Michael Spells It M-o-n-e-y
Look for the bare necessities, those simple bare necessities, forget about your worries and your strife.
--From Walt Disney’s “Jungle Book”
Michael Eisner, who presides over the Disney empire, last week exercised stock options and created for himself a pay bonus of nearly $200 million. That ought to cover a lot of bare necessities. Worries? Strife? Forget about it. Eisner’s main concern now is where to stash his hard-earned pay.
Though the heft of the bonanza might bother critics of bloated executive pay, I find Eisner’s rationale for taking the money just now even more interesting. To put it plainly, he wanted to keep Bill Clinton from getting his mitts on the loot. Our new President, needing tax money to “invest in America,” sees corporate fat cats--including Hollywood moguls who so fervently endorsed his candidacy--as a swell target. He not only has promised to increase income taxes on the super-rich, he also intends to reduce write-offs that encourage corporations to pay top bosses as though they were kings or baseball players.
By exercising his stock options now, Eisner precluded such meddling. That the Disney chairman voted for Clinton--and that Disney President Frank Wells, who cashed in $60 million worth of Disney stock, actively campaigned for the Arkansas governor--apparently makes no difference. “While it may be positive that the new Administration plans to raise all sorts of taxes to help reduce the federal deficit,” Eisner wrote shareholders in a coming annual report, “some of those proposals will have a serious negative effect on your company.”
Not to mention your CEO.
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Eisner’s action is disappointing in a couple of ways. First, I grew up with the Mouseketeers and the “Wonderful World of Disney,” still get a kick out of Disneyland. My daughter and I spend many mornings watching “Jungle Book,” “Mermaid” and the rest of the movies. I’ve been a sucker for the Disney magic, and naively I assumed that the people responsible for it must be something special. Like family, almost.
What Eisner has demonstrated is that, for all the hype about its “imagineers,” Disney is a Hollywood corporation like any other, run by profiteers who fittingly enough gave us “Ruthless People.” I read somewhere that Walt Disney had a maxim: “Pig, don’t make a hog of yourself.” It no longer seems to apply.
The other disappointment involves Clinton. Though skeptical about Gov. Bubba, I nonetheless had begun to share the excitement that his election might signal change in the national order of business. All the golden talk about rediscovered national purpose and self-sacrifice became almost believable. Eisner, purveyor of fantasy, introduced reality to this dreamy rhetoric: Rebuild your country, but leave my Magic Kingdom out of it.
Interestingly, Eisner’s $200-million bonus cum tax dodge has generated little criticism and even less surprise. Financial experts especially seem to agree that his move, to quote one, “makes sense,” and also that it is a precursor of a well-heeled stampede to escape Clinton’s tax plans and take final advantage of the central premise of Reaganomics--protect the rich. “Like all reasonable people,” Eisner wrote, “we must accept new taxes, but . . . “
That “but” said it all.
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Eisner explained that he exercised his stock option only to protect shareholders. Were Eisner to act later, under Clinton and new tax rules, Disney would no longer be able to write off his bonus and thus would face an additional tax bill of about $90 million. To suggest that he might have kicked back part of his bonus to cover this amount is, I suppose, to wander once more into the realm of corporate make-believe.
Eisner defenders insist that he has earned every cent, enriching Disney by $20 billion. It is argued that stock options provided Eisner incentive. Less pay, presumably, would have produced less work, and I wonder at what point Eisner’s performance evaluations would have suffered: Incentives drop to $150 million, Eisner begins showing up late on Mondays; $120 million, Eisner calls in sick for third consecutive Friday; $90 million, Eisner brings Game Boy to office, takes no calls.
Now I can hear the squawks from Eisner’s people already: What would you have him do? Let Clinton and the government get the money? Well, I don’t know and anyway what’s done is done. For appearance’s sake, he might now spend a small portion of his windfall on charity, create an Eisner Home for Wayward Mermaids, serve brown rice to celebs some night on behalf of the starving poor. The Hollywood deal. But Eisner can figure all that out. That’s why he makes the big bucks.
