The good news for Walt Disney chief executive Mr Michael D. Eisner is that he reaped a staggering $576 million (499 million) during the company's most recent fiscal year. Now, here's the bad news: His bonus was cut nearly in half because the company, by his own admission, had a flat year.
In a disclosure that underscores the often baffling quirks of executive compensation programs, Mr Eisner, as expected, posted a record annual take for an executive. Nearly all of his compensation in the fiscal year to September 30th last came from a previously disclosed move in which he exercised 7.3 million options in December 1997 that reaped him $569.8 million that day. He had accumulated those options since 1989.
Mr Eisner's discretionary bonus for the year, however, was cut 49 per cent to $5 million during the last fiscal year, according to information in Disney's proxy statement. He also made $764,423 in salary, the document shows.
Separately, Mr Eisner in his annual letter to shareholders took the unusual step of specifically criticising the performance of Disney's live-action movie unit, saying: "We're glad fiscal 1998 is over in this area."
"In too many instances," he said, "profits did not materialise from the revenues achieved by our films. Stated more bluntly, either the films and marketing cost too much or the audience rejected our ideas."
Among Disney's expensive live-action flops during the fiscal year were Holy Man and Beloved.
But Mr Eisner quickly added that the latest fiscal year "has started off like gangbusters for our movie division" with such hits as The Waterboy, Enemy of the State and the computer-animated feature A Bug's Life from Disney and Pixar. Movie chief Mr Joe Roth, whose contract is up this year, said he was not bothered by Mr Eisner's comments, which he said reflected troubles mostly in the early part of 1998. "We had a rough first half of last year. Most of the terrific things happened after that," Mr Roth said.
Overall, Disney had the highest film market share for 1998 among Hollywood's studios. Its live-action summer film, Armageddon, was the only film released last year that grossed more than $200 million domestically.
Mr Eisner's letter is dated before the release of Mighty Joe Young, a film heavy with special effects that flopped at the box office.
On Wednesday, entertainment analyst Ms Jill S. Krutick of Salomon Smith Barney lowered her profit estimates for Disney, citing as one reason a likely write-off on Mighty Joe Young.
Mr Eisner also said in his letter that "we could be getting close" to the time when Disney develops a theme park in China, something that has been rumoured for years.
Disney has long studied building a theme park in China, although it has approached the issue cautiously because of uncertainty in dealing with China's government.
In addition, Disney's relations with China soured with the release of Martin Scorsese's 1997 film Kundun about Chinese oppression in Tibet. Lately, Disney has signalled a growing interest in developing a theme park in China, with parks chief Mr Judson Green spending considerable amounts of time evaluating the possibility.
Disney's stock, usually one of the entertainment industry's strongest performers, has lagged this fiscal year. It is down nearly 30 per cent from its high in May, when it was trading at almost $43 a share.
