash flow” was defined as cash provided by operations less investments in parks, resorts and other properties, all on a consolidated basis and reflects the adjustments described under “—Evaluating Performance.”

In fiscal 2021, the exceptional leadership of our NEOs enabled us to recover from the impacts of the pandemic more quickly than previously anticipated by taking numerous innovative actions in response to the pandemic. In particular, our management guided the development of new content offerings and delivery of content to our consumers through flexible and creative distribution approaches. In addition, management oversaw creation of responsible health and safety protocols to enable guests to return to parks and cruises around the world and took meaningful and innovative steps in reopening our parks, including reconstituting the annual pass access programs, enhancing mobile ordering and implementing a reservation system. Such actions enabled the Company to resume operations at our theme parks and resorts, cruise ship sailings, guided tours and stage plays.

For fiscal 2022, the Committee considered the incremental increase in visibility related to the impact of the COVID-19 pandemic on our business and increased the performance ranges from fiscal 2021.

Other Performance Factors

The Compensation Committee developed Other Performance Factors for the fiscal 2021 annual bonus in December 2020. For fiscal 2021, the Other Performance Factors further emphasized the importance of one of our priority ESG issues, diversity and inclusion, which had the highest weighting among the Other Performance Factors. The Committee established the following factors based on the recommendation of Mr. Chapek and the strategic objectives of the Company:

 

 

ESG-Diversity & Inclusion – Meaningful progress building an inclusive culture through increased representation, recruitment, retention and/or promotion of underrepresented groups globally; advance inclusive content by increasing underrepresented groups in creative hiring and exploring culturally diverse and authentic themes, characters and narratives; demonstrate transparency and accountability

 

 

Collaboration on strategic priorities – Actively promote and model collaboration and synergy of key strategic priorities and drive clear accountability and partnership across all lines of business, in support of developing content and product for our key franchises, accelerating our DTC initiatives and enabling the success of creative, operating and corporate teams

 

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Efforts towards resiliency, rebuilding & innovation – Lead the Company in its resiliency and rebuilding efforts and orient towards growth; ensure strong controls on costs and transformative ideas in achieving operational efficiencies and focus on innovation and the creation of potential new sources of revenue

EVALUATING PERFORMANCE

The Compensation Committee reviewed the overall operating results of the Company in fiscal 2021, evaluating them against the bonus plan performance ranges developed by the Committee early in the fiscal year. The Compensation Committee adjusted actual fiscal 2021 total segment operating income and revenue to exclude the net benefits the Company received from timing variances related to the pandemic, such as savings from delayed programming and domestic parks operating efficiencies, partially offset by delays in park openings. The Compensation Committee adjusted after-tax free cash flow to exclude non-recurring items, such as severance and restructuring.

Based on these results, the weighted financial performance factor was 200% in fiscal 2021 compared to a factor of 21% in fiscal 2020, where the Committee elected to provide no bonuses to the NEOs even though the financial performance would have supported bonus payments. Adjusted after-tax free cash flow performance of -$2,188 million, adjusted segment operating income of $4,055 million, and adjusted revenue of $66,736 million were all above the maximum and resulted in 200% payout. Additional details regarding the performance of the Company are set forth in the section titled “Proxy Summary” and our Annual Report on Form 10-K for fiscal 2021.

With respect to the Other Performance Factors, the Committee recognizes that while we still have more work ahead of us, the NEOs demonstrated extraordinary leadership and accomplishments during continued challenging circumstances, including:

ESG-Diversity & Inclusion

 

 

Further enhanced the Company’s diversity and inclusion practices focusing on transparency, representation, accountability, community, inclusive content and culture. A significant milestone was the launch of the Reimagine Tomorrow Digital Hub, the Company’s first digital platform for employees, guests and fans for amplifying underrepresented voices and untold stories.

 

 

Enhanced reporting by publishing the 2020 CSR report with increased transparency including providing certain disclosures aligned with the SASB framework, and published EEO-1 data for calendar years 2019 and 2020.

 

 

In an incredibly competitive talent market, doubled down on our initiatives to increase diverse representation, including setting diverse candidate and interview slates, conducting inclusive leader training, investing in talent development and our over 90 Business Employee Resource Groups.

 

 

Placed an intentional focus on executive and management populations, knowing these employees are influencers with a high level of impact on the broader organization, which resulted in positive representation trends in our executives and management for both women and people of color, especially among Black employees.

 

 

Efforts also resulted in positive trends in promotions for women and people of color for executives and managers, and overall the Company was able to retain and develop diverse executives and management in an extremely competitive market for talent.

 

 

Several key initiatives supported these achievements, such as the Executive Incubator Program, a two-year program creating a pipeline of next-generation creative executives, exposing individuals with diverse and varied perspectives to the Disney General Entertainment business and the Black Talent Network, which promotes career opportunities and exposure to the Company’s leaders for Black Vice Presidents in the U.S.

 

 

Championed a multitude of voices and perspectives to forge meaningful connections with our consumers, including reimagining the way we tell stories and who tells them. For example, Disney’s Launchpad Shorts Incubator program provided a platform for diverse writers and directors to create short films for Disney+ and the Company’s film and television productions focused on diversity in creative roles in front of and behind the camera, strengthening inclusive storytelling with a roster of actors and filmmakers from all backgrounds.

 

 

Invested in our community, as the Company supported various organizations committed to advancing equality, access and economic opportunity, such as non-profit programs to expand access and opportunities for entertainment professionals with disabilities and Hispanic/Latin producers and television writers. In addition, Disney on the Yard, a HBCU pipeline development initiative, has engaged nearly 800 HBCU students, 200 HBCU alumni and 600 employees.

 

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Collaboration on strategic priorities

 

 

Successfully increased subscribers at Disney+ (+60%), Hulu (+20%) and ESPN+ (+66%) during fiscal year 2021, while launching DTC platforms in several key international markets, including 35 different countries.

 

 

Teams across the Company partnered to design and execute a virtual DTC-focused Investor Day, highlighting the breadth of content that our services offer. The event garnered more than 300,000 live streams.

 

 

Reorganized the Company’s operating units to increase creative output while centralizing and optimizing distribution management within our media operations. As part of this work, engineered two segments – one focused on integrated media across all distribution channels, and one focused on our experiential parks and products business – while reorganizing creative units into three groups focused on film, general entertainment and sports.

 

 

Continued the successful integration of TFCF and Hulu, enabling a stronger culture of one unified Company, with a focus on collaboration to enhance our various brands across the Company.

Efforts towards resiliency, rebuilding & innovation

 

 

Redesigned our media and entertainment operations to evolve our traditional media distribution business to a DTC-led distribution model, supporting our go-forward business strategy.

 

 

In an incredibly challenging theatrical distribution market, innovated the Disney Premier Access business model, improving financial outcomes, while still building the pipeline for the theatrical business.

 

 

Continued to implement the Company’s reopening strategy for our parks and workplaces globally, putting in place responsible standards in health, safety and well-being for our employees, cast members and guests.

 

 

Leveraged technology and COVID-driven operational pauses to reimagine the parks experience, prioritizing guest satisfaction and personalization, such as the development of Disney Genie, Magic Key and digital guest self-service offerings.

See tabular disclosure for each NEO below under “Individual Compensation Decisions” for additional information regarding key contributions and accomplishments of each NEO.

Individual Compensation Decisions

ANNUAL COMPENSATION DECISIONS

The following table summarizes annual compensation decisions made by the Compensation Committee with respect to each of the NEOs. The Committee established the salary and performance-based bonus target multiple of salary for each of the NEOs early in the fiscal year. The final bonus award was calculated after the fiscal year ended using the financial performance factor of 200% described above. The Other Performance Factors determined by the Committee described below applied to the target bonus opportunity for that executive.

 

    SALARY     PERFORMANCE-BASED BONUS     EQUITY AWARDS  
    FISCAL YEAR
END 2021
ANNUAL SALARY
    TARGET     FINANCIAL
PERFORMANCE
FACTOR
1
    OTHER
PERFORMANCE
FACTOR
2
    AWARD
AMOUNT
    VALUE3     TARGET
PERFORMANCE
UNITS3,4
    TIME-
BASED
UNITS4
    OPTIONS4  

Robert A. Chapek

    $2,500,000   $ 7,500,000     200%       170%     $ 14,330,000   $ 13,965,478     31,580       21,627       67,341  

Christine M. McCarthy

    $1,920,000   $ 3,840,000     200%       200%     $ 7,680,000   $ 11,922,870     15,444       21,627       89,788  

Robert A. Iger

    $3,000,000   $ 12,000,000     200%       170%     $ 22,920,000   $ 18,773,800     46,525             166,896  

Alan N. Braverman

    $1,815,000   $ 3,630,000     200%       176%     $ 7,000,000   $ 7,764,814     10,434       13,932       57,842  

Zenia B. Mucha

    $1,197,000   $ 1,496,250     200%       166%     $ 2,840,000   $ 3,088,487     4,191       5,525       22,938  

M. Jayne Parker5

    $1,140,000   $ 1,710,000     200%       N/A     $ 2,300,000   $ 5,311,333     7,172       9,516       39,507  

 

1 

Multiplied by 70% of the target amount.

 

2 

Multiplied by 30% of the target amount.

 

3 

Includes ROIC portion of fiscal 2020 performance units.

 

4 

The number of restricted stock units and options was calculated from the value of the award as described in the table in the section titled “Compensation Tables – Fiscal 2021 Grants of Plan Based Awards Table.”

 

5 

Ms. Parker retired from the Company effective July 1, 2021. The decision on her performance-based bonus took into account her partial year of service.

 

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EXECUTIVE COMPENSATION

 

 

The compensation set forth above and described below differs from the total compensation reported in the Summary Compensation Table as follows:

 

 

the compensation set forth above does not include the change in pension value and non-qualified deferred compensation earnings as these items do not reflect decisions made by the Committee during the fiscal year.

 

 

the compensation set forth above does not include perquisites and benefits and other compensation as these items are generally determined by contract and do not reflect decisions made by the Committee during the fiscal year.

The Compensation Committee’s determination on each of these matters was based on the recommendation of Mr. Chapek (except in the case of his own and Mr. Iger’s compensation), the parameters established by the executive’s employment agreement and the factors described below. In determining equity awards, the Committee considered its overall long-term incentive guidelines for all executives, which, in the context of the competitive market for executive talent, attempt to balance the benefits of incentive compensation tied to performance of the Company’s common stock with the dilutive effect of equity compensation awards.

ADDITIONAL CONTEXT FOR FISCAL 2020 AND FISCAL 2021 COMPENSATION DECISIONS

In fiscal 2020, our NEOs showed exceptional performance and leadership both in managing the Company in the face of the COVID-19 pandemic and in driving a transformation of our businesses and building long-term value. Notwithstanding these significant accomplishments for our shareholders, the impact of the pandemic on our businesses and resulting actions our Compensation Committee took in light of challenging performance led to a meaningful reduction in CEO and other NEO compensation.

 

 

Three of the four financial measures resulted in a 0% payout in the annual performance-based bonus program, in line with performance for fiscal 2020

 

 

The Board decided to not provide bonuses to NEOs with respect to fiscal 2020 in light of the Company’s circumstances (notwithstanding the attainment of certain performance metrics and the strength of management’s performance)

 

 

Each of the Company’s NEOs agreed to temporarily reduce their base salary for almost 5 months, effective with the payroll period commencing April 5, 2020

In contrast, our strong fiscal 2021 performance and execution of our long-term strategy in fiscal 2021 resulted in higher payouts for our executives, as described in the preceding and following sections. These dynamics contributed to the year-over-year increase that appears in our Summary Compensation Table for fiscal 2021.

 

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MR. CHAPEK

 

   

 

Salary

    

 

Mr. Chapek’s 2021 annual salary was unchanged from the annual salary set at the time of his promotion to Chief Executive Officer and was equal to the amount set in his employment agreement.

 

   

 

Performance-
based Bonus

    

 

Target Bonus

Mr. Chapek’s target bonus for fiscal 2021 is equal to three times his fiscal year-end salary, as set forth in his employment agreement.

 

Other Performance Factor

The Compensation Committee applied a factor of 170% with respect to Other Performance Factors for Mr. Chapek in fiscal 2021. In fiscal 2020 the Other Performance Factor was not applicable, as no bonus was paid. The Compensation Committee recognized the following key performance highlights:

 

•   Focused and enhanced the Company’s diversity, equity and inclusion efforts and commitments, leading to an increase in women and people of color representation in leadership and a more inclusive culture; launched content programs like the Onyx Collective; expanded inclusion standards across all of our content businesses.

•   Continued to lead the CEO Diversity and Inclusion Council and champion the Creative Inclusion Council, whose members have met personally with thousands of employees.

•   Reorganized the Company’s operating units to enhance focus on key capabilities and increase creative output while centralizing and optimizing distribution management within our media operations.

•   Navigated challenges of the COVID-19 pandemic and applied an innovative and strategic lens to make decisions to continue to deliver to consumers, including the creation of responsible protocols to enable guests to return to parks and cruises around the world and took meaningful and innovative steps in reopening our parks.

•   Successfully increased subscribers to Disney+, Hulu and ESPN+, while launching Disney+ in 35 new countries.

•   Innovated the Disney Premier Access business model, improving financial outcomes, while still building the pipeline for the theatrical business.

•   Leveraged technology and COVID-driven operational pauses to reimagine the theme park experience, prioritizing guest satisfaction and personalization.

•   Recognition of Disney as one of the “World’s Most Admired Companies” by Fortune (#4 overall and #1 in entertainment) and #1 in MBLM’s annual Brand Intimacy Study in Media and Entertainment, which measures the bonds consumers form with the brands they use and love.

 

   

 

Equity Award Value

    

 

The total equity award value for Mr. Chapek is equal to 5.6 times his fiscal year-end salary to provide performance-based awards tied to long-term gains in shareholder value.

 

 

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MS. MCCARTHY

 

 

   

 

Salary

    

 

The Committee increased Ms. McCarthy’s 2021 annual salary by 3.6% to reflect changes in the

market for executive talent and her continued outstanding performance.

 

   

 

Performance-
based Bonus

    

 

Target Bonus

As set forth in her employment agreement, Ms. McCarthy’s target bonus for fiscal 2021 is equal to two times her fiscal year-end salary.

 

Other Performance Factor

The Compensation Committee applied a factor of 200% with respect to Other Performance Factors for Ms. McCarthy in fiscal 2021. In fiscal 2020 the Other Performance Factor was not applicable, as no bonus was paid. The Compensation Committee recognized the following key performance highlights:

 

•   Launched the 2021 Disney Accelerator, one of only a few female-led Accelerators in the industry; selected a diverse cohort of eight startups through a competitive screening process.

•   Supported development of future talent pipeline externally through initiatives like Risk Management’s Emerging Leaders Program at USC in partnership with two HBCUs (Howard University and North Carolina AT&T) and one Hispanic-Serving Institution (University of Texas at El Paso); and Enterprise Technology representation at Grace Hopper and AfroTech.

•   Designed and executed a virtual DTC-focused Investor Day, highlighting the breadth of content that our services offer. The event garnered more than 300,000 live streams.

•   Partnered with corporate and segment teams to manage significant enterprise-wide efforts that delivered on key Company priorities, including the new Orlando regional campus, flexible work strategy and solutions, parks and resorts reopening, and 2030 environmental goals.

•   Continued management of term debt and revolving credit to mitigate the business impacts of the pandemic.

 

   

 

Equity Award Value

    

 

The annual equity award value for Ms. McCarthy is equal to 6.2 times her fiscal year-end salary to provide performance-based awards tied to long-term gains in shareholder value, including the strategic shift in business, business recovery, and leadership continuity.

 

 

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EXECUTIVE COMPENSATION

 

 

MR. IGER

 

   

 

Salary

    

 

Mr. Iger’s 2021 annual salary was equal to the amount set in his employment agreement. Mr. Iger’s 2021 salary was unchanged from his 2020 annual salary prior to the voluntary salary reduction Mr. Iger took in fiscal 2020.

 

   

 

Performance-
based Bonus

    

 

Target Bonus

Mr. Iger’s fiscal 2021 target bonus amount was unchanged from fiscal 2020 and is equal to the amount provided for in his employment agreement.

 

Other Performance Factor

The Compensation Committee applied a factor of 170% with respect to Other Performance Factors for Mr. Iger in fiscal 2021. In fiscal 2020 the Other Performance Factor was not applicable, as no bonus was paid. The Compensation Committee recognized the following key performance highlights:

 

•   Continued the Executive Chairman’s Creative Inclusion Council, which brings together diverse creative executives at all levels across the Company to accelerate our work in creating inclusive content.

•   Led multiple Reimagine Tomorrow and other important enterprise-wide diversity, equity and inclusion conversations for ABC News (The Reality of Reporting & Race), Black History Month and Asian Pacific American Heritage Month.

•   Released compelling and award-winning original content for Disney+ (WandaVision and Falcon and the Winter Soldier), Hulu (The Handmaid’s Tale and Only Murders in the Building) and ESPN+ (Stephen A’s World). Together with our international teams, developed a significant creative pipeline for local, original Disney+ and Star content.

•   Our shows won 21 Emmy Awards across Disney+, ABC, FX, and National Geographic. Searchlight’s film, Nomadland, won the Best Picture Academy Award, as well as the first Best Director Academy Award for a woman of color.

•   Recognition of Disney as one of the “World’s Most Admired Companies” by Fortune (#4 overall and #1 in entertainment) and #1 in MBLM’s annual Brand Intimacy Study in Media and Entertainment, which measures the bonds consumers form with the brands they use and love.

 

   

 

Equity Award Value

    

 

 

The Committee maintained the value of Mr. Iger’s annual equity award per his employment agreement.

MR. BRAVERMAN

 

   

 

Salary

    

 

The Committee increased Mr. Braverman’s 2021 annual salary by 3.7% to reflect changes in the market for executive talent and his continued outstanding performance.

 

   

 

Performance-
based Bonus

    

 

Target Bonus

As set forth in his employment agreement, Mr. Braverman’s target bonus for fiscal 2021 is equal to two times his fiscal year-end salary.

 

Other Performance Factor

The Compensation Committee applied a factor of 176% with respect to Other Performance Factors for Mr. Braverman in fiscal 2021. In fiscal 2020 the Other Performance Factor was not applicable, as no bonus was paid. The Compensation Committee recognized the following key performance highlights:

 

•   Continued promotion of diversity and inclusion in the Legal department and served actively as a member of the Board of the Leadership Council on Legal Diversity.

•   DEI efforts resulted in positive trends within the Legal department for promotions and new hires among women and people of color.

•   Oversaw the regulatory work associated with launches of our DTC products.

•   Counseled regarding risks associated with a number of new strategic initiatives.

•   Continued leadership of the Company’s legal and public policy positions on litigation matters, transactions and regulatory developments.

 

   

 

Equity Award Value

    

 

The annual equity award value for Mr. Braverman is equal to 4.3 times his fiscal year-end salary to provide performance-based awards tied to long-term gains in shareholder value, including the strategic shift in business, business recovery and leadership continuity.

 

 

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MS. MUCHA

 

   

 

Salary

    

 

Ms. Mucha’s 2021 annual salary was unchanged from her 2020 annual salary prior to the voluntary salary reduction Ms. Mucha took in fiscal 2020.

 

   

 

Performance-
based Bonus

    

 

Target Bonus

As set forth in her employment agreement, Ms. Mucha’s target bonus for fiscal 2021 is equal to 1.25 times her fiscal year-end salary.

 

Other Performance Factor

The Compensation Committee applied a factor of 166% with respect to Other Performance Factors for Ms. Mucha in fiscal 2021. In fiscal 2020 the Other Performance Factor was not applicable, as no bonus was paid. The Compensation Committee recognized the following key performance highlights:

 

•   Led the communications team in working closely with the DEI team to message the Company’s strong commitment to DEI, drive employee support for the CEO’s DEI priorities and highlight the Company’s Reimagine Tomorrow efforts.

•   Executed communication plans supporting the Company’s strategic initiatives, including the DTC business and the continued TFCF integration.

•   Designed and implemented an enterprise-wide media campaign in support of Investor Day 2020 and the worldwide launch of Star; successfully communicated the central importance of DTC to the Company’s overall strategy.

•   Designed and successfully executed the earned media campaign for the Company’s strategic reorganization in October 2020, effectively communicating the importance of the strategic realignment to the Company’s future growth.

 

   

 

Equity Award Value

    

 

The annual equity award value for Ms. Mucha is equal to 2.6 times her fiscal year-end salary to provide performance-based awards tied to long-term gains in shareholder value, including the strategic shift in business, business recovery and leadership continuity.

 

MS. PARKER

 

   

 

Salary

    

 

The Committee increased Ms. Parker’s 2021 annual salary by 3.6% to reflect changes in the market for executive talent and her continued outstanding performance. Ms. Parker retired on July 1, 2021, before the fiscal year end, resulting in a salary less than her full annual salary.

 

   

 

Performance-
based Bonus

    

 

Target Bonus

As set forth in her employment agreement, Ms. Parker’s target bonus for fiscal 2021 is equal to 1.5 times her full fiscal year-end annual salary.

 

Other Performance Factor

The Compensation Committee did not apply an Other Performance Factor for Ms. Parker as she retired before the fiscal year end. Based on the recommendation of Mr. Chapek, the Compensation Committee approved Ms. Parker’s bonus to recognize her contributions during the fiscal year pursuant to her employment agreement, including the following key performance highlights:

 

•   Launched the Reimagine Tomorrow Digital Hub, with the goal of providing greater transparency of our DEI commitments, efforts and progress. The hub is the Company’s first digital platform for employees, guests and fans for amplifying underrepresented voices and untold stories.

•   Collaborated with certain HBCUs to continue to build a robust, long-term pipeline of Black talent through student internships, mentorship opportunities and inclusive hiring practices.

•   Aligned leadership incentives with the Company’s strategic re-organization by designing and delivering a new and simplified fiscal 2021 annual bonus plan which supports our DTC expansion, new operating model and DEI priorities.

•   Finalized harmonization of legacy TFCF benefits outside of the U.S., and integrated Hulu into Disney benefit plans.

 

   

 

Equity Award Value

    

 

The annual equity award value for Ms. Parker is equal to 4.7 times her salary at the time of her retirement to provide performance-based awards tied to long-term gains in shareholder value, including the strategic shift in business, business recovery and leadership continuity. However, this award was cancelled upon her retirement, effective July 1, 2021.

 

 

46          THE WALT DISNEY COMPANY NOTICE OF 2022 ANNUAL MEETING AND PROXY STATEMENT


Table of Contents

EXECUTIVE COMPENSATION

 

 

Compensation Tables

Fiscal 2021 Summary Compensation Table

The following table provides information concerning the total compensation earned in fiscal 2019 (except for Mr. Chapek), fiscal 2020 and fiscal 2021 by the Chief Executive Officer who served during fiscal 2021, the Chief Financial Officer, and three other persons serving as executive officers at the end of fiscal 2021 who were the most highly compensated executive officers of the Company in fiscal 2021. In addition, this information is provided with respect to Ms. Parker, for whom disclosure would have been provided but for the fact that she was not serving as an executive officer of the Company at the end of fiscal 2021. These six officers are referred to as the named executive officers or NEOs in this proxy statement. Information regarding the amounts in each column follows the table.

 

NAME AND

PRINCIPAL POSITION

  FISCAL
YEAR
    SALARY     STOCK
AWARDS
1
    OPTION
AWARDS
    NON-EQUITY
INCENTIVE PLAN
COMPENSATION
    CHANGE IN
PENSION VALUE
AND NON-QUALIFIED
DEFERRED
COMPENSATION
EARNINGS
    ALL OTHER
COMPENSATION
    TOTAL  

ROBERT A. CHAPEK

Chief Executive Officer2

    2021       $2,500,000     $10,215,466     $3,750,012     $14,330,000     $1,358,505     $   310,310   $ 32,464,293
    2020       1,814,608     6,129,442     3,373,548           2,705,712     140,626     14,163,936

CHRISTINE M. MCCARTHY

Senior Executive Vice
President and Chief
Financial Officer

    2021       1,903,754     6,922,854     5,000,015     7,680,000     103,152     119,440     21,729,215
    2020       1,661,815     4,712,459     3,766,425           761,321     94,985     10,997,005
    2019       1,800,000     3,300,064     2,200,026     6,520,000     1,083,130     70,935     14,974,155

ROBERT A. IGER

Chief Executive Officer2;

Executive Chairman

    2021       3,000,000     9,479,879     9,293,921     22,920,000           1,205,996     45,899,796
    2020       1,569,581     6,958,847     9,586,037           1,777,334     1,139,590     21,031,389
    2019       3,000,000     10,072,895     9,583,291     21,750,000     1,967,234     1,144,342     47,517,762

ALAN N. BRAVERMAN

Senior Executive Vice

President, General
Counsel and Secretary

    2021       1,799,000     4,543,772     3,221,042     7,000,000           97,050     16,660,864
    2020       1,581,731     3,816,132     3,050,025           576,555     91,293     9,115,736
    2019       1,660,061     3,000,026     2,000,011     6,340,000     639,894     79,888     13,719,880

ZENIA B. MUCHA

Senior Executive Vice
President and Chief

Communications Officer

    2021       1,197,000     1,811,141     1,277,346     2,840,000     432,622     22,923     7,581,032
    2020       1,072,843     1,598,300     1,277,312           941,815     55,581     4,945,851
    2019       1,161,840     1,560,075     1,040,017     2,630,000     1,128,891     41,968     7,562,791

M. JAYNE PARKER3

Former Senior Executive Vice
President and Chief

Human Resources Officer

    2021       976,692     3,111,311     2,200,022     2,300,000     751,263     138,543     9,477,831
    2020       982,496     2,677,576     2,140,002           1,367,495     124,345     7,291,914
    2019       1,041,717     2,040,137     1,360,025     2,680,000     1,807,756     91,227     9,020,862

 

1 

Stock awards for each fiscal year include awards subject to performance conditions that were valued based on the probability that performance targets will be achieved. Fiscal 2021 includes the portion of awards from fiscal 2020 where the ROIC target was established on December 17, 2020 of $1,135,423, $507,715, $1,871,506, $411,131, $172,186 and $288,538 for Mr. Chapek, Ms. McCarthy, Mr. Iger, Mr. Braverman, Ms. Mucha and Ms. Parker, respectively. Assuming the highest level of performance conditions are achieved, the grant date stock awards values are outlined below:

 

FISCAL YEAR

  MR. CHAPEK   MS. MCCARTHY                   MR. IGER     MR. BRAVERMAN           MS. MUCHA     MS. PARKER  

2021

  $11,963,950   $7,767,106     $12,101,153   $5,129,692     $2,048,114   $3,515,382  

2020

  7,687,385   5,319,273     9,195,978   4,307,553     1,804,106   3,022,372  

2019

    3,980,490     14,375,162   3,618,582     1,881,722   2,460,786  

 

2 

For fiscal 2020, Mr. Iger served as Chief Executive Officer until February 24, 2020, when he was appointed Executive Chairman. Mr. Chapek was appointed Chief Executive Officer on February 24, 2020.

 

3 

Ms. Parker received stock and option awards in fiscal 2021. These awards were then cancelled upon her retirement, effective July 1, 2021.

 

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EXECUTIVE COMPENSATION

 

 

Salary. This column sets forth the base salary earned during each fiscal year. Fiscal 2020 reflects the voluntary reduction of the salary of all NEOs in response to the COVID-19 pandemic. Each of the Company’s NEOs agreed to temporarily reduce their base salary, effective with the payroll period commencing April 5, 2020. Mr. Iger agreed to forgo his salary through the end of the fiscal year. Mr. Chapek agreed to forgo 50% and each of Mr. Braverman, Ms. McCarthy, Ms. Mucha and Ms. Parker agreed to forgo 30% of the base salary that would otherwise have been payable through August 22, 2020.

Stock Awards. This column sets forth the grant date fair value of the restricted stock unit awards granted to the NEOs during each fiscal year as part of the Company’s long-term incentive compensation program. The grant date fair value of these awards was calculated by multiplying the number of units awarded by the average of the high and low trading price of the Company’s common stock on the grant date, subject to valuation adjustments for restricted stock unit awards subject to vesting conditions other than, where applicable, the test to assure deductibility under Section 162(m) of the Internal Revenue Code. The valuation adjustments for performance-based awards reflect the fact that the number of shares received on vesting varies based on the level of performance achieved and were determined using a Monte Carlo simulation that determines the probability that the performance targets will be achieved. The grant date fair value of the restricted stock unit awards granted during fiscal 2021 is also included in the Fiscal 2021 Grants of Plan Based Awards Table.

Option Awards. This column sets forth the grant date fair value of options to purchase shares of the Company’s common stock granted to the NEOs during each fiscal year. The grant-date fair value of these options was calculated using a binomial option pricing model. The assumptions used in estimating the fair value of these options are set forth in footnote 13 to the Company’s Audited Financial Statements for fiscal 2021. The grant date fair value of the options granted during fiscal 2021 is also included in the Fiscal 2021 Grants of Plan Based Awards Table.

Non-Equity Incentive Plan Compensation. This column sets forth the amount of compensation earned by the NEOs under the Company’s annual performance-based bonus program during each fiscal year. A description of the Company’s annual performance-based bonus program is included in the section “Compensation Discussion and Analysis – Executive Compensation Program Structure – Objectives and Methods,” and the determination of performance-based bonuses for fiscal 2021 is described in the section “Compensation Discussion and Analysis – Fiscal 2021 Compensation Decisions.” As a result of the COVID-19 pandemic, fiscal 2020 reflects the Compensation Committee’s determination to pay no bonuses to the NEOs, despite achievement of certain performance metrics and considerations that might have otherwise supported a bonus payment.

Change in Pension Value and Non-Qualified Deferred Compensation Earnings. This column reflects the aggregate change in the actuarial present value of each NEO’s accumulated benefits under all defined benefit plans, including supplemental plans, during each fiscal year. The amounts reported in this column vary with a number of factors, including the discount rate applied to determine the value of future payment streams, the NEO’s age and additional earned benefits as a result of an additional year of service. The discount rate used pursuant to pension accounting rules to calculate the present value of future payments was 3.22% for fiscal 2019, 2.82% for fiscal 2020 and 2.88% for fiscal 2021. Neither increases nor decreases in pension value resulting from changes in the discount rate result in any increase or decrease in benefits payable to participants under the plan. For Mr. Iger and Mr. Braverman, their age factors drove the change in pension value to be negative (-$397,782 and -$70,827, respectively).

Mr. Chapek, Ms. McCarthy, Mr. Iger and Ms. Mucha were credited with earnings on deferred compensation as disclosed below under “Fiscal 2021 Non-Qualified Deferred Compensation Table.” These earnings were at rates that were not above market rates and therefore are not reported in this column.

All Other Compensation. This column sets forth all of the compensation for each fiscal year that we could not properly report in any other column of the table, including:

 

 

the incremental cost to the Company of perquisites and other personal benefits;

 

 

the amount of Company contributions to employee savings plans;

 

 

the dollar value of insurance premiums paid by the Company with respect to excess liability insurance for the NEOs; and

 

 

the dollar amount of matching charitable contributions made to charities pursuant to the Company’s charitable gift matching program, which is available to all regular U.S. employees with at least one year of service.

 

 

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The dollar amount of matching charitable contributions was $30,000 for Mr. Chapek, $67,500 for Ms. McCarthy, $25,000 for Mr. Iger, $51,958 for Mr. Braverman and $100,000 for Ms. Parker. Matched amounts exceed $50,000 in a fiscal year if contributions for separate calendar years are made in the same fiscal year or if there were delays in processing earlier year matches.

In accordance with the SEC’s interpretations of its rules, this column also sets forth the incremental cost to the Company of certain items that are provided to the NEOs for business purposes but which may not be considered integrally related to duties.

The following table sets forth the incremental cost to the Company of each perquisite and other personal benefit that exceeded the greater of $25,000 or 10% of the total amount of perquisites and personal benefits for a named executive officer in fiscal 2021.

 

     PERSONAL
AIR TRAVEL
     SECURITY      OTHER      TOTAL   

Robert A. Chapek

     $228,294    $    $ 45,097    $ 273,391 

Christine M. McCarthy

     29,770             15,400      45,170 

Robert A. Iger

     394,504      745,222      34,350      1,174,076 

Alan N. Braverman

                   38,397      38,397 

Zenia B. Mucha

                   16,005      16,005 

M. Jayne Parker

                   31,866      31,866 

The incremental cost to the Company of the items specified above was determined as follows:

 

 

Personal air travel: the actual catering costs, landing and ramp fees, fuel costs and lodging costs incurred by flight crew plus a per hour charge based on the average hourly maintenance costs for the aircraft during the year for flights that were purely personal in nature, and a pro-rata portion of catering costs where personal guests accompanied a NEO on flights that were business in nature. Where a personal flight coincided with the repositioning of an aircraft following a business flight, only the incremental costs of the flight compared to an immediate repositioning of the aircraft are included. As noted below, Mr. Iger and Mr. Chapek are required for security reasons to use corporate aircraft for all of their personal travel.

 

 

Security: the actual costs incurred by the Company for providing security services and equipment.

The “Other” column in the table above includes, to the extent a NEO elected to receive any of these benefits, the incremental cost to the Company of the vehicle benefit, personal air travel (except for the NEOs whose personal air travel is separately identified in the “personal air travel” column in the table above), reimbursement of up to $1,000 per calendar year for wellness-related purposes such as fitness and nutrition management, reimbursement of expenses for financial consulting and for officers at the vice president level and higher before October 1, 2012, a fixed monthly payment to offset the costs of owning and maintaining an automobile.

The Company provides employees with benefits and perquisites based on competitive market conditions. All salaried employees, including the NEOs, receive the following benefits: (i) health care coverage; (ii) life and disability insurance protection; (iii) reimbursement of certain educational expenses; (iv) access to favorably priced group insurance coverage; and (v) Company matching of gifts of up to $25,000 per employee (and $50,000 per Senior Executive Vice President and Chairman directly reporting to the CEO) each calendar year to qualified charitable organizations. Additionally, officers at the vice president level and above, including NEOs, receive the following benefits, each of which involved no incremental cost to the Company: (i) complimentary access to the Company’s theme parks and some resort facilities; (ii) discounts on Company merchandise and resort facilities; and (iii) personal use of tickets acquired by the Company for business entertainment when they become available because no business use has been arranged.

 

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Table of Contents

EXECUTIVE COMPENSATION

 

 

Fiscal 2021 Grants of Plan Based Awards Table

The following table provides information concerning the range of awards available to the NEOs under the Company’s annual performance-based bonus program for fiscal 2021 and information concerning the option grants and restricted stock unit awards made to the NEOs during fiscal 2021. Additional information regarding the amounts reported in each column follows the table.

 

     

 

ESTIMATED FUTURE
PAYOUTS UNDER NON-EQUITY
INCENTIVE PLAN AWARDS

          ESTIMATED FUTURE PAYOUTS
UNDER EQUITY
INCENTIVE PLAN AWARDS
   

ALL OTHER
OPTION
AWARDS:
NUMBER OF
SECURITIES
UNDERLYING
OPTIONS

 

   

EXERCISE
OR BASE
PRICE OF
OPTION
AWARDS

 

   

GRANT
DATE
CLOSING
PRICE OF
SHARES
UNDERLYING
OPTIONS

 

   

GRANT
DATE FAIR
VALUE OF
STOCK AND
OPTION
AWARDS

 

 
          GRANT
DATE
    THRESHOLD     TARGET     MAXIMUM           THRESHOLD     TARGET     MAXIMUM  

ROBERT A.

CHAPEK

      12/17/2020                     67,341       $173.40       $173.55       $3,750,012  
    (A     12/17/2020                 21,627               3,750,122  
    (B     12/17/2020               12,516       25,032       37,547             5,329,921 1 
        $2,625,000       $7,500,000       $15,000,000                  
    (B     12/17/2020               3,274       6,548       9,822             1,135,423 1 

CHRISTINE M. MCCARTHY

      12/17/2020                     89,788       173.40       173.55       5,000,015  
    (A     12/17/2020                 21,627               3,750,122  
    (B     12/17/2020               6,258       12,516       18,774             2,665,017 1 
        1,344,000       3,840,000       7,680,000                  
    (B     12/17/2020               1,464       2,928       4,392             507,715 1 

ROBERT A. IGER

      12/17/2020                     166,896       173.40       173.55       9,293,921  
    (B     12/17/2020               17,866       35,732       53,598             7,608,373 1 
        4,200,000       12,000,000       24,000,000                  
    (B     12/17/2020               5,397       10,793       16,190             1,871,506 1 

ALAN N. BRAVERMAN

      12/17/2020                     57,842       173.40       173.55       3,221,042  
    (A     12/17/2020                 13,932               2,415,809  
    (B     12/17/2020               4,032       8,063       12,095             1,716,832 1 
        1,270,500       3,630,000       7,260,000                  
    (B     12/17/2020               1,186       2,371       3,557             411,131 1 

ZENIA B.

MUCHA

      12/17/2020                     22,938       173.40       173.55       1,277,346  
    (A     12/17/2020                 5,525               958,035  
    (B     12/17/2020               1,599       3,198       4,797             680,920 1 
        523,688       1,496,250       2,992,500                  
    (B     12/17/2020               497       993       1,490             172,186 1 

M. JAYNE

PARKER2

      12/17/2020                     39,507       173.40       173.55       2,200,022  
    (A     12/17/2020                 9,516               1,650,074  
    (B     12/17/2020               2,754       5,508       8,261             1,172,699 1 
         598,500       1,710,000       3,420,000                  
    (B     12/17/2020                                       832       1,664       2,496                               288,538 1 

 

1 

Stock awards for fiscal 2021 subject to performance conditions were valued based on the probability that performance targets will be achieved. Assuming the highest level of performance conditions are achieved, the grant date stock award values would be $8,213,828, $4,016,984, $12,101,153, $2,713,883, $1,090,079 and $1,865,307 for Mr. Chapek, Ms. McCarthy, Mr. Iger, Mr. Braverman, Ms. Mucha and Ms. Parker, respectively, for the performance-based awards made on December 17, 2020.

2 

Ms. Parker received RSUs, PBUs and stock option awards in fiscal 2021. These awards were then cancelled upon her retirement, effective July 1, 2021.

 

 

50          THE WALT DISNEY COMPANY NOTICE OF 2022 ANNUAL MEETING AND PROXY STATEMENT


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Grant Date. The Compensation Committee made the annual grant of stock options and restricted stock unit awards for fiscal 2021 on December 17, 2020. A portion of the fiscal 2021 performance-based restricted stock units granted on December 17, 2020 are subject to the ROIC performance test, as described below. One-third of such units were eligible to vest based on the ROIC performance target established for fiscal 2021. Because the performance targets for fiscal 2022 and 2023 have not yet been established, the grant date value of such portion of these awards was not determinable in fiscal year 2021. Therefore, the grant date fair value listed for fiscal 2021 reflects only the grant date value of that portion of such awards subject to the 2021 ROIC target. Based on the Company’s fiscal 2021 ROIC, 150% of the reported portion of such awards will vest. ROIC Targets for fiscal 2022 and fiscal 2023 will be set early each year for the remaining portion of those grants, and the grant date values for the remaining portions of those grants will be reported for the appropriate fiscal year when the applicable targets are established.

Estimated Possible Payouts Under Non-Equity Incentive Plan Awards. As described in the section “Compensation Discussion and Analysis,” the Compensation Committee sets the target bonus opportunity for the NEOs at the beginning of the fiscal year as a percentage of fiscal year-end salary, and the actual bonuses for the NEOs may, except in special circumstances such as unusual challenges or extraordinary successes, range from 35% to 200% of the target level based on the Compensation Committee’s evaluation of financial and other performance factors for the fiscal year. The bonus amount may be zero if actual performance is below the specified threshold levels or less than the calculated amounts if the Compensation Committee otherwise decides to reduce the bonus. As addressed in the discussion of “Compensation Discussion and Analysis,” the employment agreements of each executive officer require that the target used to calculate the bonus opportunity (but not the actual bonus awarded) be at least the amount specified in each agreement. This column shows the range of potential bonus payments for each NEO from the threshold to the maximum based on the target range set at the beginning of the fiscal year. The actual bonus amounts received for fiscal 2021 are set forth in the “Non-Equity Incentive Plan Compensation” column of the Fiscal 2021 Summary Compensation Table.

Estimated Future Payouts Under Equity Incentive Plan Awards. This column sets forth the number of restricted stock units awarded to the NEOs during fiscal 2021 that are subject to the test to assure eligibility for deduction under Section 162(m) and/or to performance tests as described below. These include units awarded to each of the NEOs as part of the annual grant in December 2020. The units in row A for Ms. Parker are subject to the test to assure eligibility under Section 162(m) in reliance on the special rules for pre-existing binding written agreements and the units in row B for Ms. Parker are subject to this test as well as the performance tests described below (for all NEOs). The vesting dates for all of the outstanding restricted stock unit awards held by the NEOs as of the end of fiscal 2021 are set forth in the Fiscal 2021 Outstanding Equity Awards at Fiscal Year-End Table below.

For only Ms. Parker, all units in Row A (plus any shares received as dividend equivalents prior to vesting) vest if the Section 162(m) test is met or is not applicable. This amount is shown in the “target” column for Row A. None of the units vest if the Section 162(m) test is applicable and is not met.

In the case of units in Row B, which are subject to both the Section 162(m) test, where applicable, and the performance tests, none of the units vest if the Section 162(m) test is applicable and is not met. All units in Row B are subject to the following vesting conditions:

 

 

Half of the units subject to the performance test are subject to a total shareholder return test and half of the units are subject to a ROIC test. For the total shareholder return test:

 

   

None of the units related to this measure vest if the Company’s total shareholder return is below the 25th percentile of the S&P 500 for that measure.

 

   

If the Company’s total shareholder return is at or above the 25th percentile of the S&P 500 for the related measure, the number of units related to that measure that vest will vary from 50% of the target number related to that measure (at the 25th percentile) to 150% of the target number related to that measure (at or above the 75th percentile) (in each case, plus dividend equivalent units).

 

 

For the half of the units subject to the ROIC performance test:

 

   

None of the units related to this measure vest if the Company’s fiscal year ROIC performance in each of the applicable fiscal years is below threshold of target ROIC.

 

   

If the Company’s ROIC is above the threshold in any fiscal year, the number of units related to that measure for that year that vest will vary from 50% of the target number related to that measure (equals threshold) to 150% of the target number related to that measure (exceeds maximum) (in each case, plus dividend equivalent units).

 

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ROIC for the Company is adjusted (i) to exclude the effect of extraordinary, unusual and/or nonrecurring items and (ii) to reflect such other factors, as the Committee deems appropriate to fairly reflect ROIC for the applicable fiscal year.

When dividends are distributed to shareholders, dividend equivalents are credited in an amount equal to the dollar amount of dividends on the number of units held on the dividend record date divided by the fair market value of the Company’s shares of common stock on the dividend distribution date. Dividend equivalents vest only when, if and to the extent that the underlying units vest.

All Other Option Awards: Number of Securities Underlying Options. This column sets forth the options to purchase shares of the Company’s common stock granted to the NEOs as part of the annual grant in December 2020. The vesting dates for these options are set forth in the Fiscal 2021 Outstanding Equity Awards at Fiscal Year-End Table below. These options are scheduled to expire ten years after the date of grant.

Exercise or Base Price of Option Awards; Grant Date Closing Price of Shares Underlying Options. These columns set forth the exercise price for each option grant and the closing price of the Company’s common stock on the date of grant. The exercise price is equal to the average of the high and low trading price on the grant date, which may be higher or lower than the closing price on the grant date.

Grant Date Fair Value of Stock and Option Awards. This column sets forth the grant date fair value of the stock and option awards granted during fiscal 2021 calculated in accordance with applicable accounting requirements. The grant date fair value of all restricted stock unit awards and options is determined as described in the section, “Grant Date,” above.

 

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EXECUTIVE COMPENSATION

 

 

Fiscal 2021 Outstanding Equity Awards at Fiscal Year-End Table

The following table provides information concerning outstanding unexercised options and unvested restricted stock unit awards held by the NEOs as of October 2, 2021. Additional information regarding the amounts reported in each column follows the table.

 

 

 

 

 

OPTION AWARDS(A)

   

 

STOCK AWARDS

 
 

 

   

 

    NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS
     

 

      

 

     

 

     

 

    EQUITY INCENTIVE PLAN
AWARDS
 
    GRANT
DATE
    EXERCISABLE     UNEXERCISABLE     OPTION
EXERCISE
PRICE
     OPTION
EXPIRATION
DATE
    NUMBER OF
UNITS THAT
HAVE NOT
VESTED(A)
    MARKET
VALUE OF
UNITS THAT
HAVE NOT
VESTED
    NUMBER OF
UNEARNED
UNITS THAT
HAVE NOT
VESTED(B)(C)
    MARKET
VALUE OF
UNEARNED
UNITS THAT
HAVE NOT
VESTED
 

ROBERT A. CHAPEK

    1/16/2013       60,860             $  51.29        1/16/2023                          
    12/19/2013       53,233             72.59        12/19/2023                          
    12/18/2014       53,077             92.24        12/18/2024                          
    12/17/2015       39,796             113.23        12/17/2025                          
    12/21/2016       49,621             105.21        12/21/2026                          
    12/19/2017       34,268       11,423       111.58        12/19/2027       2,125       374,021              
    12/19/2018       37,613       37,614       110.54        12/19/2028       7,104       1,250,375       13,968       2,458,508  
    12/17/2019       15,761       47,286       148.04        12/17/2029       8,321       1,464,579       7,127       1,254,335  
    2/28/2020       9,741       29,223 (D)      115.76        2/28/2030       7,008 (E)      1,233,478       19,064 (F)      3,355,455  
    12/17/2020             67,341       173.40        12/17/2030       21,627       3,806,568       25,032       4,405,794  

CHRISTINE M. MCCARTHY

    1/18/2012       45,342               38.75        1/18/2022                          
    1/16/2013       42,533             51.29        1/16/2023                          
    12/19/2013       30,687             72.59        12/19/2023                          
    12/18/2014       28,839             92.24        12/18/2024                          
    12/17/2015       41,722             113.23        12/17/2025                          
    12/21/2016       50,396             105.21        12/21/2026                          
    12/19/2017       48,189       16,063       111.58        12/19/2027                   3,126       550,207  
    12/19/2018       38,310       38,311       110.54        12/19/2028                   21,798       3,836,666  
    12/17/2019       25,900       77,703       148.04        12/17/2029                   26,022       4,580,132  
    12/17/2020             89,788       173.40        12/17/2030       21,627       3,806,568       12,516       2,202,941  

ROBERT A. IGER

    12/19/2013       435,220               72.59        12/19/2023                          
    12/18/2014       372,412             92.24        12/18/2024                          
    12/17/2015       271,331             113.23        12/17/2025                          
    12/21/2016       321,694             105.21        12/21/2026                          
    12/13/2017                                60,541 (G)      10,655,821       963,677 (H)      169,616,843  
    12/19/2017       221,427       73,810       111.58        12/19/2027                          
    12/19/2018       145,945       145,946       110.54        12/19/2028                   76,753       13,509,296  
    3/21/2019       23,401       23,402 (I)      109.26        3/21/2029                   11,138 (J)      1,960,399  
    12/17/2019       65,920       197,763       148.04        12/17/2029                   43,170       7,598,264  
    12/17/2020             166,896       173.40        12/17/2030                   35,732       6,289,189  

ALAN N. BRAVERMAN

    12/18/2014       53,077               92.24        12/18/2024                          
    12/17/2015       40,181             113.23        12/17/2025                          
    12/21/2016       48,536             105.21        12/21/2026                          
    12/19/2017       42,834       14,279       111.58        12/19/2027                   2,779       489,132  
    12/19/2018       34,827       34,828       110.54        12/19/2028       6,578       1,157,794       12,934       2,276,513  
    12/17/2019       20,974       62,923       148.04        12/17/2029       11,072       1,948,783       9,483       1,669,103  
    12/17/2020             57,842       173.40        12/17/2030       13,932       2,452,171       8,063       1,419,169  

ZENIA B. MUCHA

    12/17/2015       25,996             113.23        12/17/2025                          
    12/21/2016       32,797             105.21        12/21/2026                          
    12/19/2017       22,649       7,550       111.58        12/19/2027       1,404       247,118              
    12/19/2018       18,110       18,111       110.54        12/19/2028       3,420       601,954       6,725       1,183,667  
    12/17/2019       8,783       26,352       148.04        12/17/2029       4,637       816,158       3,972       699,024  
    12/17/2020             22,938       173.40        12/17/2030       5,525       972,455       3,198       562,880  

 

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EXECUTIVE COMPENSATION

 

 

   

 

OPTION AWARDS(A)

   

 

STOCK AWARDS

 
 

 

   

 

   

 

NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS

      

 

      

 

     

 

      

 

    EQUITY INCENTIVE PLAN
AWARDS
 
    GRANT
DATE
    EXERCISABLE     UNEXERCISABLE      OPTION
EXERCISE
PRICE
     OPTION
EXPIRATION
DATE
    NUMBER OF
UNITS THAT
HAVE NOT
VESTED(A)
     MARKET
VALUE OF
UNITS THAT
HAVE NOT
VESTED
    NUMBER OF
UNEARNED
UNITS THAT
HAVE NOT
VESTED(B)(C)
     MARKET
VALUE OF
UNEARNED
UNITS
THAT
HAVE NOT
VESTED
 

M. JAYNE PARKER(K)

    12/17/2015       28,243              113.23        12/17/2025                            
    12/21/2016       34,115              105.21        12/21/2026                            
    12/19/2017       34,803       11,602        111.58        12/19/2027                    2,258        397,431  
    12/19/2018       23,683       23,683        110.54        12/19/2028                    13,475        2,371,735  
    12/17/2019       14,716       44,149        148.04        12/17/2029                    14,786        2,602,484  

Number of Securities Underlying Unexercised Options: Exercisable and Unexercisable. These columns set forth, for each NEO and for each grant made to the officer, the number of shares of the Company’s common stock that can be acquired upon exercise of outstanding options. The vesting schedule for each option with unexercisable shares is shown under “Vesting Schedule” below. The vesting of options held by the NEOs may be accelerated in the circumstances described under the section “Potential Payments and Rights on Termination or Change in Control” below.

Number; Market Value of Units of Stock That Have Not Vested. These columns report the number and market value, respectively, of shares underlying each grant of restricted stock units to each officer that is not subject to performance vesting conditions nor the test to assure eligibility for deduction pursuant to Section 162(m). The number of shares includes dividend equivalent units that have accrued for dividends payable through October 2, 2021. The market value is equal to the number of shares underlying the units times the closing market price of the Company’s common stock on October 1, 2021, the last trading day of the Company’s fiscal year. The vesting schedule for each grant is shown below, with grants identified by the letter following the number of shares underlying the grant. Vesting of restricted stock units held by NEOs may be accelerated in the circumstances described under the section “Potential Payments and Rights on Termination or Change in Control” below.

Number; Market Value of Unearned Units That Have Not Vested. These columns set forth the target number and market value, respectively, of shares of the Company’s common stock underlying each restricted stock unit award held by each NEO that is subject to performance-based vesting conditions and/or the test to assure eligibility for deduction pursuant to Section 162(m). The number of shares includes dividend equivalent units that have accrued for dividends payable through October 2, 2021. The market value is equal to the number of shares underlying the units multiplied by the closing market price of the Company’s common stock on October 1, 2021, the last trading day of the Company’s fiscal year. The vesting schedule and performance tests and/or the test to assure eligibility under Section 162(m) are shown in “Vesting Schedule,” below.

Vesting Schedule. The options reported above that are not yet exercisable and restricted stock unit awards that have not yet vested are scheduled to become exercisable and vest as set forth below.

(A) Unless otherwise noted, stock options and restricted stock units granted before December 2020 will vest 25% on each of the first four anniversaries of the grant date. Grants made in or after December 2020 will vest one-third on each of the first three anniversaries of the grant date.

(B) For 2018 grants, performance-based restricted stock units will cliff-vest on the third anniversary of grant date, based on three-year TSR and EPS performance versus the S&P 500. For 2019 and 2020, performance-based restricted stock units will cliff vest on the third anniversary of grant date, based on three-year TSR versus S&P 500 and absolute ROIC tests for each of the fiscal years in the three-year period (targets set each year). Mr. Iger’s December 13, 2017 grant of performance-based restricted stock units, grants before 2018 for Mr. Braverman, before 2020 for Ms. McCarthy and all grants for Ms. Parker are subject to performance under Section 162(m).

(C) While restricted stock units will vest 25% on each of the first four anniversaries of the grant date for grants made before December 2020 and one-third on each of the first three anniversaries of the grant date for grants made in or after December 2020, grants before 2018 for Mr. Braverman, before 2020 for Ms. McCarthy and all grants for Ms. Parker are subject to performance under Section 162(m).

 

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(D) Options granted February 28, 2020 in connection with Mr. Chapek’s appointment as Chief Executive Officer. One-third of the remaining unexercisable options are scheduled to become exercisable on each of December 17, 2021, 2022 and 2023.

(E) Restricted stock units granted February 28, 2020 in connection with Mr. Chapek’s appointment as Chief Executive Officer. One-third of the remaining units are scheduled to vest on each of December 17, 2021, 2022 and 2023.

(F) Restricted stock units granted February 28, 2020 in connection with Mr. Chapek’s appointment as Chief Executive Officer. The units are scheduled to vest on December 17, 2022 subject to satisfaction of a three-year total shareholder return test and three one-year ROIC tests, with the number of units vesting depending on the level at which the tests were satisfied.

(G) Restricted stock units granted December 13, 2017. Remaining shares are scheduled to vest on December 31, 2021.

(H) Restricted stock units granted December 13, 2017. The units are scheduled to vest on December 31, 2021 subject to satisfaction of a total shareholder return test, with the number of units vesting depending on the level at which the tests were satisfied.

(I) Options granted March 21, 2019 following the close of the TFCF acquisition. One-half are scheduled to become exercisable on each of December 19, 2021 and 2022.

(J) Restricted stock units granted March 21, 2019 following the close of the TFCF acquisition. The units are scheduled to vest on December 19, 2021 subject to satisfaction of a total shareholder return and earnings per share test, with the number of units vesting depending on the level at which the tests were satisfied.

(K) Ms. Parker retired from the Company effective July 1, 2021. While she did receive an annual grant on December 17, 2020, she did not vest in the options, RSUs and performance-based restricted stock units granted in December 2020 and they were cancelled upon her retirement.

Extended Vesting of Equity Awards

Options and restricted stock units continue to vest beyond retirement (and options remain exercisable) if (1) they were awarded at least one year prior to the date of an employee’s retirement and (2) the employee was age 60 or older and had at least ten years of service on the date such employee retired. In these circumstances:

 

 

Options continue to vest following retirement according to the original vesting schedule. They remain exercisable for up to five years following retirement. Options do not, however, remain exercisable beyond the original expiration date of the option.

 

 

Restricted stock units continue to vest following retirement according to the original vesting schedule, but vesting remains subject to any applicable performance conditions (except, in some cases, the test to ensure that the compensation is deductible pursuant to Section 162(m)).

The extended vesting and exercisability is not available to certain employees outside the United States.

Options and restricted stock units awarded to executive officers with employment agreements also continue to vest (and options remain exercisable) beyond termination of employment if the executive’s employment is terminated by the Company without cause or by the executive with good reason. In this case, options and restricted stock units continue to vest (and options remain exercisable) as though the executive remained employed through the end of the stated term of the employment agreement. If the executive would be age 60 or older and have at least ten years of service as of the end of the stated term of the employment agreement, the options and restricted stock units awarded at least one year prior to the end of the stated term of the agreement would continue to vest (and options remain exercisable) beyond the stated term of the employment agreement.

 

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EXECUTIVE COMPENSATION

 

 

Fiscal 2021 Option Exercises and Stock Vested Table

The following table provides information concerning the exercise of options and vesting of restricted stock unit awards held by the NEOs during fiscal 2021.

 

 

 

  

 

OPTION AWARDS

    

 

STOCK AWARDS

 
    

 

NUMBER OF
SHARES
ACQUIRED ON
EXERCISE

     VALUE
REALIZED ON
EXERCISE
    

 

NUMBER OF
SHARES
ACQUIRED ON
VESTING

     VALUE
REALIZED ON
VESTING
 

ROBERT A. CHAPEK

                   18,655      $  3,268,288

CHRISTINE M. MCCARTHY

     34,139    $ 4,548,721      21,230      3,682,387

ROBERT A. IGER

     1,417,629      199,235,312      107,959      19,262,162

ALAN N. BRAVERMAN

     146,722      12,415,375      19,116      3,313,521

ZENIA B. MUCHA

     69,875      6,704,927      9,806      1,698,818

M. JAYNE PARKER

     9,731      591,207      14,094      2,444,772

The value realized on the exercise of options is equal to the amount per share at which the NEO sold shares acquired on exercise (all of which occurred on the date of exercise) minus the exercise price of the option times the number of shares acquired on exercise of the options. The value realized on the vesting of stock awards is equal to the closing market price of the Company’s common stock on the date of vesting times the number of shares acquired upon vesting. The number of shares and value realized on vesting includes shares that were withheld at the time of vesting to satisfy tax withholding requirements.

Equity Compensation Plans

The following table summarizes information, as of October 2, 2021, relating to equity compensation plans of the Company pursuant to which grants of options, restricted stock, restricted stock units or other rights to acquire shares of the Company’s common stock may be granted from time to time.

 

PLAN CATEGORY

  NUMBER OF SECURITIES
TO BE ISSUED
UPON EXERCISE
OF OUTSTANDING
OPTIONS, WARRANTS
AND RIGHTS
(A)
    WEIGHTED-AVERAGE
EXERCISE PRICE OF
OUTSTANDING OPTIONS,
WARRANTS AND RIGHTS
(B)
    NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
FUTURE ISSUANCE UNDER
EQUITY COMPENSATION
PLANS (EXCLUDING SECURITIES
REFLECTED IN COLUMN (A))
(C)
 

Equity compensation plans approved by security holders1

    31,727,032 2,3      $113.99 4      147,900,769 3,5 

Equity compensation plans not approved by security holders

                 

Total

    31,727,032 2,3      $113.99 4      147,900,769 3,5 

 

1 

These plans are the Company’s Amended and Restated 2011 Stock Incentive Plan (“2011 Stock Incentive Plan”), The Walt Disney Company/Pixar 2004 Equity Incentive Plan (the Disney/Pixar Plan was assumed by the Company in connection with the acquisition of Pixar) and The Walt Disney Company/TFCF 2013 Equity Incentive Plan (the Disney/TFCF Plan was assumed by the Company in connection with the acquisition of TFCF).

 

2 

Includes an aggregate of 13,472,395 restricted stock units and performance-based restricted stock units. Includes an aggregate of 52,575 restricted stock units granted under a plan assumed by the Company in connection with the acquisition of Pixar, which was approved by the shareholders of Pixar prior to the Company’s acquisition.

 

3 

Assumes shares issued upon vesting of performance-based units vest at 100% of target number of units. Actual number of shares issued on vesting of performance units could be zero to 150% of the target number of units.

 

4 

Weighted average exercise price of outstanding options; excludes restricted stock units and performance-based restricted stock units.

 

5 

Includes 382,356 securities available for future issuance under a plan assumed by the Company in connection with the acquisition of Pixar, which was approved by the shareholders of Pixar prior to the Company’s acquisition. Includes 27,720,535 securities available for future issuance under a plan assumed by the Company in connection with the acquisition of TFCF, which was approved by the shareholders of TFCF prior to the Company’s acquisition. Assumes all awards are made in the form of options. Each award of one restricted stock unit under the 2011 Stock Incentive Plan reduces the number of shares available under the plan by two, so the number of securities available for issuance will be smaller to the extent awards are made as restricted stock units.

 

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EXECUTIVE COMPENSATION

 

 

Pension Benefits

The Company maintains a tax-qualified, noncontributory retirement plan, called the Disney Salaried Pension Plan D, for salaried employees who commenced employment before January 1, 2012. Benefits are based on a percentage of total average monthly compensation multiplied by years of credited service. For service years after 2012, average monthly compensation includes overtime, commission and regular bonus and is calculated based on the highest five consecutive years of compensation during the ten-year period prior to termination of employment or retirement, whichever is earlier. For service years prior to 2012, average monthly compensation considers only base salary, benefits were based on a somewhat higher percentage of average monthly compensation, and benefits included a flat dollar amount based solely on years and hours of service. Retirement benefits are non-forfeitable after three years of vesting service (five years of vesting service prior to 2012) or at age 65 after one year of service. Actuarially reduced benefits are paid to participants whose benefits are non-forfeitable and who retire before age 65 but on or after age 55.

In calendar year 2021, the maximum compensation limit under a tax-qualified plan was $290,000 and the maximum annual benefit that may be accrued under a tax-qualified defined benefit plan was $230,000. To provide additional retirement benefits for key salaried employees, the Company maintains a supplemental non-qualified, unfunded plan, the Amended and Restated Key Plan, which provides retirement benefits in excess of the compensation limitations and maximum benefit accruals under tax-qualified plans. Under this plan, benefits are calculated in the same manner as under the Disney Salaried Pension Plan D, including the differences in benefit determination for years before and after January 1, 2012, described above, except as follows:

 

 

starting on January 1, 2017, average annual compensation used for calculating benefits under the plans for any participant was capped at the greater of $1,000,000 or the participant’s average annual compensation determined as of January 1, 2017; and

 

 

benefits for persons who were NEOs on January 1, 2012 are limited to the amount the executive officer would have received had the plan in effect prior to its January 1, 2012 amendment continued without change.

Company employees (including three of the NEOs) who transferred to the Company from ABC, Inc. after the Company’s acquisition of ABC are also eligible to receive benefits under the Disney Salaried Pension Plan A (formerly known as the ABC, Inc. Retirement Plan) and a Benefits Equalization Plan, which, like the Amended and Restated Key Plan, provides eligible participants retirement benefits in excess of the compensation limits and maximum benefit accruals that apply to tax-qualified plans. Mr. Iger, Mr. Braverman and Ms. Mucha received credited years of service under those plans for the years prior to the Company’s acquisitions of ABC, Inc. A term of the 1995 purchase agreement between ABC, Inc. and the Company provides that employees transferring employment to coverage under a Disney pension plan will receive an additional benefit under Disney plans equal to (a) the amount the employee would receive under the Disney pension plans if all of the employee’s ABC service were counted under the Disney pension less (b) the combined benefits the employee receives under the ABC plan (for service prior to the transfer) and the Disney plan (for service after the transfer). Mr. Iger, Mr. Braverman and Ms. Mucha transferred from ABC, and each receives a pension benefit under the Disney plans to bring the employee’s total benefit up to the amount the employee would have received if all the employee’s years of service had been credited under the Disney plans. The effect of these benefits is reflected in the present value of benefits under the Disney plans in the table below.

As of the end of fiscal 2021, Mr. Chapek and Ms. Mucha were eligible for early retirement; Mr. Iger, Mr. Braverman and Ms. McCarthy were eligible for retirement and Ms. Parker had elected early retirement. The early retirement reduction is 50% at age 55, decreasing to 0% at age 65.

 

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EXECUTIVE COMPENSATION

 

 

Fiscal 2021 Pension Benefits Table

The following table sets forth the present value of the accumulated pension benefits that each NEO is eligible to receive under each of the plans described above.

 

NAME

   PLAN NAME    NUMBER OF
YEARS OF
CREDITED
SERVICE AT
FISCAL
YEAR-END
         PRESENT VALUE OF
ACCUMULATED
BENEFIT AT
FISCAL YEAR-END
1
     PAYMENTS DURING
LAST FISCAL YEAR
1
 

ROBERT A. CHAPEK

   Disney Salaried Pension Plan D      20          $  1,999,686         
   Disney Amended and Restated Key Plan      20            14,866,796