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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 (Amendment No.          )

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Soliciting Material under §240.14a-12

 

The Walt Disney Company

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LOGO




Notice of 2018 Annual Meeting and Proxy Statement


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GRAPHIC

January 12, 2018

Dear Fellow Shareholder,

I am pleased to invite you to our 2018 Annual Meeting of shareholders, which will be held on Thursday, March 8, 2018, at 10 a.m. at the Hobby Center for the Performing Arts in Houston, Texas.

At the meeting, we will be electing 10 members of our Board of Directors. We will also be considering ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accountants, re-approval of certain terms of the 2002 Executive Performance Plan, an advisory vote to approve executive compensation, and two shareholder proposals.

You may vote your shares using the Internet or the telephone by following the instructions on page 70 of the proxy statement. Of course, you may also vote by returning a proxy card or voting instruction form if you received a paper copy of this proxy statement.

If you wish to attend the meeting in person, you will need to obtain an admission ticket in advance. You can obtain a ticket by following the instructions on page 71 of the proxy statement. If you cannot attend the meeting, you can still listen to the meeting, which will be webcast and available on our Investor Relations website.

Thank you very much for your continued interest in The Walt Disney Company.

Sincerely,

GRAPHIC

Robert A. Iger
Chairman and Chief Executive Officer

   


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GRAPHIC   The Walt Disney Company
  Notice of 2018 Annual Meeting

The 2018 Annual Meeting of shareholders of The Walt Disney Company will be held:

    Thursday, March 8, 2018
    10:00 a.m. Local Time
    Hobby Center for the Performing Arts
    800 Bagby Street
    Houston, Texas 77002

The items of business are:

    1.
    Election of the ten nominees named in the proxy statement as Directors, each for a term of one year.
    2.
    Ratification of the appointment of PricewaterhouseCoopers LLP as the Company's independent registered public accountants for fiscal 2018.
    3.
    Approval of material terms of performance goals under the Amended and Restated 2002 Executive Performance Plan.
    4.
    Consideration of an advisory vote to approve executive compensation.
    5.
    Consideration of up to two shareholder proposals, if presented.

Shareholders of record of Disney common stock (NYSE: DIS) at the close of business on January 8, 2018, 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 12, 2018
Burbank, California

GRAPHIC

Alan N. Braverman
Senior Executive Vice President,
General Counsel and Secretary

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be Held on March 8, 2018

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

Your Vote is Important

Please vote as promptly as possible by using the Internet or telephone or by signing, dating and returning the Proxy Card mailed to those who receive paper copies of this proxy statement.


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Table of Contents

 

Proxy Summary

  1
 

Corporate Governance and Board Matters

 
9
 

Governing Documents

  9
 

The Board of Directors

  9
 

Board Leadership

  9
 

Committees

  10
 

The Board's Role in Risk Oversight

  11
 

Director Selection Process

  12
 

Director Independence

  13
 

Certain Relationships and Related Person Transactions

  14
 

Shareholder Communications

  14
 

Director Compensation

 
16
 

Executive Compensation

 
19
 

Compensation Discussion and Analysis

  19
 

Executive Compensation Program Structure

  19
 

2017 Compensation Decisions

  28
 

Compensation Committee Report

  35
 

Compensation Tables

  36
 

Audit-Related Matters

 
54
 

Audit Committee Report

  54
 

Policy for Approval of Audit and Permitted Non-audit Services

  55
 

Auditor Fees and Services

  55
 

Items to Be Voted On

 
56
 

Election of Directors

  56
 

Ratification of Appointment of Independent Registered Public Accountants

  62
 

Approval of material terms of performance goals under the Amended and Restated 2002 Executive Performance Plan

  62
 

Advisory Vote on Executive Compensation

  64
 

Shareholder Proposals

  65
 

Other Matters

  69
 

Information About Voting and the Meeting

 
70
 

Shares Outstanding

  70
 

Voting

  70
 

Attendance at the Meeting

  71
 

Other Information

 
72
 

Stock Ownership

  72
 

Section 16(a) Beneficial Ownership Reporting Compliance

  73
 

Electronic Availability of Proxy Statement and Annual Report

  73
 

Mailings to Multiple Shareholders at the Same Address

  73
 

Proxy Solicitation Costs

  74
 

Annex A — Reconciliation of Non-GAAP Measures

 
A-1
 

Annex B — Amended and Restated 2002 Executive Performance Plan

  B-1

The Walt Disney Company (500 South Buena Vista Street, Burbank, California 91521) is providing you with this proxy statement relating to its 2018 Annual Meeting of shareholders. We began mailing a notice on January 12, 2018 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" or "Disney" in this Proxy Statement refer to The Walt Disney Company and its consolidated subsidiaries.

   

The Walt Disney Company Notice of 2018 Annual Meeting and Proxy Statement


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GRAPHIC   Proxy Summary

Proposals to be Voted On

The following proposals will be voted on at the Annual Meeting of shareholders.

 
   
  For More Information
  Board Recommendation
Proposal 1: Election of ten directors   Pages 56 to 61   GRAPHIC For Each Nominee
Susan E. Arnold   Robert A. Iger        
Mary T. Barra   Maria Elena Lagomasino        
Safra A. Catz   Fred H. Langhammer        
John S. Chen   Aylwin B. Lewis        
Francis A. deSouza   Mark G. Parker        
Proposal 2:       Page 62   GRAPHIC For
Ratification of appointment of independent registered public accountants        
Proposal 3:       Pages 62 to 64   GRAPHIC For
Approval of material terms of performance goals under the Amended and Restated 2002 Executive Performance Plan        
Proposal 4:       Page 64   GRAPHIC For
Advisory resolution on executive compensation        
Proposal 5:       Pages 65 to 66   GRAPHIC Against
Shareholder proposal requesting an annual report disclosing information regarding the Company's lobbying policies and activities        
Proposal 6:       Pages 67 to 68   GRAPHIC Against
Shareholder proposal requesting the Board amend the Company's Bylaws relating to proxy access to increase the number of permitted nominees, remove the limit on aggregating shares to meet the shareholding requirement, and remove the limitation on renomination of persons based on votes in a prior election        

You may cast your vote in any of the following ways:

  GRAPHIC   GRAPHIC   GRAPHIC   GRAPHIC   GRAPHIC

 

Internet

 

 

 

Phone

 

Mail

 

In Person
  Visit www.ProxyVote.com/Disney. You will need the 16-digit number included in your proxy card, voter instruction form or notice.   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.   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.   Send your completed and signed proxy card or voter instruction form to the address on your proxy card or voter instruction form.   See below regarding Attendance at the Meeting.

Attendance at the Meeting

If you plan to attend the meeting, you must be a shareholder on the record date and obtain an admission ticket in advance following the instructions set forth on page 71 of this proxy statement. Tickets will be available to registered and beneficial owners and to one guest accompanying each registered or beneficial owner.

Requests for admission tickets will be processed in the order in which they are received and must be requested no later than March 7, 2018. Please note that seating is

limited and requests for tickets will be accepted on a first-come, first-served basis. On the day of the meeting, each shareholder will be required to present valid picture identification such as a driver's license or passport with their admission ticket. Seating will begin at 9:00 a.m. and the meeting will begin at 10:00 a.m. Large bags, backpacks, suitcases, briefcases, cameras (including cell phones with photographic capabilities), recording devices and other electronic devices will not be permitted at the meeting. You will be required to enter through a security checkpoint before being granted access to the meeting.

   

Proxy Summary


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GRAPHIC   Proxy Summary

This summary provides highlights of certain information in this proxy statement. As it is only a summary, please review the complete proxy statement and 2017 annual report before you vote.

Executive compensation in fiscal 2017 recognized significant achievements in our Parks and Resorts segment, continued strength of our Studio operations, and leadership in addressing long-term challenges created by a changing media environment, while reflecting financial performance that faced challenges identified at the outset of the year.

                                                                          Fiscal 2017 Performance

 

GRAPHIC

As we communicated to our shareholders early in the fiscal year, fiscal 2017 faced comparability challenges relative to prior-year performance given the extraordinary success of Star Wars: The Force Awakens in fiscal 2016 and cost increases in our Media Networks segment resulting from renewal of key sports rights. Thus, despite strong growth at our Parks and Resorts segment, diluted earnings per share (EPS) declined slightly from fiscal 2016 levels.

Despite declines in fiscal 2017, EPS, net income and revenue all grew between fiscal 2015 and fiscal 2017 at a compound annual growth rate (CAGR) of 8% for EPS, 4% for net income and 3% for revenue, and segment operating income was essentially flat over the period.

GRAPHIC

    *
    For a reconciliation of segment operating income to net income, see Annex A.
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At the segment level in fiscal 2017, Parks and Resorts experienced a strong increase in operating income, with growth both domestically (despite the impact of two hurricanes during the fiscal year) and internationally. Media Networks operating income declined as an increase in affiliate revenue was offset by a decrease in advertising revenues, the previously mentioned increase in sports rights costs, and higher equity losses from our investments in BAMTech and Hulu as a result of increased investment in the direct-to-consumer business. Operating income at Studio Entertainment and Consumer Products & Interactive Media declined from fiscal 2016 levels due to the extraordinary performance of Star Wars: The Force Awakens in the prior fiscal year.

          Change in Operating Income by Segment

          GRAPHIC

   

GRAPHIC

The Company's long-term record of strong performance is reflected in five- and ten-year total shareholder returns (TSRs) that outperformed the S&P 500, by 124 percentage points in the case of the ten-year TSR.

          1-, 3-, 5- and 10-Year TSR, DIS vs. S&P 500

          GRAPHIC

We also outperformed our Media Industry Peers (used for benchmarking purposes as described on page 19) for the five- and ten-year periods.

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          1-, 3-, 5- and 10-Year TSR, DIS vs. Media Industry Peers

          GRAPHIC

    *
    Market cap-weighted TSR for The Walt Disney Company, CBS, Twenty-First Century Fox, Time Warner, Viacom, and Comcast

This outperformance for the five- and ten-year periods is even greater if Disney itself is excluded from the Media Industry Peers, as the TSR for the other companies was 91% and 169% for those periods.

                                                                          Compensation Structure and Philosophy

GRAPHIC

We summarize the Compensation Committee's compensation philosophy and address Mr. Iger's fiscal 2017 compensation below. We provide a more detailed explanation of our compensation program, Mr. Iger's compensation and the compensation of other named executive officers in the Compensation Discussion and Analysis beginning on page 19.

The Compensation Committee firmly believes in pay for performance. Again in fiscal 2017, over 90% of Mr. Iger's target annual total direct compensation depended on the Company's financial results and the performance of Disney stock.

Base salary is the only fixed element of Mr. Iger's annual compensation, and his base salary in fiscal 2017 remained unchanged since fiscal 2012. Substantially all other annual compensation breaks into the following performance-based categories:

A performance-based annual cash bonus opportunity that is:
(a)
70% dependent on achievement of performance against four financial measures (segment operating income, adjusted EPS, after-tax free cash flow, and return on invested capital), all of which the Compensation Committee believes drive long-term shareholder value creation; and
(b)
30% dependent on the Compensation Committee's assessment of individual contributions toward achievement of qualitative goals tied to the Company's strategic priorities.
An annual equity award, which for the Chief Executive Officer is comprised of 50% options and 50% performance-based units. The realized option value depends on the performance of Disney stock and the realized performance-unit value depends on three-year achievement of relative TSR and EPS performance.
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                                                                          Fiscal 2017 Chief Executive Officer Compensation

   
    

Over the course of his tenure as Chief Executive Officer, Mr. Iger has driven spectacular financial performance and created significant shareholder value, with Disney's market capitalization increasing 225% from $45.8 billion when Mr. Iger became Chief Executive Officer in October 2005 to $148.9 billion at the end of fiscal 2017. Since fiscal 2005, Disney has achieved exceptional financial performance highlighted by:

11% compounded annual growth in income from continuing operations attributable to Disney
14% compounded annual growth in diluted EPS
385% increase in total shareholder return, illustrating significant outperformance relative to the S&P 500 and Media Industry Peers, whose total returns increased 164% and 225% respectively, over this period

   
    

        Income from Continuing Operations Attributable to Disney

        GRAPHIC

        Diluted EPS (Reported)

        GRAPHIC

        TSR from Sept. 30, 2005 — Sept. 29, 2017

        GRAPHIC

    *
    Market cap-weighted TSR for The Walt Disney Company, CBS, Twenty-First Century Fox, Time Warner, Viacom, and Comcast
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Against the backdrop of this track record of consistent strong performance, the Compensation Committee made the following decisions with respect to Mr. Iger's fiscal 2017 compensation.

Salary: The Compensation Committee left Mr. Iger's annual salary rate for fiscal 2017 unchanged.

Equity Awards: The Compensation Committee left the value of Mr. Iger's equity awards for fiscal 2017 approximately equal to the values for the last five fiscal years. Half of this equity award is in the form of performance-based stock units and half is in the form of stock options.

GRAPHIC

Non-Equity Incentive Plan Compensation: Mr. Iger's performance-based cash bonus of $15.2 million (compared to $20.0 million for fiscal 2016) reflects performance against the four financial performance measures and qualitative goals as discussed below:

Financial Performance Measures:  The Compensation Committee sets performance ranges for the four financial performance measures that are used to determine 70% of each named executive officer's bonus award early in the fiscal year. In establishing these ranges for fiscal 2017, the Committee set ranges that generally reflected increases over the prior year's ranges while taking into account the exceptional performance in preceding years and challenges the Company would face in fiscal 2017.

    The Company demonstrated superior execution in a number of areas in fiscal 2017, including reaching profitability at Shanghai Disney Resort ahead of schedule, improvement of performance at Disneyland Paris, and continued strength in our studio, which had six films generating over $600 million in global box office sales. The Company also initiated an important strategic shift by beginning development of direct-to-consumer offerings of sports programming (planned for 2018) and Disney, Pixar, Marvel and Star Wars content (planned for 2019). Nevertheless, as measured for compensation purposes, adjusted segment operating income declined 5%, adjusted earnings per share were down $0.05, return on invested capital declined 90 basis points, and after-tax free cash flow declined 12%.

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    This performance resulted in performance factors that ranged from 78% to 155% across the four measures, and the weighted average of the four financial performance factors was 100%.

    GRAPHIC

    In comparing actual performance for fiscal 2017 for the purposes of establishing compensation to the performance ranges, the Compensation Committee adjusted for the impacts of: a litigation settlement; restructuring charges; the gain recognized in the value of BAMTech in connection with increased ownership of BAMTech; the effects of two hurricanes during the fiscal year; and changes in accounting principles relating to restricted cash and taxation of equity compensation. Return on invested capital and after-tax free cash flow are calculated as set forth on page 30.

Other Performance Factor:  In setting the other performance factor for Mr. Iger, the Compensation Committee considered Mr. Iger's outstanding leadership in addressing the long-term challenges created by a changing media environment. This leadership included the strategic initiative to develop a direct-to-consumer business and the necessary investments in that initiative including the acquisition of a majority stake in BAMTech. In addition, the Compensation Committee considered the creative success reflected in the Studio's performance, the profitability of Shanghai Disney Resort in its first full year of operation, and improvements at Disneyland Paris. Taking all this into account, the Compensation Committee applied a factor of 189% for Mr. Iger's qualitative performance in fiscal 2017 versus 202% in fiscal 2016.

As a result, despite strong performance in the face of known comparability challenges and Mr. Iger's on-going strategic leadership, the absence of growth in fiscal 2017 led to a decline of $4.8 million in Mr. Iger's bonus compared to fiscal 2016.

The Committee believes Mr. Iger's compensation in fiscal 2017 continues to reflect its pay for performance orientation, as demonstrated in the following chart, which shows how declines in Mr. Iger's bonus compare to declines in performance against the Compensation Committee's performance goals (reflected in the weighted average of the financial and other performance factors multiplied by the target bonus) over the last three years.

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GRAPHIC

The rigor of the program and pay for performance alignment is further demonstrated in a comparison of the Company's performance and Mr. Iger's compensation over the last three years. As shown below, the Company's adjusted EPS grew at a compound annual growth rate of 5% from fiscal 2015 to fiscal 2017 and operating income was flat over the period. Despite the growth in EPS, Mr. Iger's incentive bonus award decreased 18% and his total compensation decreased 10% on a compounded basis over this period.

CEO Compensation Trends


 
FY2015

FY2016

FY2017


Compounded Growth
FY15-FY17


Adjusted EPS

  $ 5.15   $ 5.72   $ 5.70   5%  
         

Operating Income ($M)

  $ 14,681   $ 15,721   $ 14,775     0%  

Mr. Iger's Cash Bonus

  $ 22,340,000   $ 20,000,000   $ 15,200,000   (18% )
         

Mr. Iger's Total Compensation

  $ 44,913,614   $ 43,882,396   $ 36,283,680     (10% )
*
Reconciliations of segment operating income to net income and adjusted EPS to reported EPS (diluted EPS) are set forth in Annex A.

Additional details on our compensation program and fiscal 2017 compensation can be found in the Executive Compensation section of this proxy statement beginning on page 19.

                                                                          Approval of Performance Goals Under 2002 Executive Performance Plan

GRAPHIC

We are seeking approval of the material terms of the performance goals under the Company's Amended and Restated 2002 Executive Performance Plan (the 2002 Plan). The 2002 Plan is structured to allow for the deduction of compensation awarded under the plan to the extent permitted pursuant to Section 162(m) of the Internal Revenue Code. Applicable IRS regulations require shareholder approval of terms of the 2002 Plan no less than every five years, and shareholders last approved the plan in 2013. Although the deduction for compensation under the plan was recently repealed for taxable years beginning after December 31, 2017, awards made for the current fiscal year or pursuant to contracts entered into prior to repeal will, in many circumstances, remain eligible for the exemption.

The Board of Directors recommends that shareholders approve the material terms of the performance goals under the 2002 Plan so that compensation awarded under the plan will remain deductible to the extent permitted.

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                                                                          Shareholder Proposals

GRAPHIC

In this year's proxy statement, you will find two shareholder proposals, one seeking additional disclosure regarding lobbying expenses and one requesting changes to our proxy access bylaw.

Lobbying Disclosure:  The proposal requests the Company to provide additional disclosure regarding its political activities, including information regarding its lobbying activities. The Company already provides substantial disclosure regarding our political activities, and the additional requested disclosure would exceed that provided by many other companies, putting the Company at a disadvantage without providing meaningful new information to shareholders. The Board therefore recommends that you vote against this proposal.

Proxy Access Amendments:  The proposal requests three changes to our proxy access bylaw: removing the limit on the number of shareholders that can be aggregated to reach the 3% threshold for submitting nominees; removing the limitation on repeat nominations of candidates who receive less than a 25% favorable vote; and increasing the maximum number of directors that can be nominated to 25% of the Board. The Board believes that these changes, which are outside the mainstream of current proxy access bylaws, are unnecessary and would disrupt the balanced approach reflected in our current bylaws, and therefore recommends that you vote against this proposal.

You can read our detailed positions on these proposals on pages 65 to 68.

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GRAPHIC   Corporate Governance
  and Board Matters

Governing Documents

The Board of Directors 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 of Directors, 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 on the Board of Directors is governed by a charter adopted by the Board of Directors.

The Corporate Governance Guidelines, the Standards of Business Conduct, the Code of Business Conduct and Ethics for Directors and each of the 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 of Directors are:

    Susan E. Arnold   Fred H. Langhammer    
    Mary T. Barra   Aylwin B. Lewis    
    John S. Chen   Robert W. Matschullat    
    Jack Dorsey   Mark G. Parker    
    Robert A. Iger   Sheryl K. Sandberg    
    Maria Elena Lagomasino   Orin C. Smith    

In addition, on December 5, 2017, the Board elected Safra A. Catz and Francis A. deSouza to become members of the Board effective February 1, 2018.

The Board met six times during fiscal 2017. Each current Director attended at least 75% of all of the meetings of the Board and Committees on which he or she served that occurred while he or she served on the Board or the Committees. All directors holding office at the time attended the Company's 2017 annual shareholders 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 his or her duties, including by attending annual and special meetings of the shareholders of the Company, and meetings of the Board and Committees of which he or she is a member.

Board Leadership

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 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.

Mr. Iger has served as Chairman since March of 2012, when he assumed that position upon the retirement of John Pepper who had previously served as Chairman. In making Mr. Iger Chairman, the Board determined that doing so would promote a number of important objectives: it would add a substantial strategic perspective to the Chair 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

Continues on next page ►

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into account its evaluation of Mr. Iger's performance as Chief Executive Officer and President, his very positive relationships with the other members of the Board of Directors and the strategic vision and perspective he would bring to the position of Chairman. 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 would serve the best interests of shareholders.

Mr. Iger's employment agreement provides that he will serve as Chief Executive Officer and Chairman through the end of its term. Each year, the independent members of the Board determine whether to elect Mr. Iger Chairman in accordance with the employment agreement. In doing so, the Board considers whether Mr. Iger's continuing to serve as both Chairman and Chief Executive Officer would be in the best interests of shareholders. Based on the demonstrated success of this structure to date, 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, the Board has concluded that Mr. Iger's continuing service as Chairman remains in the best interests of shareholders and that, absent an unexpected change in circumstances, he should continue to serve in the role through the term of his agreement.

At the time Mr. Iger became Chairman, the Board unanimously elected Orin Smith as independent Lead Director. The duties of the independent Lead Director were expanded in connection with the appointment of Mr. Iger as Chairman, and were further expanded in 2013 based on feedback from investors regarding Lead

Director duties. The duties of the Lead Director are as follows:

Preside at all meetings of the Board of Directors at which the Chairman is not present, including executive sessions of non-management or independent 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 of Directors;
In collaboration with the Chief Executive Officer and Chairman, and with input from other members of the Board, develop and have final authority to approve meeting agendas for the Board of Directors, 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.

Committees

The Board of Directors has four standing committees: Audit, Governance and Nominating, Compensation and

Executive. Information regarding these committees is provided below.

Audit Committee  

John S. Chen (Chair)
Fred H. Langhammer
Aylwin B. Lewis
Robert W. Matschullat
  The functions of the Audit Committee are described below under the heading "Audit Committee Report." The Audit Committee met seven times during fiscal 2017. 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 the members of the Committee 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.
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Corporate Governance and Board Matters
 
 

Governance and Nominating Committee  

Susan E. Arnold
Robert W. Matschullat
Mark G. Parker
Sheryl K. Sandberg
Orin C. Smith (Chair)
  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, officers, 5% shareholders and their 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 of Directors, makes recommendations to the Board with respect to Committee assignments and oversees the Board's director education practices. The Committee met six times during fiscal 2017. 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.

 

Compensation Committee  

Mary T. Barra
Jack Dorsey
Maria Elena Lagomasino
Aylwin B. Lewis (Chair)
Orin C. Smith
  The Compensation Committee is responsible for reviewing and approving 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 also delegated to the Committee the responsibility for approving these arrangements. Additional information on the roles and responsibilities of the Compensation Committee is provided under the heading "Compensation Discussion and Analysis," below. In fiscal 2017, the Compensation Committee met six times. 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.

 

Executive Committee  

Robert A. Iger
Orin C. Smith (Chair)
  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's actions are generally limited to matters such as the authorization of routine transactions including corporate credit facilities and borrowings. In fiscal 2017, the Executive Committee held no meetings.

 

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 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 annual review of the Company's five-year plan. The Board also has the opportunity to address such risks at each Board

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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 on-going 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 periodically reviews whether these reports appropriately 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. For example, the Audit Committee periodically reviews the audit plan of the internal audit department, the international labor standards compliance program, the Company's information technology risks and mitigation strategies, the tax function, treasury operations,

insurance, and the Company's standards of business conduct compliance program. In addition, the Audit Committee receives regular reports from: corporate controllership and the outside auditor on financial reporting matters; the internal audit department about significant findings; and the general counsel regarding legal and regulatory risks. 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 at pages 24 to 25, below.

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

Director Selection Process

Working closely with the full Board, the Governance and Nominating Committee develops criteria for open Board positions. In developing these criteria, the Committee takes into account a variety of factors, which may include: the current composition of the Board and expected retirements from the Board; the range of talents, experiences and skills that would best complement those already represented on the Board; the balance of management and independent Directors; and the need for financial or other specialized expertise. 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 upon request of the Committee from time to time.

Once the Committee has identified a prospective nominee — including prospective nominees recommended by shareholders — it makes an initial determination as to whether to conduct a full evaluation. In making this determination, the Committee takes into account the information provided to the Committee with the recommendation of the candidate, as well as the Committee's own knowledge and information obtained through inquiries to third parties to the extent the Committee deems appropriate. The preliminary determination is based primarily on the need for additional Board members and the likelihood that the prospective nominee can satisfy the criteria that the

Committee has established. If the Committee determines, in consultation with the Chairman of the Board and other Directors as appropriate, that additional consideration is warranted, it may request the third-party search firm to gather additional information about the prospective nominee's background and experience and to report its findings to the Committee. 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 his or her duties, including the prospective nominee's service on other public company boards, as specifically set out in the Company's Corporate Governance Guidelines;
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
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the willingness of the prospective nominee to meet the minimum equity interest holding guideline set out in the Company's Corporate Governance Guidelines.

If the Committee decides, on the basis of its preliminary review, to proceed with further consideration, members of the Committee, as well as other members of the Board as appropriate, interview the nominee. After completing this evaluation and 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 nominees for Director, 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. In light of the Company's current priorities, the Board seeks experience relevant to managing branded franchises, the creation of high-quality branded entertainment products and services, addressing the impact of rapidly changing technology and the management of a multi-national business. The Board also seeks experience in large, diversified enterprises and demonstrated ability to manage complex issues that involve a balance of risk

and reward and seeks Directors who have expertise in specific areas such as consumer and cultural trends, business innovation, growth strategies, financial oversight and international business and governmental issues. The background information on current nominees beginning on page 56 sets out how each of the current nominees contributes to the mix of experience and qualifications the Board seeks.

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.

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 "Shareholder Communications" below.

Director Independence

The provisions of the Company's Corporate Governance Guidelines regarding Director independence meet and in some areas exceed the listing standards of the New York Stock Exchange. These provisions are included in the Company's Corporate Governance Guidelines, which are available on the Company's Investor Relations website under the "Corporate Governance" heading at www.disney.com/investors.

Pursuant to the Guidelines, the Board undertook its annual review of Director independence in November 2017. 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 any members of the Company's senior management or their affiliates. As provided in the 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 2017 or nominated for election at the 2018 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. Mr. Iger is considered an inside Director because of his employment as a senior executive of the Company.

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 2017. 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 Guidelines. The Board determined that none of the relationships it considered impaired the independence of the Directors.

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Certain Relationships and Related Person Transactions

The Board of Directors has adopted a written policy for review of transactions involving more than $120,000 in any fiscal year in which the Company is a participant and in which any Director, executive officer, holder of more than 5% of our outstanding shares or any immediate family member of any of these persons has a direct or indirect material interest. Directors, 5% shareholders and executive officers are required to inform the Company of any such transaction promptly after they become aware of it, and the Company collects information from Directors and executive officers about their affiliations and affiliations of their family members so the Company can search its records for any such transactions. Transactions are presented to the Governance and Nominating Committee of the Board (or to the Chairman of the Committee if the Committee delegates this responsibility) for approval before they are entered into or, if this is not possible, for ratification after the transaction has been entered into. The Committee approves or ratifies a transaction if it determines that the transaction is consistent with the best interests of the Company, including whether the transaction impairs independence of a Director. The policy does not require review of the following transactions:

Employment of executive officers approved by the Compensation Committee;
Compensation of Directors approved by the Board;
Transactions in which all shareholders receive benefits proportional to their shareholdings;
Ordinary banking transactions identified in the policy;
Any transaction specifically contemplated by the Company's Restated Certificate of Incorporation or Bylaws, or any action approved by the Board where the interest of the Director, executive officer, 5% shareholder or family member is disclosed to the Board prior to such action;
Commercial transactions in the ordinary course of

      business with entities affiliated with Directors, executive officers, 5% shareholders or their family members if the aggregate amount involved during a fiscal year is less than the greater of (a) $1,000,000 and (b) 2% of the Company's or other entity's gross revenues and the related person's interest in the transaction is based solely on his or her position with the entity;

Charitable contributions to entities where a Director is an executive officer of the entity if the amount is less than the lesser of $200,000 and 2% of the entity's annual contributions; and
Transactions with entities where the Director, executive officer, 5% shareholder or immediate family member's sole interest is as a non-executive officer employee of, volunteer with, or director or trustee of the entity.

Each of the investment management firms Vanguard Group, Inc. and Blackrock, Inc., through their affiliates, held more than 5% of the Company's shares during fiscal 2017. Funds managed by affiliates of Vanguard and Blackrock are included as investment options in defined contribution plans offered to Disney employees. In addition, Blackrock manages investment portfolios for the Company's pension funds and provides reporting services related to management of investment in the pension funds. Vanguard and Blackrock received fees of approximately $1 million and $11.6 million, respectively, in fiscal 2017 based on the amounts invested in funds managed by them, and Blackrock received fees of approximately $300,000 for the risk reporting services. These relationships were in place before Vanguard and Blackrock reported beneficial ownership of more than 5% of the Company's outstanding shares. The ongoing relationships were reviewed and approved by the Governance and Nominating Committee under the Related Person Transaction Approval Policy in November 2017.

Shareholder Communications

Generally. Shareholders may communicate with the Company through its Transfer Agent, Broadridge Corporate Issuer Solutions, by writing to Disney Shareholder Services, c/o Broadridge Corporate Issuer Solutions, P.O. Box 1342, Brentwood, NY 11717, by calling Disney Shareholder Services care of Broadridge at 1-855-553-4763, or by sending an e-mail to disneyshareholder@broadridge.com. Additional information about contacting the Company is available on the Disney Shareholder Services website

(www.disneyshareholder.com) under the "Contact Us" tab.

Shareholders and other persons interested in communicating directly with the independent Lead Director or with the non-management Directors as a group may do so by writing to the independent Lead Director, The Walt Disney Company, 500 South Buena Vista Street, Burbank, California 91521-1030. Under a process approved by the Governance and Nominating

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Committee of the Board for handling letters received by the Company and addressed to non-management members of the Board, the office of the Secretary of the Company reviews all such correspondence and forwards to Board members a summary and/or copies of any such correspondence that, in the opinion of the Secretary, deals with the functions of the Board or Committees thereof or that he otherwise determines requires their attention. The Governance and Nominating Committee reviews summaries of all correspondence from identified shareholders at each regular meeting of the Committee. Directors may at any time review a log of all correspondence received by the Company that is addressed to members of the Board and request copies of any such correspondence.

Concerns relating to accounting, internal controls or auditing matters are immediately brought to the attention of the Company's internal audit department and handled in accordance with procedures established by the Audit Committee with respect to such matters.

Shareholder Proposals for Inclusion in 2019 Proxy Statement. To be eligible for inclusion in the proxy statement for our 2019 Annual Meeting, shareholder proposals must be received by the Company's Secretary no later than the close of business on September 14, 2018. Proposals should be sent to the Secretary, The Walt Disney Company, 500 South Buena Vista Street, Burbank, California 91521-1030 and follow the procedures required by SEC Rule 14a-8.

Shareholder Director Nominations for Inclusion in 2019 Proxy Statement. Under our Bylaws, written notice of shareholder nominations to the Board of Directors that

are to be included in the proxy statement pursuant to the proxy access provisions in Article II, Section 11 of our Bylaws must be delivered to the Company's Secretary not later than 120 nor earlier than 150 days prior to the first anniversary of the preceding year's annual meeting. Accordingly any eligible shareholder who wishes to have a nomination considered at the 2019 Annual Meeting and included in the Company's proxy statement must deliver a written notice (containing the information specified in our bylaws regarding the shareholder and the proposed nominee) to the Company's Secretary between October 9, 2018 and November 8, 2018.

Shareholder Director Nomination and Other Shareholder Proposals for Presentation at the 2019 Annual Meeting Not Included in 2019 Proxy Statement. Under our Bylaws, written notice of shareholder nominations to the Board of Directors or any other business proposed by a shareholder that is not to be included in the proxy statement must be delivered to the Company's Secretary not later than 90 nor earlier than 120 days prior to the first anniversary of the preceding year's annual meeting. Accordingly, any shareholder who wishes to have a nomination or other business considered at the 2019 Annual Meeting but not included in the Company's proxy statement must deliver a written notice (containing the information specified in our bylaws regarding the shareholder and the proposed action) to the Company's Secretary between November 8, 2018 and December 8, 2018. SEC rules permit management to vote proxies in its discretion with respect to such matters if we advise shareholders how management intends to vote.

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GRAPHIC   Director
  Compensation

The elements of annual Director compensation for fiscal 2017 were as follows.

Annual Board retainer   $110,000  
   
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   $185,000  
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. Director's spouses, children and grandchildren may also participate in this benefit within each Director's $15,000 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 of Directors 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.

Director Compensation for Fiscal 2017

The following table sets forth compensation earned during fiscal 2017 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

  $128,750   $185,246   $11,029   $325,025  
         

Mary T. Barra

  11,658   19,492     31,150  

John S. Chen

  134,167   185,246   56,459   375,872  
         

Jack Dorsey

  120,028   185,246     305,274  

Maria Elena Lagomasino

  120,000   185,246   150   305,396  
         

Fred H. Langhammer

  120,000   185,246   34,634   339,880  

Aylwin B. Lewis

  141,333   185,246   13,382   339,961  
         

Robert W. Matschullat

  140,903   185,246   33,860   360,009  

Mark G. Parker

  111,277   185,246     296,523  
         

Sheryl K. Sandberg

  120,000   185,246   68,860   374,106  

Orin C. Smith                      

  195,000   185,246   86,899   467,145  
         

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 the Moody's Average Corporate (Industrial) Bond Yield, adjusted quarterly, for amounts deferred prior to calendar 2018. For amounts deferred after calendar year 2017, the interest rate will be 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 2017, the average interest rate was 4.07%.

The following table sets forth the form of fees received by each Director who elected to receive compensation in a form other than currently paid cash. The number of

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Director Compensation
 
 

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, 2017.

      Cash

Stock Units

 

 

                                   

 

    Paid
Currently


Deferred
      Value
Distributed
Currently



Value
Deferred


Number
Of Units


 

 

Mary T. Barra

    $1,495           $10,163   103    
                   

 

John S. Chen

      119,167             $15,000     143    

 

Jack Dorsey

    60,014         60,014     571    
                   

 

Maria Elena Lagomasino

                    120,000   1,142    

 

Aylwin B. Lewis

    70,667           70,667   674    
                   

 

Mark G. Parker

                    111,277   1,060    

 

Sheryl K. Sandberg

    60,000         60,000     571    
                   

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. Barra was awarded 1,760 units in fiscal 2017. Ms. Barra was awarded 199 units in fiscal 2017.

Unless a Director elects to defer receipt of shares until after his or her service as a Director 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.

Prior to fiscal 2011, each Director serving on March 1 of any year received an option on that date to acquire shares of Company stock. The exercise price of the options was equal to the average of the high and low prices reported on the New York Stock Exchange on the date of grant.

The following table sets forth all stock units and options held by each Director as of the end of fiscal 2017. 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 share ownership table on page 72 except to the extent they may have been distributed as shares and sold prior to January 8, 2018.

 

Stock
Units







Number of
Shares
Underlying
Options
Held





Susan E. Arnold

  16,370    
     

Mary T. Barra

    302      

John S. Chen

  26,284   12,143  
     

Jack Dorsey

    4,068      

Maria Elena Lagomasino

  5,507    
     

Fred H. Langhammer

    18,603      

Aylwin B. Lewis

  23,529   12,143  
     

Robert W. Matschullat

    40,089     12,143  

Mark G. Parker

  4,944    
     

Sheryl K. Sandberg

    7,854      

Orin C. Smith

  3,634   12,143  
     

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 he or she meets the stock holding guideline described above. Based on the holdings of units and shares on January 8, 2018, each Director complied with the minimum holding requirement on that date except Ms. Barra, who is within the three-year period following the date on which she first became a Director.

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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 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 less than $10,000 for each Director other than Mr. Langhammer, Mr. Lewis, Mr. Matschullat, and Ms. Sandberg for whom the reimbursement was $13,813, $13,382, $18,860, and $18,860 respectively.
Interest earned on deferred cash compensation, which was less than $10,000 for each Director.

The matching charitable contribution of the Company, which was less than $10,000 for each Director other than Mr. Chen, Mr. Langhammer, Mr. Matschullat, Ms. Sandberg and Mr. Smith, for whom the amounts were $50,000, $15,000, $15,000, $50,000 and $85,000, respectively. Matched amounts exceed $50,000 in a fiscal year if contributions for separate calendar years are made in the same fiscal year.
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GRAPHIC   Executive
  Compensation

Compensation Discussion and Analysis

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 have adopted the following approach to achieve these objectives.

                 
                 
     Pay for Performance     Provide a strong relationship of pay to performance through:

A performance-based bonus tied to the achievement of financial performance factors and an assessment of each executive's individual performance against other performance factors

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

 
    Competitive
Compensation Levels
      Provide compensation opportunities that take into account compensation levels and practices of our peers, but without targeting any specific percentile of relative compensation    
    Compensation Mix     Provide a mix of variable and fixed compensation that:

Is heavily weighted toward variable performance-based compensation for senior executives

Uses short-term (annual performance-based bonus) and longer-term performance measures (equity awards) to balance appropriately incentives for both short and long-term performance

 
                 

Peer Groups

    Establishing Compensation Levels

The Compensation Committee believes that the pool of talent with the set of creative and organizational skills needed to run a global creative organization like the Company is quite limited and that, accordingly, the market for executive talent to lead the Company is best reflected by the five other major media companies who compete for this talent — CBS, Comcast, Twenty-First Century Fox, Time Warner and Viacom (with Disney, the "Media Industry Peers"). Disney has more employees and a more extensive global footprint than any of the Media Industry Peers as well as a greater market capitalization and greater revenue, more diverse business segments and greater operating income than all but one of the Media Industry Peers.

The Committee believes that executives with the background needed to manage companies such as ours have career options with compensation opportunities that normally exceed those available in most other industries and that compensation levels within the peer group are driven by the dynamics of compensation in the entertainment industry and not the ownership structure of a particular company.

    Establishing Compensation Structure, Policies and Practice

The Committee believes that the features of the Company's overall compensation structure, policies and practices should normally be consistent for all executives. Because the four distinct segments of our operations span multiple industries, the Committee believes that a consistency of approach across the breadth of the Company's operations with respect to such features is best achieved by reference to a general industry group that is broader than the Media Industry Peers.

The peer group used for establishing compensation structure, policies and practices consists of companies that have:

A consumer orientation and/or strong brand recognition;
A global presence and operations;
Annual revenue no less than half and no more than twice our annual revenue; and
A market capitalization no less than one-quarter and no more than four times our market capitalization;
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Plus companies that do not meet the revenue test, but that are included in the peer groups used by one or more of the Media Industry Peers.

The companies that meet these criteria and were included in the peer group at the beginning of fiscal 2017 were:

Accenture

Alphabet

Amazon.com

AT&T

CBS

Charter Communications

Cisco Systems

Coca-Cola

Comcast

IBM

 

Intel

Johnson & Johnson

Microsoft

Oracle

PepsiCo

Procter & Gamble

Time Warner

Twenty-First Century Fox

Verizon Communications

Viacom

Advised by its independent consultant, the Committee reviewed the criteria for selecting members of this peer group during fiscal 2017 and determined that the criteria remained appropriate. In connection with this review, Facebook was added because its revenue and market capitalization satisfied the criteria described above.

    Evaluating Performance

The overall financial performance of the Company is driven by the sum of the individual performances of the Company's four segments — Media Networks, Parks and Resorts, Studio Entertainment and Consumer Products & Interactive Media — each of which competes in different sectors of the overall market. The Committee believes that, given the span of the Company's businesses, the best measure of relative performance is how the Company's diverse businesses have fared in

the face of the economic trends that impact companies in the overall market and that the best benchmark for measuring such success is the Company's relative performance compared to that of the companies comprising the S&P 500. Accordingly, the Committee — like the other media companies and many other businesses — has selected the S&P 500 to set the context for evaluating the Company's performance and to measure relative performance for performance-based restricted stock unit awards.

    Summary of Peer Groups

The following table summarizes the three distinct peer groups we use for the three distinct purposes described above:

    Peer Group
Purpose
Composition
 
  Media Industry Peers   Evaluating compensation levels for the named executive officers   Disney and the five other major media companies:

CBS

Comcast

Twenty-First Century Fox

Time Warner

Viacom

   
       
    General Industry Peers   Evaluating general compensation structure, policies and practices   20 similarly-sized global companies with a consumer orientation and/or strong brand recognition    
  Performance Peers   Evaluating relative economic performance of the Company   Standard & Poor's (S&P) 500    
       
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Executive Compensation
 
 

Compensation Program Elements

2017 Total Direct Compensation

The following table sets forth the elements of total direct compensation for our named executive officers (NEOs) in fiscal 2017 and the objectives and key features of each element.

Compensation
Type



 
Pay Element


 
Objectives and Key Features


FIXED     Salary  

Objectives

The 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

Compensation Committee discretion to adjust annually based on changes in experience, nature and responsibility of the position, competitive considerations, and CEO recommendation (except his own salary)

   
 
  CASH COMPENSATION   Performance-
based Bonus
 

Objectives

The Committee structures the bonus program to incentivize performance at the high end of ranges for financial performance measures that it establishes each year to drive meaningful growth over the prior 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 normally set by Committee early in the fiscal year in light of employment agreement provisions, competitive considerations, CEO recommendation (except his own target), and other factors Committee deems appropriate; bonus opportunity normally limited to 200% of target bonus

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

Payout on 30% of target determined by Committee's assessment of individual performance based both on other performance objectives established early in the fiscal year and on CEO recommendation (except his own payout)

In addition, Mr. Iger has an opportunity to earn: a performance-based retention award in fiscal 2018 to the extent the Company's cumulative adjusted operating income for the five years ending September 28, 2018 exceeds $76.01 billion; and a cash bonus of $5 million if Mr. Iger remains employed by the Company until July 2, 2019

Annual payments to executive officers are subject to Section 162(m) test to the extent necessary to obtain deductibility of the payments

   
 
VARIABLE   EQUITY COMPENSATION   Equity
Awards
Generally
 

Objectives

The 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 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 for his own award)

Allocation of annual awards for CEO (based on award value):

50% performance-based restricted stock units

50% stock options

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

   

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Compensation
Type



 
Pay Element


 
Objectives and Key Features


    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

10-year term

Vest 25% per year

   
 
VARIABLE   EQUITY COMPENSATION   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 award vests based on Total Shareholder Return relative to S&P 500 and half of award vests based on Earnings Per Share relative to S&P 500, each as described on pages 40 to 41

All annual units awarded to executive officers are subject to Section 162(m) test

   
 
    Time-Based
Restricted
Stock Units
 

Key Features

25% vest each year following grant date

All annual units awarded to executive officers are subject to Section 162(m) test

   

 

Compensation at Risk

The Committee believes that most of the compensation for named executive officers should be at risk and tied to a combination of long-term and short-term Company performance. Approximately 90% of the target compensation for the CEO, and approximately 80% of the target compensation for other named executive officers, varies with either short or long-term Company performance.

In establishing a mix of fixed to variable compensation, the mix of various 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

at the same time affording compensation opportunities that, in success, would be 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 who are more successful.

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 award to deliver the appropriate value to executives.

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The following chart shows the percentage of the target total direct compensation (constituting base salary and performance-based bonus plus the grant-date fair value of regular annual equity awards) for Mr. Iger that was variable with performance (performance-based bonus and equity awards) versus fixed (salary) in fiscal 2017.

2017 Target Total Direct Compensation Mix for CEO

92% of CEO target compensation is considered performance-based

CHART

For the other NEOs, 82% of average target compensation is considered performance-based.

Employment Agreements

We enter 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.

We have employment agreements with each of the named executive officers that extend to the dates shown below:

  Term Ends

Robert A. Iger

  December 31, 2021*

Alan N. Braverman

  July 2, 2019

Christine M. McCarthy

  June 30, 2021

Kevin A. Mayer

  June 30, 2021

M. Jayne Parker

  June 30, 2021
*
Pursuant to an amendment dated December 13, 2017 and assuming completion of the merger transaction with Twenty-First Century Fox. Otherwise, termination is July 2, 2019 or, if later, 90 days after termination of the merger agreement without closing the transaction.

Material terms of the employment agreements with the named executive officers are reflected under "Total Direct Compensation," above, and "Benefits and Perquisites," "2017 Compensation Decisions" and "Compensation Tables — Potential Payments and Rights on Termination or Change in Control," below.

Benefits and Perquisites

The Company provides employees with benefits and perquisites based on competitive market conditions. All salaried employees, including the named executive officers, receive the following benefits:

health care coverage;
life and disability insurance protection;
reimbursement of certain educational expenses;
access to favorably priced group insurance coverage; and
Company matching of gifts of up to $25,000 per employee each calendar year to qualified charitable organizations.

Officers at the vice president level and above, including named executive officers, receive the following benefits:

complimentary access to the Company's theme parks and some resort facilities;
discounts on Company merchandise and resort facilities;
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;
relocation assistance;
eligibility for annual reimbursement of up to $1,000 for wellness-related purposes such as fitness, nutrition and physical exams; and
personal use of tickets acquired by the Company for business entertainment when they become available because no business use has been arranged.

Named executive officers (and some other senior executives) are also entitled to the following additional benefits and perquisites: basic financial planning services, enhanced excess liability coverage, increased relocation assistance, an increased automobile benefit and an increased Company matching gift amount of $50,000.

The Company pays the cost of security services and equipment for the Chief Executive Officer in an amount that the Board of Directors believes is reasonable in light of his security needs and, in the interest of security, requires the Chief Executive Officer to use corporate

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aircraft for all personal travel. Other senior executive officers may also have security expenses reimbursed and are permitted at times to use corporate aircraft for personal travel, in each case at the discretion of the Chief Executive Officer.

Retirement Plans

Named executive officers participate in defined benefit programs available to all of our salaried employees hired prior to January 1, 2012 and defined contribution retirement programs available to all of our salaried employees.

Tax-qualified defined benefit and defined contribution plans limit the benefit to participants whose compensation or benefits would exceed maximums imposed by applicable tax laws. To provide retirement benefits commensurate with compensation levels, the Company offers non-qualified plans to key salaried employees, including the named executive officers, using substantially the same formula for calculating benefits as is used under the tax-qualified defined benefit plans on compensation in excess of the compensation limitations and maximum benefit accruals. The Company also offers deferral of income in addition to that permitted under tax qualified defined contribution plans.

Additional information regarding the terms of retirement and deferred compensation programs for the named executive officers is included in "Compensation Tables — Pension Benefits" beginning on page 45 and "Compensation Tables — Fiscal 2017 Nonqualified Deferred Compensation Table" beginning on page 46.

Risk Management Considerations

The Compensation Committee believes that the following features of our annual performance-based bonus and equity programs appropriately incentivize the creation of long-term shareholder value while discouraging behavior that could lead to excessive risk:

Financial Performance Metrics.  The financial metrics used to determine the amount of an executive's bonus are measures the Committee believes drive long-term shareholder value. The ranges set for these measures are intended to reward success without encouraging excessive risk taking.
Limit on Bonus.  The overall bonus opportunity is not expected to exceed two times the target amount, no matter how much financial performance exceeds the ranges established at the beginning of the fiscal year.
Equity Vesting Periods.  Performance-based stock units vest in three years. Time-based stock units and options vest annually over four years and options remain exercisable for 10 years. These periods are designed to reward sustained performance over several periods, rather than performance in a single period.
Equity Retention Guidelines.  Named executive officers are required to acquire within five years of becoming an executive officer, and hold as long as they are executive officers of the Company, shares (including restricted stock units) having a value of at least three times their base salary amounts, or five times in the case of the Chief Executive Officer. If these levels have not been reached, these officers are required to retain ownership of shares representing at least 75% of the net after-tax gain (100% in the case of the Chief Executive Officer) realized on exercise of options for a minimum of 12 months. Based on holdings of units and shares on January 8, 2018, each named executive officer exceeded the minimum holding requirement on that date.
No Hedging or Pledging.  Named executive officers (and other employees subject to the Company's insider trading compliance program) are not permitted to enter into any transaction designed to hedge, or having the effect of hedging, the economic risk of owning the Company's securities and they are prohibited from pledging Company securities.
Clawback Policy.  If the Company is required to restate its financial results due to material noncompliance with financial reporting requirements under the securities laws as a result of misconduct by an executive officer, applicable law permits the Company to recover incentive compensation from that executive officer (including profits realized from the sale of Company securities). In such a situation, the Board of Directors would exercise its business judgment to determine what action it believes is appropriate. Action may include recovery or cancellation of any bonus or incentive payments made to an executive on the basis of having met or exceeded performance targets during a period of fraudulent activity or a material misstatement of financial results if the Board determines that such recovery or cancellation is appropriate due to intentional misconduct by the executive officer that resulted in performance targets being achieved that would not have been achieved absent such misconduct.
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At the Compensation Committee's request, management conducted its annual assessment of the risk profile of our compensation programs in November 2017. The assessment included an inventory of the compensation programs at each of the Company's segments and an evaluation of whether any program contained elements that created risks that could have a material adverse impact on the Company. Management provided the results of this assessment to Frederic W. Cook & Co., Inc., which evaluated the findings and reviewed them with the Committee. As a result of this review, the Committee determined that the risks arising from the Company's policies and practices are not reasonably likely to have a material adverse effect on the Company.

Other Considerations

Timing of Equity Awards

Equity awards are made by the Compensation Committee only on dates the Committee meets. Committee meetings are normally scheduled well in advance and are not scheduled with an eye to announcements of material information regarding the Company. The Committee may make an award with an effective date in the future contingent on commencement of employment, execution of a new employment agreement or some other subsequent event, or may act by unanimous written consent on the date of such an event when the proposed issuances have been reviewed by the Committee prior to the date of the event.

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 he or she 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 if the options were awarded after March 2011 and for up to three years following retirement if the options were awarded between December 2009 and March 2011. 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 as described above.

Deductibility of Compensation

Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public corporations for compensation over $1 million paid for any fiscal year to the corporation's chief executive officer and up to three other executive officers (other than the chief financial officer) whose compensation must be included in this proxy statement because they are our most highly compensated executive officers. Section 162(m) exempts qualifying performance-based compensation with respect to taxable years beginning on or before December 31, 2017 and payable pursuant to a binding written agreement in effect on November 2, 2017. Thus, performance-based awards that are deductible in the Company's current fiscal year and performance-based awards outstanding on that date or awarded thereafter pursuant to a binding written agreement can be exempt from the deduction limit if applicable requirements are met.

The Compensation Committee has historically structured awards to executive officers under the Company's annual performance-based bonus program so that a bonus equal to the maximum amount that can be awarded the officer under the Amended and Restated 2002 Executive Performance Plan (or a lesser award pursuant to the Committee's right to exercise negative discretion) and annual equity awards issued pursuant to the Company's equity awards programs qualify for this exemption. The Committee believes that shareholder interests are best served if its discretion and flexibility in awarding compensation is not restricted, even though some compensation awards may result in non-deductible compensation expenses. Therefore, the Committee has approved salaries and other awards for executive officers that were not fully deductible because


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of Section 162(m) and, in light of the repeal of the performance-based compensation exception to Section 162(m), expects in the future to approve additional compensation that is not deductible for income tax purposes.

To qualify for the available exemption from Section 162(m), awards to executive officers under the annual performance-based bonus program and the long-term incentive program are made payable or vest at maximum levels subject to achievement of a performance test based on adjusted net income. If this test is satisfied, the additional performance tests described in this Compensation Discussion and Analysis are applied to determine the actual payout of such bonuses and awards, which in order to remain deductible may not be more than the maximum level funded based on achievement of the Section 162(m) test. Adjusted net

income means net income adjusted, as appropriate, to exclude the following items or variances: change in accounting principles; acquisitions; dispositions of a business; asset impairments; restructuring charges; extraordinary, unusual or infrequent items; and extraordinary litigation costs and insurance recoveries. For fiscal 2017, the adjusted net income target was $6.0 billion, and the Company achieved adjusted net income of $9.0 billion. Net income was adjusted by a litigation settlement, restructuring charges, and a gain recognized in the value of BAMTech in connection with the acquisition of additional interests in BAMTech.

Therefore, the Section 162(m) test was satisfied with respect to bonuses earned in fiscal 2017 and restricted stock units vesting based on fiscal 2017 results.

Compensation Process

The following table outlines the process for determining annual compensation awards for named executive officers.

    Salaries
  Performance-Based Bonus
 
   

Annually, normally at the end of the calendar year, the CEO recommends salaries for executives other than himself for the following calendar year

Committee reviews proposed salary changes with input from consultant

Committee determines annual salaries for all NEOs

Committee reviews determinations with the other non-management directors

     

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 consultant and determines performance measures and ranges that it believes establish appropriate stretch goals

   
    Equity Awards
 

CEO recommends bonus targets for executives other

   
   

In first fiscal quarter, CEO recommends grant date fair value of awards for executives other than himself

Committee reviews proposed awards with input from 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

          than himself

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

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

CEO recommends other performance factor multipliers for executives other than himself

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

Committee reviews determinations with the other non-management directors and, in the case of the CEO, seeks their concurrence in the Committee's determination

   
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The following table outlines the process for determining terms of employment agreements and compensation plans in which the named executive officers participate.

    Employment Agreements
  Compensation Plans
 
    CEO

Committee arrives at proposed terms of agreement with input from consultant

Committee recommends terms of agreement to other non-management directors following negotiation with CEO

Committee participates with other non-management directors in determining terms of agreement for CEO

Other NEOs

CEO recommends terms of agreements

Committee reviews proposed terms of agreements with input from consultant

Committee determines material terms of agreements, subject to consultation with Board where the Committee deems appropriate

     

Committee requests management and its consultant to review compensation plans

Management and its consultant recommend changes to compensation plans in response to requests or on their own initiative

Committee reviews proposed changes to compensation plans with input from its consultant

Committee determines changes to compensation plans or recommends to Board if Board action is required

Committee participates with Board in determining changes when Board action is required

   

Management Input

In addition to the CEO 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.

Compensation Consultant

The Compensation Committee has retained the firm of Frederic W. Cook & Co., Inc. as its compensation consultant. The consultant assists the Committee's development and evaluation of compensation policies and practices and the Committee's determinations of compensation awards by:

attending Committee meetings;
meeting with the Committee without management present;
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, including the consistency of proposals with the Committee's compensation philosophy and comparisons to programs at other companies; and
preparing its own analysis of compensation matters, including positioning of programs in the competitive market and the design of plans consistent with the Committee's compensation philosophy.

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 Compensation 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 Frederic W. Cook & Co. Inc.'s independence in November 2017 and confirmed that the firm's work has not raised any conflict of interest and the firm is independent under the policy.

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2017 Compensation Decisions

This section discusses the specific decisions made by the Compensation Committee in fiscal 2017 or with respect to fiscal 2017 compensation.

Investor Engagement

At our 2017 Annual Meeting, 84% of shares cast voted in favor of the advisory vote on executive compensation. We maintain a robust shareholder engagement program, and in fiscal 2017, we spoke with most of our twenty largest investors and contacted about 80% of our largest 50 investors, seeking input on compensation and governance matters. To enable the Board and the Compensation Committee to consider direct shareholder feedback, the Compensation Committee is updated on these conversations with investors and Committee and other Board members participate directly in a number of them. Consistent with views received by the Committee in connection with this engagement, the Committee remains focused on the alignment of pay and performance as well as the absolute level of executive compensation, particularly for the Chief Executive Officer.

The Committee believes that recent compensation trends demonstrate this focus, as executive compensation has consistently reflected the financial performance by the Company over recent years. This is illustrated by the decline in our chief executive officers' total compensation by 10% over the last three years on a compound annual basis (and decline of 17% in the most recent fiscal year), consistent with a decline in the growth rate for the key financial factors used in determining executive compensation over those years.

Employment Agreements

Extension of Mr. Iger's Employment Agreement

In March 2017, the Company and Mr. Iger agreed to amendments to Mr. Iger's employment agreement, extending the period during which Mr. Iger would remain employed with the Company and serve as Chairman and Chief Executive Officer. The amendments extended the end of Mr. Iger's employment from June 30, 2018 to July 2, 2019. The amendments also provided that Mr. Iger's annual compensation for the extended employment period would be determined on the same basis as his annual compensation for fiscal 2016. Specifically, the amendment stated that his annual salary would be unchanged, that he would have the opportunity to earn an award under the Incentive Bonus Program and an equity award under the Long Term Incentive Program for fiscal 2019, with the target annual incentive and target equity award value for fiscal 2019 equal to those for fiscal 2016 and with terms of any equity grants for fiscal 2019 on the same terms and

conditions as would have applied to the grants made in fiscal 2018.

The amendments also provided that, if Mr. Iger remained employed until July 2, 2019, he would receive a cash bonus of $5 million. Mr. Iger also agreed to serve as a consultant to the Company for a period of three years following his retirement to enable the Company to have access to his unique skills, knowledge and experience with regard to the media and entertainment business. The amendment provided that Mr. Iger would receive a quarterly fee of $500,000 for each of the first eight quarters of this three-year period and $250,000 for each of the last four quarters. The amendment provided that Mr. Iger would receive during this three-year period the same security services (other than personal use of a Company provided aircraft) as he was provided as Chief Executive Officer. The amendment provided that the compensation described above would be provided to Mr. Iger (and the consulting period would begin at the date of termination) if his employment were terminated prior to July 2, 2019 as a result of the Company's exercise of its right to terminate without cause or Mr. Iger's exercise of his right to terminate for good reason and if Mr. Iger executed a release as provided in his employment agreement. All other terms of his pre-existing employment agreement remained unchanged.

In October 2014, Mr. Iger was granted the opportunity to receive a Growth Incentive Retention Bonus tied to the Company's cumulative operating income over the five-year period ending at the end of fiscal year 2018, subject to adjustments by the Board as provided in the agreement. In connection with the discussions regarding the extension of Mr. Iger's employment, the Compensation Committee and the Board determined that Mr. Iger's agreement should be interpreted such that the adjustment provision applies to additional commitments regarding the Company's interest in Hulu.

In December 2017, in connection with the Company's signing a merger agreement relating to the acquisition of certain businesses of 21st Century Fox, and as requested by both 21st Century Fox and Disney's Board of Directors, the Company and Mr. Iger agreed to extend to December 31, 2021 the period during which Mr. Iger would remain employed with the Company and serve as Chairman and Chief Executive Officer if the acquisition transaction is completed. The Board of Directors determined that the extension will be critical to Disney's ability to effectively drive long-term value from the acquisition. In connection with this extension, Mr. Iger's base salary increased to $3.0 million effective January 1, 2018 and his salary will increase to $3.5 million, his target annual incentive will increase to $20 million and his annual target long-term incentive award will increase to $25 million (and the potential payout on performance units may increase to 200% of target) when the acquisition transaction is completed. Mr. Iger also received an award of 245,098 restricted stock units that will vest over four years regardless of

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whether the transaction is completed and 687,898 performance-based units that will vest on December 31, 2021 if (1) the acquisition transaction is completed and (2) subject to satisfaction of a performance-vesting requirement based on total shareholder return of the Company's common stock relative to the total shareholder returns of the S&P 500. The payout on the performance-based units will be zero if the low end of the performance range is not achieved and up to 150% of the number of units awarded if the high end of the performance range is achieved. The amendment also extended to five years the consulting period following termination of Mr. Iger's tenure as Chairman and Chief Executive Officer and provided that the quarterly fee of $500,000 and the provision of security services will remain in place for the length of the extended consulting period.

Extension of Employment for Mr. Braverman, Ms. McCarthy, Mr. Mayer and Ms. Parker

In August 2017, the Company and Mr. Braverman, Ms. McCarthy and Mr. Mayer each agreed to amendments extending the term of their employment, and Ms. Parker (whose prior agreement had expired earlier in the year) entered into a new employment agreement on substantially similar terms. The term of Mr. Braverman's agreement was extended from June 30, 2018 to July 2, 2019, and the terms of Ms. McCarthy, Mr. Mayer and Ms. Parker's agreements were extended (or set, in Ms. Parker's case) to June 30, 2021.

Ms. McCarthy and Mr. Mayer's minimum salary was increased to $1,500,000, and Ms. Parker's minimum salary was set at $975,000. Mr. Braverman's target long-term incentive award was increased to not less than 225% of his fiscal year-end salary, Ms. McCarthy and Mr. Mayer's target long-term incentive award was increased to, and Ms. Parker's target award was set at, not less than three times their respective fiscal year-end salary, and Ms. Parker's minimum opportunity under the annual performance-based bonus program was set at not less than 140% of her fiscal year-end salary. Mr. Braverman's, Ms. McCarthy's and Mr. Mayer's amendments, and Ms. Parker's agreement, each provide that the Company's Chief Executive Officer will recommend an annual cash bonus for the fiscal year in which their respective employment agreements end based on the executive's contributions during the fiscal year.

Mr. Mayer's amendment provides that, at the end of his employment term, the Company and Mr. Mayer will enter into a new one-year employment agreement through which Mr. Mayer will serve in a consulting role, with an annual salary of $200,000.

The remaining material terms of Mr. Braverman's, Ms. McCarthy's and Mr. Mayer's employment agreements were unchanged by the amendments, and the remaining terms of Ms. Parker's agreement were substantially the same as under her prior agreement.

Performance Goals

The Compensation Committee sets 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.

Setting Goals

    Financial Performance

In November 2016, the Compensation Committee reviewed the functioning of the annual performance-based bonus program and retained the following financial measures and relative weights for calculating the portion of the named executive officers' bonuses that is based on financial performance:

segment operating income (25.0%)
earnings per share (28.6%)
after-tax free cash flow (21.4%)
return on invested capital (25.0%)

The Committee retained these measures and weightings because it believes successful performance against these measures promotes the creation of long-term shareholder value. The Committee places slightly more weight on earnings per share and slightly less weight on after-tax free cash flow because, between the two, it believes earnings per share is somewhat more closely related to shareholder value.

The Committee also established performance ranges for each of the measures in November 2016. These ranges are used to determine the multiplier that is applied to 70% of each named executive officer's target bonus. The overall financial performance multiple is equal to the weighted average of the performance multiples for each of the four 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 end of the range. The Committee believes the top of each range represents extraordinary performance and the bottom represents disappointing performance.

In establishing these ranges for fiscal 2017, the Committee set ranges that generally reflected increases over the prior year's ranges while taking into account the exceptional performance in preceding years and known challenges the Company would face in fiscal 2017. The known challenges included increasing sports rights costs (specifically driven by the first year of ESPN's new contract with the NBA) and the absence of a film comparable to fiscal 2016's The Force Awakens, which generated $2.1 billion in worldwide box office and led to record financial performance at the Studio Entertainment and Consumer Products & Interactive Media segments. The range for free cash flow was lower than in fiscal 2016 in light of the impact of these two factors and planned changes in capital spending. The following table shows actual performance in fiscal 2016 and the target ranges chosen by the Committee for

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fiscal 2017 (dollars in millions except per share amounts):

  Fiscal 2016
Actual


Fiscal 2017
Target Range


Segment Operating Income*

  $15,721   $13,076-$17,689  
     

Adjusted earnings per share*

  $5.72   $4.62-$6.71  

After-tax free cash flow**

  $10,297   $3,990-$10,520  
     

Return on Invested Capital***

  14.0%   11.6%-14.8%  
*
For purposes of the annual performance-based bonuses, "segment operating income" is calculated as set forth in Annex A and segment operating income and adjusted earnings per share reflect the adjustments described on page 31.
**
For purposes of the annual performance-based bonuses, "after-tax free cash flow" takes into account the adjustments described on page 31 and was defined as cash provided by operations plus cash paid for restructuring costs and less investments in parks, resorts and other properties, all on an equity basis (i.e., including Disneyland Paris, Hong Kong Disneyland and Shanghai Disney Resort as if they were equity investments rather than on a consolidated basis).
***
For purposes of the annual performance-based bonuses "return on invested capital" takes into account the adjustments described on page 31 and was defined as the aggregate segment operating income less corporate and unallocated shared expenses (both on an after-tax basis), divided by average net assets (including net goodwill) invested in operations, all on an equity basis (i.e., including Disneyland Paris, Hong Kong Disneyland and Shanghai Disney Resort as if they were equity investments rather than on a consolidated basis).

    Other Performance Factors

The Committee also established other performance factors for the fiscal 2017 annual bonus in November 2016. The Committee established the following factors based on the recommendation of Mr. Iger and the strategic objectives of the Company:

Foster quality, creativity and innovation in how we create, market and distribute all of our products
Drive long-term growth internationally, particularly through recent acquisitions and initiatives
Manage efficiency across all areas of spending
Support the hiring, development and talent planning of diverse executives; and put into development content, products, and guest experiences that appeal to diverse audiences

Evaluating Performance

After the fiscal year ended, the Compensation Committee reviewed the overall performance of the Company. The Company saw financial growth in a number of areas, including the achievement of profitability at Shanghai Disney Resort ahead of schedule, improvement of performance at Disneyland Paris, and continued strength in our studio, which had seven major theatrical releases that averaged over $800 million in worldwide box office. The Company also initiated an important strategic shift by beginning development of direct-to-consumer offerings of sports programming through ESPN (planned for 2018) and of Disney, Pixar, Marvel and Star Wars content (planned for 2019). Nevertheless, largely due to comparability challenges relative to the record performance in fiscal 2016 identified above, adjusted segment operating income declined 5%, adjusted earnings per share were down $0.05, return on invested capital declined 90 basis points, and after-tax free cash flow declined 12%. Additional details regarding this performance is set forth in the proxy statement summary beginning on page 1. Based on these results, the weighted financial performance factor was 100% in fiscal 2017 compared to a performance factor of 152% in fiscal 2016.

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The following chart shows actual performance in fiscal 2017 with respect to each of these measures relative to prior year performance and the ranges established at the beginning of the fiscal year and the resulting performance factor used in calculating the aggregate financial performance goal multiple. (Dollars in millions except per share amounts.)

CHART

In comparing actual performance for fiscal 2017 to the performance ranges, the Compensation Committee adjusted for the impacts of: a litigation settlement; restructuring charges; the gain recognized in the value of BAMTech in connection with increased ownership of BAMTech; the effects of two hurricanes during the fiscal year; and changes in accounting principles relating to restricted cash and taxation of equity compensation.

The Committee also evaluated performance of each executive officer against the other performance factors established at the beginning of the year, taking into account the recommendations of Mr. Iger (except as to his own compensation) and the Company's performance during fiscal 2017.

Individual Compensation Decisions

The following table summarizes compensation decisions made by the Committee with respect to each of the named executive officers. The Committee established the performance-based bonus target multiple of salary for each of the named executive officers other than Ms. Parker early in the fiscal year and updated annual salaries for Ms. McCarthy, Mr. Mayer and Ms. Parker, and the bonus target multiple of salary for Ms. Parker, in June. The final bonus award was calculated after the fiscal year ended using the financial performance factor of 100% described above and 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 2017
Annual Salary





 

 

 

 

Target



Financial
Performance
Factor1





Other
Performance
Factor2





Award
Amount




 

 

 

 

Value



Target
Performance
Units3





Time-
Based
Units3





Options3



 
    Robert A. Iger     $2,500,000       $12,000,000   100%   189%   $15,200,000       $17,282,513   78,874     321,694    
                               
    Alan N. Braverman       $1,565,000           $3,130,000   100%   150%   $3,600,000           $3,130,162   8,244   8,926   48,536    
  Christine M. McCarthy     $1,500,000       $3,000,000   100%   150%   $3,450,000       $3,250,118   8,560   9,268   50,396    
                               
    Kevin A. Mayer       $1,500,000           $3,000,000   100%   150%   $3,450,000           $3,250,118   8,560   9,268   50,396    
  M. Jayne Parker     $975,000       $1,365,000   100%   150%   $1,570,000       $2,200,191   5,795   6,274   34,115    
                               
1
Multiplied by 70% of the target amount.
2
Multiplied by 30% of the target amount.
3
The number of restricted stock units and options was calculated from the value of the award as described in the table on pages 21 to 22.

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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 nonqualified deferred compensation earnings as the change in pension value does 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 Committee's determination on each of these matters was based on the recommendation of Mr. Iger (except in the case of his own compensation), the parameters established by the executive's employment agreement and the factors described below. In determining the appropriate other performance factor for individual executives, the Committee and Mr. Iger take into consideration that the named executive officers operate as a team in contributing to success across the Company. In addition, 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.

Mr. Iger

                 
                 
    Salary       Mr. Iger's 2017 annual salary rate was unchanged from his 2016 salary and is equal to the amount set in his employment agreement.    
    Performance-
based Bonus
      Target Bonus
Mr. Iger's fiscal 2017 target bonus amount was unchanged from fiscal 2016 and is equal to the amount set in his employment agreement.

Other Performance Factor
The Committee applied a factor of 189% with respect to other performance factors for Mr. Iger in fiscal 2017 compared to a factor of 202% in fiscal 2016. In fiscal 2017, Mr. Iger provided outstanding leadership of the Company's superior execution in developing the Company's strategic response to a changing media environment and in managing through a number of known challenges in the year compared to prior years. Key accomplishments during the year included:

The development of a strategy based on direct-to-consumer offerings of sports programming (planned for 2018) and Disney, Pixar, Marvel and Star Wars content (planned for 2019) and the acquisition of a majority stake in BAMTech in support of that strategy.

Outstanding Studio performance with six films generating over $600 million in global box office sales, including Disney-branded films Beauty and the Beast and Moana, Marvel's Guardians of the Galaxy Vol. 2 and Lucasfilm's Rogue One.

Shanghai Disney Resort exceeding expectations by delivering profitability in its first full year of operations, with over 11 million guests in the first 12 months.

Disney was ranked #1 in the entertainment industry in Fortune's World's Most Admired Companies for 2017 and #1 Millennial Brand in MBLM's Brand Intimacy Report. Disney was also named as one of the Most Respected American Companies by Barron's and one of the Most Reputable Companies by Forbes.

   
    Equity Award Value       The Committee left the value of Mr. Iger's equity award approximately equal to the value of his fiscal 2016 award.    
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Mr. Braverman

                 
                 
    Salary       Mr. Braverman's 2017 annual salary rate was unchanged from his 2016 salary.    
    Performance-
based Bonus
      Target Bonus
Mr. Braverman's target bonus for fiscal 2017 is equal to two times his fiscal year end salary, as set forth in his employment agreement.

Other Performance Factor
The Committee applied a factor of 150% with respect to other performance factors for Mr. Braverman in fiscal 2017 compared to a factor of 225% in fiscal 2016. The determination this year reflected Mr. Iger's recommendation and Mr. Braverman's accomplishments during the year, which included:

Continued leadership of the Company's legal positions on significant litigation matters, transactions and regulatory developments including European Union copyright regulation.

Oversaw legal strategy of the acquisition of majority stake in BAMTech, the privatization of Disneyland Paris and development of the direct-to-consumer initiative.

Led oversight of the Company's governmental affairs and public policy positions on both a domestic and global level, including consolidation of public policy work under unified leadership.

Continued to promote diversity of hiring in the legal department and to promote development of the department's pro bono legal program, each of which resulted in industry recognition.

   
    Equity Award
Value
      The equity award value for Mr. Braverman is equal to two times his fiscal year end salary as set forth in his employment agreement as in effect at the time the award was made.    

Ms. McCarthy

                 
                 
    Salary       The Committee increased Ms. McCarthy's salary in August 2017 by 15% to $1,500,000 to reflect changes in the market for executive talent and her continued outstanding performance.    
    Performance-
based Bonus
      Target Bonus
Ms. McCarthy's target bonus for fiscal 2017 is equal to two times her fiscal year end salary, as set forth in her employment agreement.

Other Performance Factor
The Committee applied a factor of 150% with respect to other performance factors for Ms. McCarthy in fiscal 2017 compared to a factor of 225% in fiscal 2016. The determination this year reflected Mr. Iger's recommendation and Ms. McCarthy's accomplishments during the year, which included:

Oversaw execution of financing for key business initiatives, including expansion at Hong Kong Disneyland and Disney Cruise Line and privatization of Disneyland Paris.

Maintained and promoted Disney's financial and capital markets strength, including successful debt offerings, structured long-term financings and achievement of favorable interest rates.

Restructured corporate functions for continued efficiency and consistency including enterprise social responsibility and global product and labor standards.

Provided active oversight of the corporate risk management function and corporate real estate projects involving changed leadership, restructuring and a number of significant projects.

   
    Equity Award
Value
      The annual equity award value for Ms. McCarthy is equal to 2.5 times her expected fiscal year end salary as set forth in her employment agreement as in effect at the time the award was made.    
                 

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Mr. Mayer

                 
                 
    Salary       The Committee increased Mr. Mayer's salary in August 2017 by 15% to $1,500,000 to reflect changes in the market for executive talent and his continued outstanding performance.    
    Performance-
based Bonus
      Target Bonus
Mr. Mayer's target bonus for fiscal 2017 is equal to two times his fiscal year end salary, as set forth in his employment agreement.

Other Performance Factor
The Committee applied a factor of 150% with respect to other performance factors for Mr. Mayer in fiscal 2017 compared to a factor of 225% in fiscal 2016. The determination this year reflected Mr. Iger's recommendation and Mr. Mayer's accomplishments during the year, which included:

Managed the Company's strategic merger and acquisition and joint venture activity, including acquisition of majority control in BAMTech and further investment in Hulu.

Led the development of Disney's content distribution strategy, including the development of direct-to-consumer initiatives.

Continued to develop the Company's research and development strategy to focus on high-value opportunities and expanded the scope of the Disney Accelerator program.

Supported technology innovation, including building capability for data-driven support for customer interactions in a variety of fields, rationalization of technology expenditures in significant areas and adaptation of information security programs to emerging risks.

   
    Equity Award
Value
      The annual equity award value for Mr. Mayer is equal to 2.5 times his expected fiscal year end salary as set forth in his employment agreement as in effect at the time the award was made.    
                 

Ms. Parker

                 
                 
    Salary       The Committee increased Ms. Parker's salary in August 2017 by 17% to $975,000 to reflect changes in the market for executive talent and her continued outstanding performance.    
    Performance-
based Bonus
      Target Bonus
Ms. Parker's target bonus for fiscal 2017 is equal to 1.4 times her fiscal year end salary, as set forth in her employment agreement.

Other Performance Factor
The Committee applied a factor of 150% with respect to other performance factors for Ms. Parker in fiscal 2017 compared to a factor of 225% in fiscal 2016. The determination this year reflected Mr. Iger's recommendation and Ms. Parker's accomplishments during the year, which included:

Hired new Chief Diversity Officer fully dedicated to driving the people, culture and diversity strategies for the Company.

Led the people strategy for the BAMTech acquisition from planning through integration.

Developed enhanced workplace technology solutions for employee communications and interaction.

Enhanced the ability to develop world-class talent through an executive assessment process for developing senior executive candidates and development of on-demand learning opportunities for all employees.

Provided leadership through unprecedented frequency of natural disasters and employee emergency events and continued the integration of strong global security and intellectual property protection practices in response to a heightened security environment worldwide.

   
    Equity Award
Value
      The equity award value for Ms. Parker is equal to 2.6 times her fiscal year end salary (compared to a minimum value of two times her fiscal year end salary as set forth in her employment agreement as in effect at the time the award was made) based on Mr. Iger's recommendation, Ms. Parker's continued outstanding performance and the market for executive talent.    
                 
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Compensation Committee Report

The Compensation Committee has:

    (1)
    reviewed and discussed the Compensation Discussion and Analysis included in this proxy statement with management; and
    (2)
    based on this review and discussion, recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company's proxy statement relating to the 2018 Annual Meeting of shareholders.

Members of the Compensation Committee

Mary T. Barra
Jack Dorsey
Maria Elena Lagomasino
Aylwin B. Lewis (Chair)
Orin C. Smith

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Compensation Tables

Fiscal 2017 Summary Compensation Table

The following table provides information concerning the total compensation earned in fiscal 2015, in fiscal 2016 and fiscal 2017 by the chief executive officer, the chief financial officer and the three other persons serving as executive officers at the end of fiscal 2017 who were the most highly compensated executive officers of the Company in fiscal 2017. These five 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


Salary1
Stock
Awards2


Option
Awards






Non-Equity
Incentive
Plan
Compensation











Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings3









All Other
Compensation


Total
 
    Robert A. Iger   2017   $2,500,000   $8,984,191   $8,298,322   $15,200,000     $1,301,167   $36,283,680    
                   
  Chairman and Chief Executive   2016   2,500,000   8,828,117   8,454,674   20,000,000   $2,893,778   1,205,827   43,882,396    
                   
  Officer   2015   2,548,077   8,862,741   8,419,823   22,340,000   1,423,047   1,319,926   44,913,614    
                   
    Alan N. Braverman     2017   1,565,000   1,878,142   1,252,020     3,600,000     56,359     95,938   8,447,459    
    Senior Executive Vice President,     2016   1,549,000   1,878,037   1,252,040     5,440,000     931,443     68,431   11,118,951    
    General Counsel and Secretary     2015   1,502,692   1,847,400   1,200,012     5,532,000     395,940     216,573   10,694,617    
    Christine M. McCarthy   2017   1,323,077   1,950,118   1,300,000   3,450,000   852,787   70,600   8,946,582    
                   
  Senior Executive Vice President   2016   1,287,692   1,950,106   1,300,058   4,520,000   1,104,131   36,523   10,198,510    
                   
  and Chief Financial Officer   2015   869,712   1,003,783   652,018   4,310,000   155,346   79,194   7,070,053    
                   
    Kevin A. Mayer     2017   1,323,077   1,950,118   1,300,000     3,450,000     333,928     77,495   8,434,618    
    Senior Executive Vice President     2016   1,287,692   1,950,106   1,300,058     4,520,000     1,031,418     36,075   10,125,349    
    and Chief Strategy Officer     2015   1,050,250   1,354,785   880,006     4,310,000     303,767     107,763   8,006,571    
    M. Jayne Parker
 
2017   851,154   1,320,171   880,020   1,570,000   392,107   77,112   5,090,564    
                   
  Senior Executive Vice President and   2016   826,385   1,320,122   880,052   1,815,000   711,775   51,060   5,604,394    
                   
  Chief Human Resources Officer   2015   797,077   1,354,785   880,006   1,844,000   664,810   112,388   5,653,066    
                   
1
The amounts reflect compensation for 53 weeks in fiscal year 2015 compared to 52 weeks in fiscal 2016 and fiscal 2017 due to the timing of the end of the fiscal period.

2
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. Assuming the highest level of performance conditions are achieved, the grant date stock award values would be as follows:

 

Fiscal Year



Mr. Iger

Mr. Braverman

Ms. McCarthy

Mr. Mayer

Ms. Parker
 

 

2017

  $ 12,447,500   $2,240,131   $2,325,983   $ 2,325,983   $ 1,574,625    

 

2016

    12,681,647     2,287,925     2,375,735     2,375,735     1,608,262    
             

 

2015

  12,629,785   2,250,073   1,222,575   1,650,084   1,650,084    
             
3
As described more fully under "Change in Pension Value and Nonqualified Deferred Compensation Earnings" below, changes in pension value in 2016 were driven largely by changes in the discount rate applied to calculate the present value of future pension payments. In fiscal 2017, the change in pension value for Mr. Iger was negative $428,437.
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Salary.    This column sets forth the base salary earned during each fiscal year.

Stock Awards.    This column sets forth the grant date fair value of the restricted stock unit awards granted to the named executive officers 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 performance-based vesting conditions other than the test to assure deductibility under Section 162(m) of the Internal Revenue Code. The valuation adjustments, which reflect the fact that the number of shares received on vesting varies based on the level of performance achieved, 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 2017 is also included in the Fiscal 2017 Grants of Plan Based Awards table on page 39.

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 named executive officers 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 12 to the Company's Audited Financial Statements for fiscal 2017. The grant date fair value of the options granted during fiscal 2017 is also included in the Fiscal 2017 Grants of Plan Based Awards table on page 39.

Non-Equity Incentive Plan Compensation.    This column sets forth the amount of compensation earned by the named executive officers 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 discussion of "2017 Total Direct Compensation" in the "Executive Compensation Program Structure" section, and the determination of performance-based bonuses for fiscal 2017 is described in the "2017 Compensation Decisions" section of the Compensation Discussion and Analysis beginning on page 28.

Change in Pension Value and Nonqualified Deferred Compensation Earnings.    This column reflects the aggregate change in the actuarial present value of each named executive officer'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 discount rate used pursuant to pension accounting rules to calculate the present value of future payments was 4.40% for fiscal 2014, 4.47% for fiscal 2015, 3.73% for fiscal 2016 and 3.88% for fiscal 2017. The decrease in fiscal 2016 drove substantial increases in the present value of future payments. 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. Pension values in fiscal 2015 and for some executive officers in fiscal 2017 increased despite the small increases in the discount rate due to the effect of an additional year of service and higher compensation levels.

Mr. Iger, Ms. McCarthy, and Ms. Parker were credited with earnings on deferred compensation as disclosed below under "Deferred Compensation". 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 named executive officers;
a one-time payout of accumulated vacation time in fiscal 2015 resulting from a Company-wide change in policy relating to vacation accrual; 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 US employees with at least one year of service.

The dollar amount of matching charitable contributions was $50,000, $31,693, $48,693, $50,000 and $37,850 for Mr. Iger, Mr. Braverman, Ms. McCarthy, Mr. Mayer and Ms. Parker, respectively.

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 named executive officers for business purposes but which may not be considered integrally related to his or her duties.

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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 2017.

 

 
Personal Air Travel

Security

Other

Total
 

 

Robert A. Iger

  $310,540   $ 899,810   $ 34,529   $ 1,244,879    

 

Alan N. Braverman

            57,968     57,968    
           

 

Christine M. McCarthy

      15,735   15,735    

 

Kevin A. Mayer

            21,319     21,319    
           

 

M. Jayne Parker

      33,090   33,090    

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 named executive officer 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 on pages 23 to 24, above, Mr. Iger is required for security reasons to use corporate aircraft for all of his 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 named executive officer elected to receive any of these benefits, the incremental cost to the Company of the vehicle benefit, personal air travel, reimbursement of up to $1,000 per calendar year for wellness-related purposes such as fitness and nutrition management, and reimbursement of expenses for financial consulting.

The named executive officers also were eligible to receive the other benefits described in the Compensation Discussion and Analysis under the discussion of "Benefits and Perquisites" in the "Compensation Program Elements" section, which involved no incremental cost to the Company or are offered through group life, health or medical reimbursement plans that are available generally to all of the Company's salaried employees.

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Executive Compensation
 
 

 


Fiscal 2017 Grants of Plan Based Awards Table

The following table provides information concerning the range of awards available to the named executive officers under the Company's annual performance-based bonus program for fiscal 2017 and information concerning the option grants and restricted stock unit awards made to the named executive officers during fiscal 2017. Additional information regarding the amounts reported in each column follows the table.