<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
THE WALT DISNEY COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
<PAGE>
[LOGO OF THE WALT DISNEY COMPANY]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 25, 1997
----------------
To our Stockholders:
The 1997 annual meeting of stockholders of The Walt Disney Company will be
held at the Arrowhead Pond of Anaheim, 2695 East Katella Avenue, Anaheim,
California, on Tuesday, February 25, 1997, beginning at 10:00 a.m. At the
meeting, stockholders will act on the following matters:
(1) Election of five directors, each for a term of three years;
(2) Approval of the 1997 Cash Bonus Performance Plan for Executive
Officers;
(3) Approval of a performance-based compensation plan for the Chief
Executive Officer of the Company;
(4) Ratification of the appointment of Price Waterhouse LLP as the
Company's independent accountants for the 1997 fiscal year;
(5) Consideration of two stockholder proposals; and
(6) Any other matters that properly come before the meeting or any
postponements or adjournments thereof.
Only stockholders of record at the close of business on December 30, 1996
are entitled to vote at the meeting or any postponement or adjournment.
IF YOU PLAN TO ATTEND:
WE ANTICIPATE THAT A LARGE NUMBER OF STOCKHOLDERS WILL ATTEND THE MEETING.
PLEASE NOTE THAT SPACE LIMITATIONS MAKE IT NECESSARY TO LIMIT ATTENDANCE TO
STOCKHOLDERS AND ONE GUEST. ADMISSION TO THE MEETING WILL BE ON A FIRST-COME,
FIRST-SERVED BASIS. REGISTRATION WILL BEGIN AT 8:00 A.M., AND SEATING WILL BE
AVAILABLE AT APPROXIMATELY 9:00 A.M. CAMERAS AND RECORDING DEVICES WILL NOT BE
PERMITTED AT THE MEETING. "STREET NAME" HOLDERS WILL NEED TO BRING A COPY OF A
BROKERAGE STATEMENT REFLECTING STOCK OWNERSHIP AS OF THE RECORD DATE.
By order of the Board of Directors,
/s/ Marsha L. Reed
Marsha L. Reed
Corporate Secretary
January 9, 1997
Burbank, California
<PAGE>
[LOGO OF THE WALT DISNEY COMPANY]
500 SOUTH BUENA VISTA STREET
BURBANK, CALIFORNIA 91521
----------------
PROXY STATEMENT
----------------
This proxy statement contains information related to the solicitation of
proxies for use at the annual meeting of stockholders of The Walt Disney
Company to be held at the Arrowhead Pond of Anaheim, 2695 East Katella Avenue,
Anaheim, California, on Tuesday, February 25, 1997, beginning at 10:00 a.m.,
and at any postponements or adjournments thereof, for the purposes set forth
in the accompanying notice. This proxy statement and accompanying materials
are being mailed to stockholders beginning on or about January 9, 1997.
GENERAL
The Company. In connection with the Company's acquisition of Capital
Cities/ABC, Inc. on February 9, 1996, a new parent company, with the name "The
Walt Disney Company," replaced the old parent company of the same name. For
convenience, the term "Company" is used in this proxy statement to refer to
the old parent company through February 8, 1996 and the new parent company
thereafter.
Stockholders Entitled to Vote. Only stockholders of record at the close of
business on December 30, 1996 are entitled to notice of the annual meeting and
to vote the shares of common stock of the Company held by them on that date at
the meeting or any postponements or adjournments thereof. Each outstanding
share entitles its holder to cast one vote on each matter to be voted upon. As
of December 31, 1996, 675,109,522 shares of common stock of the Company were
outstanding.
Quorum. The presence at the meeting, in person or by proxy, of the holders
of a majority of the shares of common stock outstanding on December 30, 1996
will constitute a quorum, permitting the meeting to conduct its business.
Abstentions and broker non-votes will be included in the calculation of the
number of shares considered to be present at the meeting.
Voting. If the accompanying proxy card is properly signed, returned to the
Company and not revoked, it will be voted as directed by the stockholder.
Unless contrary instructions are given, the persons designated as proxy
holders in the proxy card will vote for the slate of nominees for election as
directors proposed by the Board of Directors, for adoption of the 1997 Cash
Bonus Performance Plan, for approval of the performance-based compensation
plan for the Company's Chief Executive Officer, for ratification of the
appointment of Price Waterhouse LLP as the Company's independent accountants
for the fiscal year ending September 30, 1997, against approval of the two
stockholder proposals and as recommended by the Board of Directors with regard
to any other matters or, if no recommendation is given, in their own
discretion.
The affirmative vote of a plurality of the votes cast at the meeting will be
required for the election of directors. A properly executed proxy marked
"WITHHOLD AUTHORITY" with respect to the election of one or more directors
will not be voted with respect to the director or directors indicated,
although it will be counted for purposes of determining whether there is a
quorum. For each other item to be acted upon at the meeting, the affirmative
vote of the holders of a majority of the shares represented in person or by
proxy and entitled to vote on the item will be required for approval. A
properly executed proxy marked "ABSTAIN" with respect to any such matter will
not be voted, although it will be counted for purposes of determining whether
there is a quorum. Accordingly, an abstention will have the effect of a vote
against the matter in question.
<PAGE>
In accordance with the rules of the New York Stock Exchange, brokers and
nominees may be precluded from exercising their voting discretion with respect
to certain matters to be acted upon and thus, in the absence of specific
instructions from the beneficial owner of the shares, will not be empowered to
vote the shares on such matters and therefore will not be counted in
determining the number of shares necessary for approval. Shares represented by
such broker non-votes will, however, be counted for purposes of determining
whether there is a quorum.
Revocation of a Proxy. Each stockholder may revoke a previously granted
proxy at any time before it is exercised by filing with the Secretary of the
Company either a notice of revocation or a duly executed proxy bearing a later
date. The powers of the proxy holders will be suspended if the person
executing the proxy attends the meeting in person and so requests. Attendance
at the meeting will not, in itself, constitute revocation of a previously
granted proxy.
Participants in the Disney Savings and Investment Plan and the ABC Savings
and Investment Plan. Employees of the Company and its affiliates who
participate in the Disney Savings and Investment Plan or the ABC, Inc. Savings
and Investment Plan (i.e., the Company's "401(k)" plans) may vote shares of
common stock of the Company equivalent to the value of the interest credited
to their account in either plan by instructing Fidelity Management Trust
Company, the trustee of both plans, pursuant to the instruction card being
mailed with this proxy statement to plan participants. The trustee will vote
such shares in accordance with duly executed instructions received by February
18, 1997. Share equivalents credited to a participant's account as to which no
instructions are received by that date will be voted by the trustee in the
same proportion that it votes share equivalents for which it did receive
timely instructions. Each participant may revoke previously given voting
instructions by February 18, 1997 by filing with the trustee a written notice
to that effect or a duly executed voting instruction card bearing a date
subsequent to the date of his or her previously delivered instruction card.
STOCK OWNERSHIP
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of December 31, 1996, no single person or group was known to the Company
to be the beneficial owner of more than 5% of the outstanding common stock of
the Company.
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table reflects shares of common stock of the Company
beneficially owned (or deemed to be beneficially owned pursuant to the rules
of the Securities and Exchange Commission) as of December 31, 1996 by each
continuing director of the Company, each of the executive officers named in
the Summary Compensation Table below and the current directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
SOLE VOTING SHARED VOTING ACQUIRABLE
AND INVESTMENT AND/OR INVESTMENT WITHIN PERCENT OF
NAME POWER(1) POWER(1)(2) 60 DAYS(3) COMMON STOCK(4)
---- -------------- ----------------- ---------- ---------------
<S> <C> <C> <C> <C>
Reveta F. Bowers........ -- -- 1,200 *
Roy E. Disney(5)........ 5,658,230 1,764,256 80,000 1.1%
Michael D. Eisner....... 2,934,180 99,455 6,666,668 1.4%
Stanley P. Gold......... 1,000 1,856 1,200 *
Sanford M. Litvack...... 500 700 350,000 *
Ignacio E. Lozano, Jr. . 5,148 440 1,200 *
George J. Mitchell...... 500 -- 1,200 *
Lawrence P. Murphy...... 20,272 1,122 332,000 *
Thomas S. Murphy........ 1,048,544 17,830 205,238 *
Richard D. Nanula....... 249 3,112 184,000 *
Richard A. Nunis........ 89,097 14,430 440,000 *
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
SOLE VOTING SHARED VOTING ACQUIRABLE
AND INVESTMENT AND/OR INVESTMENT WITHIN PERCENT OF
NAME POWER(1) POWER(1)(2) 60 DAYS(3) COMMON STOCK(4)
---- -------------- ----------------- ---------- ---------------
<S> <C> <C> <C> <C>
Leo J. O'Donovan, S.J. . -- -- -- *
Sidney Poitier.......... -- -- 1,200 *
Irwin E. Russell........ 4,000 -- 1,200 *
Robert A.M. Stern....... 260 -- 1,200 *
E. Cardon Walker........ 158,573 -- 1,200 *
Raymond L. Watson....... 17,040 -- 1,200 *
Gary L. Wilson.......... -- -- 1,200 *
All current directors
and executive officers
as a group (19
persons)............... 9,937,593 1,904,689 8,299,906 3.0%
</TABLE>
- --------
* Represents less than 1% of the Company's outstanding common stock.
(1) Certain directors and executive officers disclaim beneficial ownership of
some of the shares listed, as follows: Mr. Eisner--29,600 shares held by
his wife directly and as custodian for their children, 36,000 shares held
in trust for the benefit of their children, 24,000 shares held by an adult
child and 1,600 shares held in a family trust; Mr. Disney--1,764,256
shares (see footnote (5) below); Mr. Gold--1,440 shares held by his wife
and children and 416 shares beneficially owned by Shamrock Holdings, Inc.,
of which he is an officer and director; Mr. Lozano--440 shares that he
holds as custodian for the benefit of his child; Thomas Murphy--17,390
shares held in trust for the benefit of a non-family member and 440 shares
owned by Mr. Murphy's wife; Mr. Nunis--882 shares held by a trust of which
Mr. Nunis is trustee for the benefit of his son and 200 shares held by his
wife as trustee for her children; and all current directors and executive
officers as a group--1,920,664 shares.
(2) Includes interests in shares held for the benefit of the following
individuals and for all current directors and executive officers as a
group in the Disney Salaried Savings and Investment Plan, with respect to
which such persons have sole voting power but no investment rights: Mr.
Eisner--8,255 shares; Mr. Litvack--700 shares; Mr. Nanula--3,112 shares;
Lawrence Murphy--1,122 shares; Mr. Nunis--9,802 shares; and all current
directors and executive officers as a group--24,474 shares.
(3) Reflects the number of shares that could be purchased by exercise of
options available at December 31, 1996 or within 60 days thereafter under
the Company's stock option plans.
(4) Based on the number of shares outstanding at, or acquirable within 60 days
of, December 31, 1996.
(5) The shares listed in the table for Mr. Disney include 1,764,256 shares as
to which he disclaims beneficial ownership, consisting of 1,507,520 shares
owned by his wife; 256,320 shares held in trusts for the benefit of his
four children, of which Mr. Disney is the trustee; and 416 shares
beneficially owned by Shamrock Holdings, Inc., of which both Mr. Disney
and his wife are officers and directors and the shares of which are held
by Mr. Disney, his wife, certain of his children, trusts for the benefit
of his children and custodial accounts for the benefit of certain of his
children and grandchildren.
ITEM 1--ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into three classes, as
nearly equal in number as possible. Each class serves three years, with the
terms of office of the respective classes expiring in successive years. The
term of office of directors in Class I expires at the 1997 annual meeting. The
Board of Directors proposes that the nominees described below, all of whom are
currently serving as Class I directors, be re-elected to Class I for a new
term of three years and until their successors are duly elected and qualified.
The Board of Directors has no reason to believe that any of the nominees will
not serve if elected, but if any of them should become unavailable to serve as
a director, and if the Board designates a substitute nominee, the persons
named as proxies will vote for the substitute nominee designated by the Board.
3
<PAGE>
Directors will be elected by a plurality of the votes cast at the annual
meeting. If elected, all nominees are expected to serve until the annual
meeting in the year 2000 and until their successors are duly elected and
qualified.
DIRECTORS STANDING FOR ELECTION--CLASS I
REVETA F. BOWERS Director since 1993
Mrs. Bowers, 48, has been the Head of School for the Center for Early
Education, an independent school for pre-school through sixth grade located
in Los Angeles, since 1976. Mrs. Bowers is a member of the Board of
Directors of several non-profit educational organizations, including the
National Association of Independent Schools, Educational Records Bureau,
Inc., The Fulfillment Fund and the Coalition for Justice.
ROY E. DISNEY Director since June 1984;
also from 1967 to March 1984
Mr. Disney, 66, has been Vice Chairman of the Board of Directors of the
Company since 1984, and since November 1985 has also served as head of the
Company's animation department. In addition, Mr. Disney is Chairman of the
Board of Shamrock Holdings, Inc., which, through its subsidiaries, is
engaged in real estate development and the making of investments. Mr.
Disney is a nephew of the late Walt Disney.
IGNACIO E. LOZANO, JR. Director since 1981
Mr. Lozano, 69, is Chairman of Lozano Enterprises, which publishes La
Opinion, the largest Spanish-language newspaper in the Los Angeles
metropolitan area. Mr. Lozano was Publisher and Editor of La Opinion from
1953 to 1986, except for the period from 1976 through 1977 when he was the
United States Ambassador to El Salvador. Mr. Lozano is a member of the
Boards of Directors of Bank America Corporation, a bank holding company;
Bank of America N.T. & S.A.; Pacific Enterprises, a holding company, and
its subsidiary Southern California Gas Co., a natural gas public utility;
Pacific Mutual Life Insurance Company; and a number of public service and
charitable organizations.
GEORGE J. MITCHELL Director since 1995
Mr. Mitchell, 63, is special counsel to the law firm of Verner, Liipfert,
Bernhard, McPherson & Hand in Washington, D.C. He served as a United States
Senator for fifteen years commencing in 1980, and was Senate Majority
Leader from 1989 to 1995. Mr. Mitchell is a member of the Board of
Directors of UNUM Corporation, Federal Express Corp. and Xerox Corporation.
He also serves as special advisor to the President and the Secretary of
State on United States investment and trade opportunities in Ireland.
GARY L. WILSON Director since 1985
Mr. Wilson, 56, is Co-Chairman of the Board of Northwest Airlines
Corporation. From July 1985 through December 1989, he was Executive Vice
President and Chief Financial Officer of the Company. Prior to joining the
Company, Mr. Wilson was Executive Vice President and Chief Financial
Officer of Marriott Corporation, a diversified company involved in lodging,
food service and related businesses.
DIRECTORS CONTINUING IN OFFICE
CLASS II--TERM EXPIRES AT THE 1998 ANNUAL MEETING
MICHAEL D. EISNER Director since 1984
Mr. Eisner, 54, is Chairman of the Board and Chief Executive Officer of the
Company. Prior to joining the Company in September 1984, Mr. Eisner was
President and Chief Operating Officer of Paramount Pictures Corp., which
was then a wholly owned subsidiary of Gulf+Western Industries, Inc. Prior
to joining
4
<PAGE>
Paramount in 1976, Mr. Eisner was Senior Vice President, Prime Time
Programming, for ABC Entertainment, a division of the American Broadcasting
Company, Inc., with responsibility for the development and supervision of
all prime-time series programming, limited series movies made for
television and the acquisition of talent.
STANLEY P. GOLD Director since 1987;
also from June to September 1984
For more than the past five years, Mr. Gold, 54, has served as President
and Chief Executive Officer of Shamrock Holdings, Inc. Since 1990, Mr. Gold
has been President of Trefoil Investors, Inc., the general partner of
Trefoil Capital Investors, L.P., an investment partnership, as well as
President of Shamrock Capital Advisors, Inc., which acts as manager of the
partnership. Mr. Gold is also Chairman of the Board of Directors of LA
Gear, Inc., a manufacturer and distributor of athletic and casual footwear,
and Chairman of Koor Industries, an Israeli company engaged in the
manufacture of telecommunications equipment, agro-chemicals and
infrastructure materials.
THOMAS S. MURPHY Director since 1996
Mr. Murphy, 71, was Chairman of the Board and Chief Executive Officer of
Capital Cities/ABC, Inc. for 24 years from 1966 to 1990 and from February
1994 until his retirement February 1996. Mr. Murphy is also a director of
Johnson & Johnson and Texaco Inc. He is Chairman of the New York University
Medical Center Board of Trustees and a member of the Board of Overseers of
Harvard College.
LEO J. O'DONOVAN, S.J. Director since 1996
Fr. O'Donovan, 62, has served as President of Georgetown University in
Washington, D.C. since 1989. He is Chair of the Board of the Consortium on
Financing Higher Education and a member of the Board of Directors of The
Riggs National Bank of Washington, D.C., the National Council on the Arts
of the National Endowment for the Arts, the Association of Catholic
Colleges and Universities and the Consortium of Universities of the
Washington Metropolitan Area.
IRWIN E. RUSSELL Director since 1987
Mr. Russell, 70, is an attorney engaged in private practice specializing in
the entertainment industry. From 1989 to 1992 he served of counsel to the
law firm of Rudin, Appel & Rosenfeld. Mr. Russell serves as a member of the
Board of Directors of The Lipper Funds, Inc., a mutual fund group, and of
the Southern California Tennis Association, a nonprofit association. He
also serves as an ad hoc arbitrator for the Federal Mediation and
Conciliation Service and the American Arbitration Association.
RAYMOND L. WATSON Director since 1974
Mr. Watson, 70, has served as Chairman of the Executive Committee of the
Company's Board of Directors since 1984 and was Chairman of the Board of
the Company from May 1983 to September 1984. Since 1986, Mr. Watson has
been Vice Chairman of the Board of The Irvine Company, a land development
company. From 1985 to 1986, he was Regents Professor in the Graduate School
of Management at the University of California, Irvine. Mr. Watson is also a
director of Pacific Mutual Life Insurance Company; Mitchell Energy &
Development Co., a company engaged in oil and gas exploration, production,
distribution and land development; The Tejon Ranch Company; and the Public
Policy Institute of California, a non-profit public policy research
institute.
CLASS III--TERM EXPIRES AT THE 1999 ANNUAL MEETING
SANFORD M. LITVACK Director since 1995
Mr. Litvack, 60, is Senior Executive Vice President and Chief of Corporate
Operations of the Company, having served as Senior Vice President General
Counsel from April 1991 through June 1992 and as
5
<PAGE>
Executive Vice President Law and Human Resources from June 1992 to August
1994. Mr. Litvack was a litigation partner with the law firm of Dewey
Ballantine from 1987 until joining the Company in 1991.
RICHARD A. NUNIS Director since 1981
Mr. Nunis, 64, is Chairman of Walt Disney Attractions, which encompasses
the Company's theme parks and resorts, and has been a senior executive of
the Company or its subsidiaries for more than the past five years. He is
also a member of the Board of Directors of SunTrust Bank and of Florida
Progress Corporation, a diversified holding company whose interests include
an electric utility. Mr. Nunis is a member of the Board of the University
of Central Florida Foundation, Inc.
SIDNEY POITIER Director since 1994
Mr. Poitier, 69, is an actor, director and writer, serving as Chief
Executive Officer of Verdon-Cedric Productions, a film production company.
He is also a member of the Board of Directors of Sarah Lawrence College.
Mr. Poitier has won many awards, including the Academy Award for Best Actor
and the American Film Institute's Lifetime Achievement Award. He belongs to
numerous civic organizations, including the Children's Defense Fund, the
NAACP Legal Defense and Education Fund and the Natural Resources Defense
Council.
ROBERT A.M. STERN Director since 1992
Mr. Stern, 57, is a practicing architect, teacher and writer. He is Senior
Partner of Robert A.M. Stern Architects of New York, which he founded, and
a Fellow of the American Institute of Architects. Mr. Stern is also a
professor at the Graduate School of Architecture, Planning and Preservation
at Columbia University in New York, where he is Director of the Historic
Preservation Program. Mr. Stern was the architect of the Yacht and Beach
Club hotels, the Boardwalk Inn and the Casting Center at the Walt Disney
World Resort and the Newport Bay Club and the Cheyenne Hotel at Disneyland
Paris. He is also the architect of the Feature Animation Building at the
Company's headquarters in Burbank, California.
E. CARDON WALKER Director since 1960
Mr. Walker, 80, was a senior executive of the Company for more than 25
years until 1984, serving as President from 1971 to 1977 and Chairman of
the Board and Chief Executive Officer from 1980 to 1983. From 1984 through
1989, he provided consulting and other services to the Company.
DIRECTORS' COMPENSATION; ATTENDANCE
Director's Compensation. Directors who are also full-time employees of the
Company receive no additional compensation for service as directors. During
the Company's fiscal year ending September 30, 1996, each nonemployee director
received a retainer fee based upon an annualized amount of $30,000, together
with a fee of $1,000 per Board or Committee meeting attended. Nonemployee
directors may defer payment of all or part of their fees under the Company's
Deferred Compensation Plan for Outside Directors. Such deferrals are generally
until termination of the director's service with the Company or until he or
she reaches a specified age. Ms. Bowers, Fr. O'Donovan and Mr. Murphy are
currently participating in this plan.
In addition, each nonemployee director receives an automatic grant, on March
1 of each year, of options to purchase 2,000 shares of common stock. For
fiscal 1996, Ms. Bowers and Messrs. Gold, Lozano, Mitchell, Murphy, Poitier,
Russell, Stern, Walker, Watson and Wilson received grants under this plan.
Each option grant, vesting in equal installments over five years and having a
ten-year term, permits the holder to purchase shares at their fair market
value on the date of grant ($65.75 in the case of options granted in 1996).
Other Compensation of Directors. During fiscal 1996, Mr. Walker received
payments totalling $609,826 with respect to motion pictures in which he
invested between 1963 and 1979 under a former incentive program of the
Company.
6
<PAGE>
During fiscal 1996, a Company subsidiary retained the firm of Robert A.M.
Stern Architects, of which Mr. Stern is Senior Partner, for architectural
services relating to resort and office developments in California, Florida and
Japan. Payments to Mr. Stern's firm for these services aggregated $168,278
during fiscal 1996.
Senator Mitchell provides consulting services to the Company with respect to
a variety of matters affecting the Company's international business operations
and development efforts. During fiscal 1996, the Company paid Senator Mitchell
an aggregate of $50,000 for these services. In addition, the Company engaged
the law firm of Verner, Liipfert, Bernhard, McPherson & Hand, of which Senator
Mitchell is special counsel, to advise the Company on various matters during
fiscal 1996, for which the Company paid an aggregate of $122,764.
Meetings and Attendance. The Board of Directors met five times during fiscal
1996. Each director attended more than 75% of the total number of meetings of
the Board and Committees on which he or she served with the exception of
Sidney Poitier, who attended less than 75% of the meetings of the Board of
Directors and Compensation Committee as the result of on-location filming
commitments.
COMMITTEES OF THE BOARD
The Board of Directors has standing Executive, Compensation, Audit Review
and Nominating Committees. In addition, during fiscal 1996 the Board created a
new Executive Performance Plan Committee.
Executive Committee. The Executive Committee, composed of Messrs. Disney,
Eisner and Watson (Chairman), possesses all of the powers of the Board except
the power to issue stock, approve mergers with nonaffiliated corporations or
declare dividends (except at a rate or in a periodic amount or within a price
range established by the Board), and certain other powers specifically
reserved by Delaware law to the Board. In fiscal 1996, the Executive Committee
held no meetings, but took action by unanimous written consent 15 times.
Compensation Committee. The Compensation Committee, composed of Messrs.
Lozano, Poitier, Russell (Chairman) and Watson, is charged with reviewing the
Company's general compensation strategy (except with respect to matters
entrusted to the Executive Performance Plan Committee commencing October 1,
1996 as described below); establishing salaries and reviewing benefit programs
(including pensions) for the Chief Executive Officer and those persons who
report directly to him; reviewing, approving, recommending and administering
the Company's incentive compensation and stock option plans and certain other
compensation plans; and approving certain employment contracts. In fiscal
1996, the Compensation Committee met eleven times. For fiscal 1997 and beyond,
the Compensation Committee will continue its functions of reviewing,
approving, recommending and administering the Company's compensation plans and
employment contracts; however, to the extent that incentive, stock option
and/or compensation issues relate to executives who are, or may become,
subject to Section 162(m) of the Internal Revenue Code, the Executive
Performance Plan Committee will take all necessary actions.
Executive Performance Plan Committee. The Executive Performance Plan
Committee was created on September 30, 1996 with responsibility for reviewing
and advising the Board with respect to executive compensation affecting
corporate officers subject to Section 162(m) of the Internal Revenue Code and
such other executives as the Company's management may deem appropriate. The
Committee also has responsibility for administration of the 1997 Cash Bonus
Performance Plan described under Item 2 of this proxy statement (including
establishing performance targets and determining specific bonuses) and will in
the future establish and administer compensation intended as performance-based
compensation under the Code and fix all salaries, grant all stock options and
approve all employment agreements for executives who are, or are expected to
become, subject to Section 162(m). The Committee, which consists of Messrs.
Gold (Chairman), Lozano, Poitier and Russell, held no meetings in fiscal 1996.
Audit Review Committee. The Audit Review Committee, composed of Ms. Bowers
and Messrs. Lozano (Chairman), Walker and Watson, met three times during
fiscal 1996. Its functions are to recommend the appointment of independent
accountants; review the arrangements for and scope of the audit by independent
accountants; review the independence of the independent accountants; consider
the adequacy of the system of internal accounting controls and review any
proposed corrective actions; review and monitor the Company's
7
<PAGE>
policies relating to business ethics and conflicts of interests; discuss with
management and the independent accountants the Company's draft annual
financial statements and key accounting and/or reporting matters; and review
the activities and recommendations of the Company's management audit
department.
Nominating Committee. The Nominating Committee, composed of Ms. Bowers and
Messrs. Gold (Chairman) and Wilson, is responsible for soliciting
recommendations for candidates for the Board of Directors; developing and
reviewing background information for candidates; making recommendations to the
Board regarding such candidates; and reviewing and making recommendations to
the Board with respect to candidates for directors proposed by stockholders.
Any stockholder wishing to propose a nominee should submit a recommendation in
writing to the Company's Secretary, indicating the nominee's qualifications
and other relevant biographical information and providing confirmation of the
nominee's consent to serve as a director. The Nominating Committee met once
during fiscal 1996.
CERTAIN LEGAL PROCEEDINGS
On January 3, 1997, the Company was advised that two purported stockholders,
Richard and David Kaplan, had filed a putative derivative action in the
Superior Court of the State of California, Los Angeles County, alleging that
certain current and former directors of the Company breached their fiduciary
duties of loyalty and care and wasted corporate assets in connection with
entering into and terminating the Company's employment agreement with
Michael S. Ovitz. See "Employment Agreements--Employment Agreement with
Michael S. Ovitz" below. On January 6, 1997, two other purported stockholders,
William and Geraldine Brehm, filed a substantially identical complaint in the
Court of Chancery for the State of Delaware, New Castle County. The complaints
name Messrs. Eisner, Ovitz, Disney, Gold, Litvack, Nunis, Poitier, Russell,
Stern, Walker, Watson and Wilson as defendants, together with Stephen F.
Bollenbach, the Company's former Chief Financial Officer and a former
director. Ms. Bowers, Messrs. Lozano, Mitchell and Murphy and Fr. O'Donovan
are not named as defendants. The complaints seek, among other things, a
declaratory judgment that Mr. Ovitz's employment agreement was void or,
alternatively, that Mr. Ovitz's termination should be deemed a termination
"for cause" and any severance payments to him forfeited, and compensatory or
rescissory damages and injunctive and other equitable relief from the named
defendants.
Management of the Company believes that the allegations in the complaints
are without merit.
EXECUTIVE COMPENSATION
The following Report of the Compensation Committee and the Executive
Performance Plan Committee and the performance graphs included elsewhere in
this proxy statement shall not be deemed soliciting material or otherwise
deemed filed and shall not be deemed to be incorporated by reference by any
general statement incorporating by reference this proxy statement into any
other filing under the Securities Act of 1933 or the Securities Exchange Act
of 1934, except to the extent the Company specifically incorporates this
Report or the performance graph by reference therein.
REPORT OF THE COMPENSATION COMMITTEE AND THE EXECUTIVE PERFORMANCE PLAN
COMMITTEE ON COMPENSATION OF EXECUTIVE OFFICERS OF THE COMPANY
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation for fiscal 1996. Because certain of
the functions of the Compensation Committee were transferred to the Executive
Performance Plan Committee at the end of fiscal 1996 and this report addresses
certain ongoing matters, the Executive Performance Plan Committee joins in the
report.
Executive Officer Compensation
The Company's compensation program for executive officers (other than the
Chief Executive Officer, who is compensated pursuant to an agreement described
under "Employment Agreements" below) consists of three key elements: a base
salary, a performance-based annual bonus pursuant to the Company's 1996 Cash
Bonus
8
<PAGE>
Performance Plan for Eligible Executive Officers (the "1996 Performance Plan")
and periodic grants of stock options. (For future years the Company has
adopted the 1997 Cash Bonus Performance Plan for Executive Officers, which, if
approved by stockholders as proposed in Item 2 below, will succeed the 1996
Performance Plan.) The Committee believes that this approach best serves the
interests of stockholders by enabling the Company to structure compensation in
a manner that meets the requirements of the highly competitive environment in
which the Company operates, while ensuring that executive officers are
compensated in a manner that advances both the short- and long-term interests
of stockholders. Thus, compensation for such officers involves a high
proportion of pay which is at risk: the variable annual bonus (which permits
individual performance to be recognized on an annual basis, and which is
based, in significant part, on an evaluation of the contribution made by the
officer to Company performance) and stock options (which directly relate a
significant portion of the executive officer's long-term remuneration to stock
price appreciation realized by the Company's stockholders).
Michael Ovitz, the Company's former president, was compensated during fiscal
year 1996 pursuant to the terms of his employment agreement. (See "Employment
Agreements--Employment Agreement with Michael S. Ovitz.")
Base Salary. Salaries paid to executive officers (other than the Chief
Executive Officer) are reviewed annually by the Chief Executive Officer based
upon his subjective assessment of the nature of the position and the
contribution, experience and Company tenure of the executive officer. The
Chief of Corporate Operations, under the Chief Executive Officer's direction,
reviews all salary recommendations with the Compensation Committee, which for
fiscal 1996 was responsible for approving or disapproving those
recommendations. (For future fiscal years, this responsibility will be borne
by the Executive Performance Plan Committee.) The Chief Executive Officer
reviews any salary recommendations for the Chief of Corporate Operations with
the Compensation Committee, which then approves or disapproves such
recommendations.
Annual Bonus. Annual bonuses for fiscal 1996 paid to executive officers of
the Company (other than Mr. Eisner, whose bonus was determined pursuant to a
formula described below, and Mr. Nanula, who was an executive officer for only
part of the year) were granted under the Company's 1996 Performance Plan. This
plan provided for performance-based bonuses for executives who are "covered
employees" under Section 162(m) of the Internal Revenue Code. Because bonuses
granted to such covered employees are intended to satisfy those Code
requirements, the 1996 Performance Plan specifies a maximum amount payable for
any year to any eligible executive equal to $10,000,000 or, if less, ten times
his or her salary on December 11, 1995. These maximum bonus amounts were set
above the Company's historical bonus levels for executives other than the
Chief Executive Officer because the Section 162 (m) regulations allow only
"negative discretion" in respect of this type of plan and the Committee wanted
the flexibility to recognize exceptional individual performance when
warranted.
In accordance with the provisions of the 1996 Performance Plan, the
Compensation Committee established an overall Company performance target to be
met before any bonuses would be payable for fiscal 1996. This performance
target related to the attainment of a specified level of net income for the
Company as a whole, as reported in the Company's audited financial statements
for the fiscal year, which after the end of the year the Executive Performance
Plan Committee confirmed was satisfied. The award of any annual bonus to any
eligible executive was subject to this initial determination. In arriving at
an actual bonus amount for each executive, the Executive Performance Plan
Committee then considered a number of specific factors, including an
assessment of overall Company performance as compared to both budgeted and
prior fiscal year performance; the extent to which the Company achieved its
overall financial goals of growth in earnings and return on stockholders'
equity; the amount of the Company-wide bonus pool applicable to all bonus-
eligible employees of the Company (other than the Chief Executive Officer);
and the executive's individual achievements, including, for fiscal 1996, his
or her contribution to the integration of the operations of ABC into the
Company. Based upon these factors, the Committee exercised its negative
discretion under the 1996 Performance Plan and awarded the bonuses set forth
below in the Summary Compensation Table, other than those to Messrs. Nanula
and Eisner.
Mr. Nanula was not an eligible executive officer of the Company at the time
the performance criteria for the 1996 Performance Plan were set, and
accordingly was not covered by that Plan. His annual bonus was
9
<PAGE>
determined in the manner applicable to other bonus-eligible employees who are
not covered by the 1996 Performance Plan. Following each fiscal year, the
Chief Executive Officer, working with the Chief of Corporate Operations,
develops a Company-wide bonus pool, which excludes payments to be made to the
Chief Executive Officer. The size of the bonus pool is based upon a subjective
assessment of overall Company and individual business unit performance as
compared to both budgeted and prior fiscal year performance and the extent to
which the Company achieved its overall financial goals of growth in earnings
and return on stockholders' equity. The amount of the bonus pool is subject to
the approval of both the Compensation Committee and the Board of Directors as
a whole. Once the overall bonus pool is approved, the Company's senior
management makes individual bonus recommendations to the Compensation
Committee, within the limits of the pool, for eligible employees based upon an
evaluation of their individual performance and contribution to the Company's
overall performance. For fiscal 1996, the Chief Executive Officer reviewed Mr.
Nanula's performance and contribution and the rationale for his recommended
bonus with the Committee before its approval.
The Chief Executive Officer's nondiscretionary annual bonus is awarded
pursuant to the terms of his employment agreement, which is described under
"Chief Executive Officer Compensation" and "Employment Agreements" below.
Stock Options. Under the stock option guidelines adopted by the Compensation
Committee, stock option grants may be made to executive officers when one of
the following events occurs: upon initial employment, upon promotion to a new,
higher level position that entails increased responsibility and
accountability, in connection with the execution of a new employment
agreement, and/or when all previously granted stock options have either fully
vested or are within twelve months of full vesting. Using the guidelines, the
Chief of Corporate Operations, under the direction of the Chief Executive
Officer, recommends the number of options to be granted, within a range
associated with the individual's salary level, and presents this to the
Committee for its review and approval. The Chief Executive Officer and/or the
Chief of Corporate Operations may make a recommendation to the Committee that
deviates from the guidelines, where they deem it appropriate. While options
typically vest over a minimum five-year period, options granted to certain
executive officers have longer vesting periods. In the past, the Chief
Executive Officer has reviewed any proposed stock option grant for the Chief
of Corporate Operations directly with the Compensation Committee, which then
approves or disapproves the grant. In the future, stock option grants for all
executive officers will be awarded by the Executive Performance Plan
Committee.
Chief Executive Officer Compensation
As Chief Executive Officer, Mr. Eisner was compensated during fiscal 1996
pursuant to his 1989 employment agreement described under "Employment
Agreements--1989 Agreement with Michael D. Eisner" below. Graef Crystal, an
independent consultant, was retained by the Company to advise it with respect
to the compensation set forth in Mr. Eisner's employment agreement prior to
the Board's approval of that agreement in 1989. Mr. Eisner's compensation
under that agreement was substantially related to the Company's performance
because it provided for an annual bonus, determined pursuant to a specific
formula based on the Company's achievement of defined stockholder return
levels, and stock options (75% of which were granted at an exercise price
equal to and 25% of which were granted at an exercise price $10 above the
then-current fair market value of the Company's common stock). In November
1996, the application of Mr. Eisner's contractual bonus provision for fiscal
1996 was adjusted pursuant to a specific provision of his 1989 agreement
authorizing adjustment in the event the calculation of the bonus is
significantly affected by a merger or other corporate combination. Pursuant to
this provision, Mr. Eisner's bonus formula was applied to the pro forma
financial results of the Company for fiscal 1996, excluding the effects of the
acquisition of ABC and the results of its operations for this transitional
year. The Committee determined that this adjustment in the formula pursuant to
the agreement was appropriate and would yield for fiscal 1996 an "equitable
and comparable result," as required by the agreement. The bonus awarded for
fiscal 1996 was $7,900,000, compared to $14,021,229 for fiscal 1995 and
$9,907,201 for fiscal 1994. (The bonuses for fiscal 1995 and 1994 were paid
partly in restricted stock. See Note 2 to the Summary Compensation Table
below.) For fiscal 1997 and 1998, Mr. Eisner's bonus will be determined
10
<PAGE>
pursuant to the 1997 Cash Bonus Performance Plan described under Item 2 below,
if approved by stockholders. Thereafter, Mr. Eisner's bonuses will be subject
to the performance-based compensation plan described in Item 3 below, if
approved by stockholders.
On September 30, 1996, the material terms of a new employment agreement with
Mr. Eisner were approved by the Compensation Committee and ratified and
approved by the Board of Directors, subject to completion of the final
contract. At the same time, the Compensation Committee also granted Mr. Eisner
an option for 8,000,000 shares (the same number as his 1989 grant). On January
8, 1997, the Company and Mr. Eisner entered into the final employment
agreement, which has a term extending through September 30, 2006, subject to
earlier termination under certain circumstances. (See "Employment Agreements--
New Employment Agreement with Michael D. Eisner" below.) The agreement follows
the pattern of the two previous agreements with Mr. Eisner, and includes a new
bonus formula which is being submitted for approval by the Company's
stockholders under Item 3 below. This new bonus formula adopts as its
performance criterion growth in earnings per share (EPS) to replace the 1989
bonus formula based on return on equity, because the Company believes EPS will
provide a more efficient measure of performance and create an incentive
directly related to the Company's growth in the years ahead. In arriving at
this new formula, the Committee took into account the Company's financial
goals, past bonus levels and detailed statistical studies based on various
financial assumptions and projections.
As in the case of the 1989 agreement, the Company engaged the services of
Graef Crystal, an independent expert consultant on executive compensation, and
he and members of the Compensation Committee devoted considerable time,
analysis and evaluation to the major components of a new compensation package
intended to assure Mr. Eisner's continued services on a long-term basis in
order to implement the long-range plans of a very large, world-wide, and
diversified Company. In addition, the Committee took into account the
established value of Mr. Eisner to the Company, his leadership position in the
entertainment industry and the relative value of entrepreneurial and other
opportunities which might be available to him in the absence of a new
agreement.
The new agreement continues to emphasize the philosophy of the risk/reward
relationship embodied in the two previous agreements: Mr. Eisner will receive
through 2006 the same base salary he has received since 1984, which the
Committee believes is substantially below market rates for chief executives in
the entertainment industry; bonuses for fiscal 1997 and 1998 will be
determined under the 1997 Cash Bonus Performance Plan as described in Item 2
below; a bonus formula will be in effect for fiscal 1999 and thereafter
(described under Item 3 below) which is tied mathematically to a compounded
earnings growth rate of the Company above a specified level; and Mr. Eisner's
ability to realize the value of his stock options will be tied to the very
long-range growth of the Company and stockholder values, with vesting of the
earliest options delayed for seven years (except in the event of early
termination of his employment under certain circumstances described below) and
with a significant portion vesting later (subject to the same exception) and
bearing exercise prices at 125%, 150%, and 200% of fair market value at the
date of grant. Because most of Mr. Eisner's compensation under the new
agreement is directly dependent on the future fortunes of the Company, his
compensation may, if the Company's operations and stock values do not grow
significantly, fall below that of top executives in the entertainment industry
and of other very large companies. If earnings and stock values increase, Mr.
Eisner will have the opportunity to achieve substantial benefits, along with
the Company's stockholders generally.
The Committee reported its analysis, and that of Mr. Crystal, and its
approval and recommendations to the Board of Directors, which, after due
consideration, ratified and approved the material terms of the new agreement
on September 30, 1996, subject to completion of the final contract.
Mr. Russell abstained from the final discussion with respect to the employment
agreement and all votes taken by both the Compensation Committee and the Board
of Directors because he also serves as Mr. Eisner's personal attorney and
represented Mr. Eisner in connection with the new agreement. Messrs. Eisner,
Ovitz, Litvack and Nunis, all then employees of the Company, also abstained
from the vote of the Board of Directors.
11
<PAGE>
Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public corporations for compensation over $1,000,000 for any
fiscal year paid to the corporation's chief executive officer and four other
most highly compensated executive officers in service as of the end of any
fiscal year. The Company believes that Section 162(m) does not apply to
compensation paid to the Company's Chief Executive Officer under his 1989
employment agreement or to stock options currently outstanding under the
Company's existing stock option plans.
Section 162(m) provides that qualifying performance-based compensation will
not be subject to the deduction limit if certain requirements are met. The
Executive Performance Plan Committee currently intends to structure
performance-based grants to executive officers under stock option plans in a
manner that satisfies those requirements. The Committee also currently intends
to structure annual bonuses for executive officers to comply with Section
162(m) as further discussed under "Annual Bonus" above and has adopted a
performance-based plan--the 1997 Cash Bonus Performance Plan for Executive
Officers--which is being submitted for stockholder approval under Item 2 below
in order to satisfy the stockholder approval requirements of Section 162(m).
In addition, it is the intention of the Committee that the bonus formula in
Mr. Eisner's new employment agreement, which is being submitted for
stockholder approval as Item 3, satisfy these requirements. It is possible
under certain circumstances, if stockholder approval of either the 1997 Cash
Bonus Performance Plan or Mr. Eisner's bonus formula is not obtained, that
Mr. Eisner could receive discretionary bonuses that do not comply with Section
162(m). The Board and the Committee also reserve the authority to award non-
deductible compensation in other circumstances as they deem appropriate.
Further, because of ambiguities and uncertainties as to the application and
interpretation of Section 162(m) and the regulations issued thereunder, no
assurance can be given, notwithstanding the efforts of the Company in this
area, that compensation intended by the Company to satisfy the requirements
for deductibility under Section 162(m) does in fact do so.
Members of the Compensation Members of the Executive Performance Plan
Committee Committee
Irwin E. Russell (Chairman) Stanley P. Gold (Chairman)
Ignacio E. Lozano, Jr. Ignacio E. Lozano, Jr.
Sidney Poitier Sidney Poitier
Raymond L. Watson Irwin E. Russell
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Directors Lozano, Poitier, Russell and Watson comprise the Board's
Compensation Committee. None of these directors is or has been an officer or
employee of the Company, except Mr. Watson, who was Chairman of the Board of
Directors of the Company from May 1983 to September 1984.
As noted above, at the end of fiscal 1996, the Board of Directors
established a new Executive Performance Plan Committee with responsibility,
among other things, for advising the Board of Directors with respect to
compensation matters affecting executives subject to Section 162(m) of the
Internal Revenue Code and administering the Company's 1997 Cash Bonus
Performance Plan and stock option plans as to such persons. None of the
members of this Committee (Messrs. Gold, Lozano, Poitier and Russell) is or
has been an officer or employee of the Company.
EMPLOYMENT AGREEMENTS
1989 Employment Agreement with Michael D. Eisner. Until January 8, 1997, Mr.
Eisner served the Company pursuant to an employment agreement dated as of
January 11, 1989. Mr. Eisner's base salary under this agreement was $750,000
per year through the entire term of the agreement. In addition, the agreement
provided for a nondiscretionary annual bonus equal to 2% of the amount by
which the Company's net income for the fiscal year exceeded the amount
representing a return on stockholder's equity of 11% (9% for 1989 and 1990).
In November 1996, the application of the formula was adjusted pursuant to a
provision in the employment
12
<PAGE>
agreement providing for adjustments in the event of mergers or other corporate
combinations. See "Report of the Compensation Committee and the Executive
Performance Plan Committee--Chief Executive Officer Compensation" above. Mr.
Eisner's bonuses for the first two years of the agreement were payable in
cash; beginning in 1991, bonuses, to the extent earned, were payable in cash,
to the extent the return on stockholders' equity is equal to or less than
17.5%, and in restricted stock, as defined in the employment agreement, to the
extent of any amount over 17.5%. See footnote 2 to the Summary Compensation
Table below. Mr. Eisner's employment agreement provided for a single stock
option grant (made on January 11, 1989) with respect to 8,000,000 shares of
common stock. Of the options granted, 25% were granted at an exercise price
$10 above the then current fair market value of the common stock, with the
remaining 75% granted at a price equal to fair market value.
New Employment Agreement with Michael D. Eisner. The Company and Mr. Eisner
executed a new employment agreement on January 8, 1997, which provides for Mr.
Eisner's employment through September 30, 2006 (subject to earlier termination
in certain circumstances as described below), at his current base salary of
$750,000 per year, which has been in effect since 1984. Under the new
agreement, bonus compensation for fiscal years 1997 and 1998 is to be
determined pursuant to the terms of the 1997 Cash Bonus Performance Plan
described under Item 2 below. Starting with fiscal 1999, Mr. Eisner's bonus
compensation will be determined through application of the bonus formula set
forth in the Chief Executive Officer Bonus Compensation Plan described under
Item 3 below. Both Items 2 and 3 are being submitted to the Company's
stockholders for approval. All bonuses under both plans will be paid in cash.
Under the new agreement, Mr. Eisner will be entitled to receive the bonuses
referred to above for each year in which he is employed under the new
agreement and, in the event of termination of his employment by the Company in
a manner that is a breach of the agreement or termination by him for "good
reason" as described below, for the full remaining term of the employment
agreement and the 24-month period thereafter, subject to reduction to twelve
months if he takes employment with another major entertainment company (other
than as an independent producer) within twelve months of termination. In the
event of termination of employment as a result of death or disability or upon
normal termination of the agreement in September 2006, Mr. Eisner will receive
such bonuses for the year in which the termination occurs and for the 24
months following such fiscal year. The employment agreement also provides for
a death benefit to Mr. Eisner's estate in the event of his death during the
term of the agreement, in an after-tax amount equal to $3,000,000.
In connection with the new employment agreement, the Committee also granted
to Mr. Eisner, on September 30, 1996, stock options with respect to a total of
8,000,000 shares of common stock of the Company under the Company's 1995 Stock
Incentive Plan. Of this total, an option with respect to 5,000,000 shares
bears an exercise price of $63.31, the fair market value of the Company's
common stock on September 30, 1996 as determined under the Plan, and vests on
September 30, 2003, with an expiration date of September 30, 2008. Three
additional options, each with respect to 1,000,000 shares, bear exercise
prices in excess of fair market value on the date of grant: one, with an
exercise price of $79.13 (125% of fair market value), vests on September 30,
2004; the second, with an exercise price of $94.96 (150% of fair market
value), vests on September 30, 2005; and the third, with an exercise price of
$126.62 (200% of fair market value), vests on September 30, 2006. The three
additional options expire on September 30, 2011.
The Company has the right to terminate Mr. Eisner's employment upon his
death; illness or disability that has incapacitated him for six consecutive
months; or "good cause," which is defined as gross negligence, malfeasance or
resignation without approval of the Company. Mr. Eisner has the right to
terminate the agreement for "good reason" in the event he is not elected or
retained as Chairman and Chief Executive Officer and a director of the
Company, or the Company acts to reduce his duties and responsibilities
materially or to change the location of the performance of his duties from the
Los Angeles area. In the event of any termination of Mr. Eisner's employment
by the Company without "good cause" or by Mr. Eisner for "good reason," or in
the event his death or disability, all of Mr. Eisner's options granted in
connection with his new employment agreement vest immediately and remain
exercisable until the earlier of five years thereafter or their scheduled
expiration dates, and he or his estate is entitled to a cash payment equal to
the present value of the remainder of
13
<PAGE>
the salary and to the bonus payments provided for in his agreement as
described above. If Mr. Eisner's new bonus formula is not approved by the
Company's stockholders, Mr. Eisner may terminate his employment agreement as
early as September 30, 1999, as described under Item 3 below.
The agreement also provides for Mr. Eisner to serve as a consultant to the
Company after expiration of the agreement at a fee to be mutually agreed
(which may be nominal), plus continuation of his benefits and perquisites
under the agreement, other than salary, bonus, stock options and group health,
pension and employee welfare plan coverage. Any such consulting agreement
would be terminable by the Company if Mr. Eisner were to accept employment
with a third party, render any services to a competitor or become disabled.
Employment Agreement with Michael S. Ovitz. The Company entered into a five-
year employment agreement with Michael Ovitz, commencing October 1, 1995,
providing that Mr. Ovitz, who was a founder, chairman and majority owner of
Creative Artists Agency ("CAA") and a leading entrepreneur in the
entertainment industry, would serve as President of the Company for an annual
salary of $1,000,000 and an annual discretionary bonus. Prior to entering into
the agreement, the Company negotiated with Mr. Ovitz extensively regarding its
terms, with particular emphasis on establishing a total compensation package
which would, within the framework of the established policies of the Company,
induce Mr. Ovitz to relinquish his significant earning power and the
substantial value of his ownership interest in CAA. In those negotiations, the
Company declined to pay Mr. Ovitz any signing bonus or to grant him any
restricted stock or other form of compensation not dependent solely upon
future growth of the Company. Instead, in order to induce Mr. Ovitz to
relinquish his ownership position at CAA, the agreement included a number of
provisions (described further below) concerning compensation payable to Mr.
Ovitz in the event of certain types of early termination of his employment by
the Company.
Pursuant to the agreement, Mr. Ovitz was granted a stock option on October
16, 1995 to purchase 3,000,000 shares of the Company's common stock at an
exercise price of $57.00, the fair market value of the common stock on the
date of grant. The option provided for vesting in increments of 1,000,000
shares on September 30 of each year commencing September 30, 1998. A second
stock option was also granted to Mr. Ovitz on the same date and at the same
exercise price for the purchase of 2,000,000 shares, vesting in two equal
installments on September 30, 2001 and 2002. The option for 3,000,000 shares
provided for accelerated vesting if Mr. Ovitz's employment was terminated as a
result of his death or disability or by the Company for any reason other than
good cause (defined in the employment agreement as "gross negligence or
malfeasance" or his resignation without the Company's consent). Such
accelerated vesting was also provided for if Mr. Ovitz terminated the
employment agreement on the ground that the Company had assigned him duties
materially inconsistent with the position of President or failed to continue
him in the position of President or to nominate him as a director of the
Company. Upon any such termination, the period of exercisability would be
extended until the later of September 30, 2002 or 24 months after the date of
termination. The second option grant contained no acceleration provision and
expired by its terms if Mr. Ovitz was not employed by the Company after
September 30, 2000. However, in the event that Mr. Ovitz's employment was not
extended beyond September 30, 2000 (or terminated prior thereto by the
Company), so that he would not receive the benefit of the second grant of
options, the Company agreed to pay Mr. Ovitz a termination payment of
$10,000,000.
Further, in the event of termination of employment as referred to above, the
agreement provided for an additional payment equal to the present value
(calculated as provided in the agreement) of (i) the remaining salary payments
under the agreement through September 30, 2000, and (ii) the product of $7.5
million multiplied by the number of fiscal years of the Company remaining
under the agreement.
Mr. Ovitz's employment with the Company was terminated as of December 27,
1996, and on that date he resigned from the Board of Directors of the Company.
Pursuant to the terms of the employment agreement, Mr. Ovitz's total payment
upon such termination amounted to $38,869,000, and his stock option for
3,000,000 shares vested and became exercisable as provided in the agreement.
14
<PAGE>
EXECUTIVE COMPENSATION SUMMARY TABLE
The following table sets forth information concerning total compensation
earned or paid to the Chief Executive Officer and the four most highly
compensated executive officers of the Company who served in such capacities on
September 30, 1996 (the "named executive officers") for services rendered to
the Company during each of the last three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------- ------------------------------------
NUMBER OF
OTHER STOCK RESTRICTED
NAME AND PRINCIPAL FISCAL ANNUAL OPTIONS STOCK ALL OTHER
POSITIONS(1) YEAR SALARY BONUS(2) COMPENSATION(3) GRANTED AWARDS(2) COMPENSATION(4)
------------------ ------ -------- ---------- --------------- --------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael D. Eisner 1996 $750,000 $7,900,000 -- 8,000,000 $ -- $3,520
Chief Executive Officer 1995 750,000 8,024,707 -- -- 5,996,522 6,877
and Chairman of the 1994 750,000 7,268,807 -- -- 2,638,394 9,730
Board
Roy E. Disney 1996 $459,614 $ 700,000 -- -- -- $3,520
Vice Chairman of the 1995 350,000 500,000 -- 200,000 -- 3,820
Board 1994 350,000 500,000 -- -- -- 6,670
Sanford M. Litvack 1996 $650,000 $1,100,000 -- -- -- $3,520
Senior Executive Vice 1995 647,115 1,600,000 -- -- -- 6,820
President and Chief of 1994 500,000 1,600,000 -- 200,000 -- 9,731
Corporate Operations
Richard D. Nanula(5) 1996 $552,577 $ 750,000 $ 73,510 212,000 -- $3,520
Senior Executive Vice 1995 450,000 500,000 108,297 -- -- 3,550
President and Chief 1994 382,212 800,000 -- 200,000 -- 9,699
Financial Officer
Lawrence P. Murphy 1996 $522,308 $ 650,000 -- -- -- $3,520
Executive Vice 1995 475,769 550,000 -- 150,000 -- 6,828
President 1994 436,173 800,000 -- -- -- 9,701
and Chief Strategic
Officer
</TABLE>
- --------
(1) Michael Ovitz, the Company's President from October 1, 1995 until December
27, 1996, did not receive a bonus for fiscal 1996, and as a result is not
included in the table. See "Employment Agreements--Employment Agreement
with Michael S. Ovitz" above.
(2) Mr. Eisner's bonuses were calculated pursuant to the bonus formula in his
1989 employment agreement (see "Employment Agreements--1989 Agreement with
Michael D. Eisner" above). He received 97,445 shares (at $43.525) of
restricted stock as part of his fiscal 1995 bonus and 60,618 shares (at
$61.538) of restricted stock as part of his fiscal 1994 bonus. Pursuant to
the 1989 bonus formula, the number of shares of restricted stock is based
upon the average closing price for the Company's common stock during a
"window period" following the release of the applicable year's results.
The value of the restricted shares represents the aggregate bonus amount,
less the cash portion (i.e., the bonus payable if net income were .175
times stockholders equity) under the terms of the 1989 agreement. The
restricted stock granted as part of the fiscal 1995 and 1994 bonuses vests
on September 30, 1998 and January 1, 1998, respectively, and may vest
earlier upon certain events (including death, disability, a termination by
the Company without "good cause," a termination by Mr. Eisner for "good
reason" (as discussed below) or an agreement for the combination or sale
of the Company that would, or could reasonably be expected to, eliminate
or materially impair the market for public trading of the Company's common
stock). The restricted stock will be forfeited if Mr. Eisner's employment
is terminated by the Company for "good cause." At the end of fiscal 1996,
the restricted stock portion of Mr. Eisner's fiscal 1995 and fiscal 1994
bonuses had a market value of $6,175,577 and $3,841,666, respectively
(without giving effect to any diminution in value attributable to the
restrictions). Dividends are paid on the restricted stock at the same rate
payable to common stockholders and thus are not reflected in the amounts
reported under applicable S.E.C. rules.
(3) In accordance with S.E.C. rules, amounts totaling less than $50,000 have
been omitted. The only portions of the amounts for Mr. Nanula that
represent more than 25% of the totals shown are interest payment
reimbursements in the amount of $52,460 for fiscal 1996 and $63,468 for
fiscal 1995.
15
<PAGE>
(4) The Company provides the named executive officers with certain group life,
health, medical and other non-cash benefits generally available to all
salaried employees and not included in this column pursuant to the
S.E.C.'s rules. The amounts shown in this column include the following:
(a) Matching contributions by the Company under the Disney Salaried Savings
and Investment Plan, which permits salaried employees to make tax-
deferred contributions of a portion of their base compensation pursuant
to Section 401(k) of the Internal Revenue Code. Under the plan, the
Company currently matches 50% of a participant's first 4% of tax-
deferred contributions, subject to a maximum of 2% of the participant's
compensation for that year. Participants may allocate their
contributions among specified investment funds, including a fund
investing in the Company's common stock. All Company matching
contributions are invested in common stock of the Company. During
fiscal 1996, the Company's matching contributions were $3,000 for each
of Messrs. Eisner, Litvack, Nanula and Murphy. Mr. Disney did not
participate in the plan.
(b) Insurance premiums under personal liability insurance plans that the
Company provides for certain key employees, with coverage up to
$5,000,000. Benefits under the plan supplement each employee's personal
homeowner's and automobile liability insurance coverage. During fiscal
1996, the Company paid $520 in premiums on behalf of each of the named
executive officers.
(5) Mr. Nanula assumed his current position in February 1996. From November
1994 to February 1996, he served as President of The Disney Store
Worldwide, and from August 1991 to February 1994 he was Senior Vice
President and Chief Financial Officer of the Company and from February
1994 to April 1995, Executive Vice President and Chief Financial Officer
of the Company.
OPTION GRANTS FOR FISCAL 1996
The following table sets forth as to each of the named executive officers
information with respect to option grants during fiscal 1996 and the potential
realizable value of such option grants: (i) the number of shares of Common
Stock underlying options granted during fiscal 1996, (ii) the percentage that
such options represent of all options granted to employees during that year,
(iii) the exercise price, (iv) the expiration date and (v) the present value,
as of the grant date, of the options under the option pricing model discussed
below.
The hypothetical value of the options as of their date of grant has been
calculated below, using the Black-Scholes option pricing model, as permitted
by the rules of the Securities and Exchange Commission, based upon a set of
assumptions set forth in the footnote to the table. It should be noted that
this model is only one method of valuing options, and the Company's use of the
model should not be interpreted as an endorsement of its accuracy. The actual
value of the options may be significantly different, and the value actually
realized, if any, will depend upon the excess of the market value of the
common stock over the option exercise price at the time of exercise.
OPTION GRANTS DURING FISCAL 1996
<TABLE>
<CAPTION>
% OF TOTAL
OPTIONS
NUMBER OF GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE EXPIRATION HYPOTHETICAL VALUE
NAME GRANTED(1) FISCAL YEAR ($/SHARE) DATE(1)(3)(4) AT GRANT DATE(2)
- ---- ---------- ------------ --------- ------------- ------------------
<S> <C> <C> <C> <C> <C>
Michael D. Eisner....... 5,000,000 16.3% $ 63.31 9/30/08 $134,096,924
1,000,000 3.3% 79.14 9/30/11 25,390,861
1,000,000 3.3% 94.97 9/30/11 21,194,406
1,000,000 3.3% 126.62 9/30/11 14,901,090
Roy E. Disney........... -- -- -- -- --
Sanford M. Litvack...... -- -- -- -- --
Richard D. Nanula....... 212,000 0.7% 64.25 3/26/06 4,962,920
Lawrence P. Murphy...... -- -- -- -- --
</TABLE>
- --------
(1) Mr. Eisner's options become exercisable in stages over an extended period,
with the option for 5,000,000 shares vesting on September 30, 2003 and the
three options for 1,000,000 shares each vesting on September 30, 2004,
2005 and 2006, respectively. See "Employment Agreements--New Employment
16
<PAGE>
Agreement with Michael D. Eisner" above for the material terms of these
options. Mr. Nanula's options become exercisable with respect to 26,000
shares annually from 1997 through 2000, with 28,000 shares vesting in 2001
and 80,000 shares vesting in 2002. These options were granted under the
Company's 1995 Stock Incentive Plan.
(2) The estimated present value at grant date of options granted during fiscal
year 1996 has been calculated using the Black-Scholes option pricing
model, based upon the following assumptions: estimated time until
exercise: eight years in the case of Mr. Eisner's option for 5,000,000
shares, ten years in the case of his three other options and 6.7 years in
the case of Mr. Nanula's option; a risk-free interest rate of 6.78% for
Mr. Eisner's 5,000,000 share option, 6.89% for his other options and 6.14%
for Mr. Nanula's option, representing in each case the interest rate on a
U.S. Government zero-coupon bond on the date of grant with a maturity
corresponding to the estimated time until exercise; a volatility rate of
22.5%; and a dividend yield of 0.69%, representing the current $0.44 per
share annualized dividends divided by the fair market value of the common
stock on the date of grant. The approach used in developing the
assumptions upon which the Black-Scholes valuation was done is consistent
with the requirements of Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation."
(3) After termination of employment, Mr. Nanula's options remain exercisable
for periods ranging up to 18 months, depending on the cause of
termination, and may continue to vest for up to three months after
termination.
(4) The Committee administering this Plan has the general authority thereunder
to amend options to accelerate, extend or otherwise modify benefits in
certain circumstances within overall plan limits, and with the consent of
the affected optionee, to change the option price of the shares remaining
subject to the option to a price not less than 100% of the market value of
the stock on the effective date of the amendment. The Committee has no
current intention to exercise that authority with respect to these
options.
OPTION EXERCISES AND VALUES FOR FISCAL 1996
The table below sets forth the following information with respect to option
exercises during fiscal 1996 by each of the named executive officers and the
status of their options at September 30, 1996: (i) the number of shares of
common stock acquired upon exercise of options during fiscal 1996, (ii) the
aggregate dollar value realized upon the exercise of such options, (iii) the
total number of exercisable and non-exercisable stock options held at
September 30, 1996 and (iv) the aggregate dollar value of in-the-money
exercisable options at September 30, 1996.
AGGREGATED OPTION EXERCISES DURING FISCAL 1996
AND
OPTION VALUES ON SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
NUMBER
OF SHARES NUMBER OF VALUE OF UNEXERCISED
ACQUIRED VALUE UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
UPON REALIZED 9/30/96 9/30/96(1)
EXERCISE UPON ------------------------- --------------------------
NAME OF OPTION EXERCISE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------- ---------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Michael D. Eisner....... -- -- 6,666,668 9,333,332(2) $303,633,392 $60,726,608
Roy E. Disney........... 160,000 $6,356,944 40,000 160,000 669,920 2,679,680
Sanford M. Litvack...... 100,000 3,243,800 350,000 250,000 11,558,650 6,977,550
Richard D. Nanula....... -- -- 148,000 516,000 4,980,887 8,550,240
Lawrence P. Murphy...... -- -- 332,000 270,000 12,981,564 5,631,840
</TABLE>
- --------
(1) In accordance with the S.E.C.'s rules, values are calculated by
subtracting the exercise price from the fair market value of the
underlying common stock. For purposes of this table, fair market value is
deemed to be $63.31, the average of the high and low common stock price
reported for the New York Stock Exchange on September 30, 1996.
17
<PAGE>
(2) Includes options to purchase an aggregate of 8,000,000 shares granted in
connection with Mr. Eisner's new employment agreement. See "Employment
Agreements--New Employment Agreement with Michael D. Eisner."
RETIREMENT PLANS
The Company maintains a tax-qualified, noncontributory retirement plan,
called the Disney Salaried Retirement Plan, for salaried employees who have
completed one year of service. Benefits are based primarily on the
participant's credited years of service and average base compensation (base
compensation excludes other compensation such as bonuses) for the highest five
consecutive years of compensation during the ten-year period prior to
termination or retirement, whichever is earlier. In addition, a portion of
each participant's retirement benefit is comprised of a flat dollar amount
based solely on years and hours of credited service. Benefits are non-
forfeitable after five years of vesting service, and actuarially reduced
benefits are available for participants who retire on or after age 55 after
five years of vesting service.
In addition, the Company maintains a nonqualified, unfunded plan, the
Amended and Restated Key Plan, which provides retirement benefits for key
salaried employees. This plan provides retirement benefits in excess of the
compensation limitations and maximum benefit accruals for tax-qualified plans.
In calendar year 1996, the maximum compensation limit under a tax-qualified
plan was $150,000 and the maximum annual benefit accruable under a tax-
qualified defined benefit plan was $120,000. Benefits under this plan are
provided by the Company on a noncontributory basis.
The table below illustrates the total combined estimated annual benefits
payable under these retirement plans to eligible salaried employees for years
of service assuming normal retirement at age 65. The table illustrates
estimated benefits payable determined on a straight-life annuity basis. There
is no offset in benefits under either plan for Social Security benefits.
RETIREMENT PLAN AND RESTATED KEY PLAN
<TABLE>
<CAPTION>
AVERAGE ANNUAL
BASE
COMPENSATION
FOR
HIGHEST FIVE YEARS OF CREDITED SERVICE
CONSECUTIVE ----------------------------------------
YEARS 15 20 25 30 35
-------------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
$ 150,000........................ $45,444 $60,621 $75,906 $91,050 $104,925
300,000........................ 88,757 118,371 148,094 177,675 205,988
450,000........................ 132,069 176,121 220,281 264,300 307,050
600,000........................ 175,382 233,871 292,469 350,925 408,113
750,000........................ 218,694 291,621 364,656 437,550 509,175
1,000,000........................ 290,882 387,871 484,969 581,925 677,613
</TABLE>
As of December 1, 1996, the estimated annual payments for services under the
Company's retirement plans would be based upon an average compensation of
$750,000 for Mr. Eisner, $378,462 for Mr. Disney, $566,539 for Mr. Litvack,
$410,515 for Mr. Nanula and $452,600 for Mr. Murphy. Messrs. Eisner and Disney
each have twelve years, Mr. Litvack has six years and Messrs. Nanula and
Murphy each have eleven years of credited service.
RELATED PARTY TRANSACTIONS
In November 1995, a Company subsidiary purchased a Gulfstream III airplane
from North Enterprises Trust, a trust for the benefit of a corporation of
which Mr. Ovitz was the majority shareholder, for an aggregate purchase price
of $7,800,000. The purchase price was based upon the lowest of three
valuations of the aircraft by three independent appraisers: Gulfstream
Aerospace Corporation, Bloomer deVere Group Avia Inc. and O'Gara Aviation
Company.
18
<PAGE>
COMPARISON OF FIVE- AND TWELVE-YEAR AND CUMULATIVE TOTAL RETURNS
The following two graphs compare the performance of the Company's common
stock with the performance of the Standard & Poor's 500 Composite Stock Price
Index and a peer group index over the periods from, respectively, October 1,
1991 and October 1, 1984 (shortly after Mr. Eisner became the Company's
Chairman and Chief Executive Officer). The graphs assume that $100 was invested
on, respectively, October 1, 1991 and October 1, 1984 in the Company's common
stock, the S&P 500 Index and the peer group index, and that all dividends were
reinvested.
Because the Company is involved in a wide variety of entertainment/leisure,
consumer products and media businesses, no published peer group accurately
mirrors the Company's businesses or weighs those businesses to match their
relative contributions to the Company's overall performance. Accordingly, the
Company has created a special peer group index that includes companies in the
principal lines of business in which the Company does business. The common
stocks of the following companies have been included in the peer group index:
Capital Cities/ABC, Inc., Club Med, Inc., Hasbro, Inc., Hilton Hotels Corp.,
King World Productions, Inc., Mattel, Inc., Paramount Communications Inc., Time
Warner Inc., Turner Broadcasting System, Inc. and Viacom Inc. Paramount
Communications Inc.'s stock is included in the peer group index until July 7,
1994, when it became a subsidiary of Viacom Inc. The stock of Capital
Cities/ABC, Inc. is included until February 9, 1996, when it became a wholly
owned subsidiary of the Company. The stock of Turner Broadcasting System, Inc.
is included for all periods shown, although it became a subsidiary of Time
Warner Inc. following the end of fiscal 1996. The peer group weighs the
constituent companies' stock performance on the basis of market capitalization,
measured at the beginning of each relevant time period.
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, S&P 500 INDEX AND PEER GROUP INDEX
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PEER
Measurement Period WALT DISNEY GROUP
(Fiscal Year Covered) COMPANY S&P 500(R) INDEX
- --------------------- ----------- ---------- -----
<S> <C> <C> <C>
Measurement Pt-09/1991 $100 $100 $100
FYE 09/1992 $128 $111 $119
FYE 09/1993 $134 $125 $174
FYE 09/1994 $138 $130 $163
FYE 09/1995 $206 $169 $206
FYE 09/1996 $229 $203 $226
</TABLE>
19
<PAGE>
PERFORMANCE GRAPH
COMPARISON OF TWELVE-YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, S&P 500 INDEX AND PEER GROUP INDEX
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
PEER
Measurement Period WALT DISNEY S&P GROUP
(Fiscal Year Covered) COMPANY S&P 500(R) INDEX
- --------------------- ----------- ---------- -----
<S> <C> <C> <C>
Measurement Pt-09/1984 $ 100 $100 $100
FYE 09/1985 $ 145 $114 $138
FYE 09/1986 $ 275 $151 $186
FYE 09/1987 $ 543 $216 $270
FYE 09/1988 $ 456 $189 $251
FYE 09/1989 $ 855 $252 $397
FYE 09/1990 $ 644 $228 $255
FYE 09/1991 $ 815 $300 $300
FYE 09/1992 $1,043 $333 $357
FYE 09/1993 $1,092 $376 $523
FYE 09/1994 $1,128 $390 $489
FYE 09/1995 $1,682 $506 $620
FYE 09/1996 $1,867 $608 $678
</TABLE>
ITEMS 2 AND 3: PROPOSED PERFORMANCE-BASED BONUS PLANS
The following two items seek stockholder approval of the 1997 Cash Bonus
Performance Plan for all executive officers (including Mr. Eisner) (Item 2)
and a new performance-based bonus formula plan for Mr. Eisner for fiscal 1999
and beyond (Item 3). These plans are being submitted to stockholders to
satisfy the stockholder approval requirements of Section 162(m). See "Report
of the Compensation Committee and the Executive Performance Plan Committee--
Internal Revenue Code Section 162(m)."
If the plans are approved by the stockholders, Mr. Eisner will participate
in the 1997 Plan during fiscal 1997 and 1998 and in the formula plan
thereafter as provided in his employment agreement. If Item 2 is approved by
stockholders and Item 3 is not, Mr. Eisner will remain eligible for the 1997
Plan in fiscal years after 1998. If Item 3 is approved and Item 2 is not, he
will be eligible to receive discretionary bonuses for fiscal years 1997 and
1998. If neither Item 2 nor Item 3 is approved, he will be eligible for
discretionary bonuses for all fiscal years. If Item 3 is not approved, Mr.
Eisner may terminate his employment agreement by advance notice after October
1, 1998 under conditions summarized in Item 3.
If either or both of the new plans is not approved by stockholders, the
relevant plan or plans will not be implemented. The Executive Performance Plan
Committee, the Compensation Committee or the Board, however, may continue to
authorize and pay bonuses to executive officers on another basis, or authorize
other
20
<PAGE>
compensation or plan amendments, consistent with applicable corporate
authority and the Company's compensation policies, as from time to time in
effect. Such other compensation (or future amendments) could increase
compensation cost to the Company, without further stockholder approval.
Stockholder approval of the plans presented in Items 2 and/or 3, however, will
not be deemed to constitute stockholder approval of any such other
compensation or future amendments.
ITEM 2--APPROVAL OF 1997 CASH BONUS PERFORMANCE PLAN
At the end of fiscal 1996, the Company requested the Executive Performance
Plan Committee to develop a new plan with respect to the cash bonus portion of
the compensation of executive officers of the Company. On November 25, 1996,
the Executive Performance Plan Committee adopted (with Mr. Russell
abstaining), and the Board of Directors ratified and approved the 1997 Cash
Bonus Performance Plan for Executive Officers, the full text of which is set
forth in Annex 1 to this proxy statement. The eligible persons under this Plan
include key employees (including officers) who are, or in the opinion of the
Committee may become, executive officers of the Company.
Summary of Terms. The purpose of the new Plan is to permit the Company's
executive compensation practices to satisfy the requirements for performance-
based compensation within the meaning of Section 162(m) of the Internal
Revenue Code. Implementation of the Plan is subject to the approval of the
Company's stockholders.
The Plan is administered by the newly established Executive Performance Plan
Committee. Under the Plan, this Committee is charged with responsibility for
the establishment of specific annual "performance targets" for each executive
officer who participates in the Plan for performance periods of one or more
years from October 1, 1996 through September 30, 2001. The performance targets
may be based on one or more of the following business criteria: net income,
return on equity, return on assets or earnings per share (in each case as
defined in the Plan), or on any combination thereof, and must be established
while the performance relative to the target remains substantially uncertain
within the meaning of Section 162(m). Concurrently with the selection of the
performance targets, the Committee must establish an objective formula or
standard for calculating the maximum bonus payable to each participating
executive officer. Under the Plan, the maximum bonus per fiscal year may not
in any event exceed $10,000,000 or, if less, ten times the executive's base
salary ($15,000,000 or, if less, 20 times base salary, in the case of the
Chief Executive Officer) or $50,000,000 ($75,000,000 in the case of the Chief
Executive Officer) over the five-year term of the Plan. In addition to this
overall maximum, the Committee has sole discretion to determine whether any or
all of the maximum permissible bonus will actually be paid, or whether payment
or vesting of any bonus will be deferred, subject in each case to the Plan's
terms and any other written commitment (including Mr. Eisner's new employment
agreement) authorized by the Committee. The Committee is also authorized to
exercise its "negative discretion" by establishing additional conditions and
terms of payment of bonuses, including the achievement of other financial,
strategic or individual goals, which may be objective or subjective, as it
deems appropriate. All bonuses are to be paid in cash or cash equivalents.
The Plan may from time to time be amended, suspended or terminated, in whole
or in part, by the Board of Directors or the Committee, but no amendment will
be effective without Board and/or stockholder approval if such approval is
required to comply with the applicable rules under Section 162(m).
The Committee established the performance target for fiscal 1997 based upon
net income; the Committee believes that the specific target constitutes
confidential business information the disclosure of which could adversely
affect the Company. The number of individuals designated to participate in the
Plan for fiscal 1997 is six, including Messrs. Eisner, Disney, Litvack and
Nunis. Because of the similarities between the 1996 and 1997 bonus plans and
the Committee's choice of net income as the applicable criterion for both
years, the Company believes that if the Plan had been in effect for fiscal
1996, the participants would have received the same bonuses they received
under the 1996 Cash Bonus Performance Plan (other than Messrs. Eisner and
Nanula, who did not participate in the 1996 Plan).
21
<PAGE>
Recommendation of the Board of Directors. The Board of Directors believes,
in general, that it is desirable and in the best interest of the Company and
its stockholders to enable the Company's executive compensation plans to
comply with the requirements of Section 162(m). The Board further believes
that the 1997 Cash Bonus Performance Plan is consistent with the Company's
existing policies that closely relate executive compensation to the Company's
performance. The Plan also serves the Company's interests by granting the
Executive Performance Plan Committee discretion both in selecting the criteria
by which performance is to be measured and in determining the actual amount of
each eligible executive's bonus within the maximum limits imposed pursuant to
the Plan. In the event that the 1997 Cash Bonus Performance Plan is not
approved by the Company's stockholders, it is currently contemplated that any
bonuses for fiscal years 1997 and 1998 for executive officers would be
discretionary and that such bonuses would not be deductible under
Section 162(m) to the extent that (when combined with other non-exempt
compensation) they exceed the limit set forth in that statute.
FOR THE FOREGOING REASONS, THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" APPROVAL OF THE 1997 CASH BONUS PERFORMANCE PLAN.
ITEM 3--APPROVAL OF PERFORMANCE-BASED COMPENSATION PLAN FOR THE COMPANY'S
CHIEF EXECUTIVE OFFICER
As noted above under "Employment Agreements," the Company's 1989 employment
agreement with Michael D. Eisner was superseded on January 8, 1997 by a new
agreement providing for Mr. Eisner's service through September 30, 2006,
subject to earlier termination in certain circumstances. The principal terms
of the new employment agreement are described under "Employment Agreements--
New Employment Agreement with Michael D. Eisner" above. One component of the
new agreement is subject to stockholder approval to satisfy one of the
requirements of Section 162(m) of the Internal Revenue Code, in order to
permit the Company to deduct payments in excess of $1,000,000 in any fiscal
year. The provision requiring such approval is the Chief Executive Officer
Bonus Compensation Plan, which sets the performance-based formula pursuant to
which Mr. Eisner's annual bonus is to be determined under the new agreement.
If this plan is approved by stockholders, commencing with fiscal 1999, Mr.
Eisner's bonus will be tied to the growth of the Company's earnings per share
(EPS) above an annual threshold growth rate of 7.5%. The threshold EPS for
fiscal 1999 will be an amount 7.5% above the average EPS of the Company for
fiscal 1997 and 1998 (subject to a maximum of $3.25 and a minimum of $2.75 for
such average). For each subsequent fiscal year, the threshold EPS will be 7.5%
more than the prior year's threshold EPS. The bonus for each year will be
determined by multiplying (a) the amount, if any, by which the Company's
reported EPS exceeds the specified threshold level by (b) a specified "Bonus
Percentage," and (c) multiplying the resulting amount by the number of
outstanding shares used by the Company in calculating its reported EPS for the
fiscal year in question.
The Compensation Committee took into account the Company's financial goals,
past bonus levels and detailed statistical studies based on various financial
assumptions and projections in creating this bonus formula. EPS was selected
as the most appropriate measure available that is derivable directly from the
Company's financial statements. The use of the 1997/1998 base period average
was chosen as the most appropriate foundation from which to measure the future
growth of the new combined company. The threshold of a compounded growth rate
of 7.5% was determined to be the appropriate level before any bonus becomes
payable. The Bonus Percentage declines each year to reduce the growth of the
bonuses over the entire term, since it would be inequitable to have the
bonuses increase in direct proportion to growth in earnings.
The "threshold EPS" for each fiscal year reflects a 7.5% growth over the
threshold EPS of the prior year (or the "base EPS," in the case of fiscal
1999). Thus, on a hypothetical basis, if there were a constant growth rate of
7.5% (starting from the base EPS) in each year of the agreement beginning with
fiscal 1999, no bonuses would be payable to Mr. Eisner. If actual EPS for
fiscal 1999 reflected a 20% growth rate from the base EPS, but EPS grew by 0%
in fiscal 2000 over fiscal 1999, a bonus would be payable for both years,
since the EPS for fiscal 2000 would still represent compound growth in excess
of the minimum required for the payment of a bonus under the formula.
Conversely, a hypothetical 10% decline in EPS in fiscal 1999 from the base EPS
22
<PAGE>
followed by a 10% increase in fiscal 2000 over fiscal 1999 would result in a
bonus for neither year, since even though the year-to-year growth rate for
fiscal 2000 over fiscal 1999 exceeded 7.5%, the compound growth rate for both
years would be below 7.5%.
The full text of the formula is set forth below:
"The bonus payable for each applicable fiscal year of the Company shall be
the amount of Bonus EPS multiplied by Outstanding Shares with the result
multiplied by the Bonus Percentage.
In determining such bonus, the following definitions shall apply:
"(1) "BONUS EPS' shall be the amount by which the EPS for the applicable
fiscal year exceeds Threshold EPS.
"(2) "EPS' means the primary earnings per share of the Company as
reported in its annual consolidated financial statements after any
extraordinary items set forth therein.
"(3) "BASE EPS' shall be the average of the EPS of the Company for the
fiscal years 1997 and 1998 (rounded to the nearest cent), but in no event
less than $2.75 or more than $3.25 if the average is below or above such
figures, respectively.
"(4) "THRESHOLD EPS' shall be based on a compounded annual growth rate of
7.5% calculated on Base EPS (and rounded to the nearest cent). For fiscal
year 1999 it shall be determined by multiplying Base EPS by 1.075. For each
succeeding fiscal year it shall be determined by multiplying the previous
fiscal year's Threshold EPS by 1.075.
"(5) "OUTSTANDING SHARES' means the number of common shares of the
Company outstanding based on the same figures used by the Company in
calculating EPS for the applicable fiscal year.
"(6) The "BONUS PERCENTAGE' for each applicable fiscal year shall be the
following:
<TABLE>
<S> <C> <C> <C>
Year Percentage Year Percentage
---- ---------- ---- ----------
1999 5.75% 2003 0.75%
2000 2.75% 2004 0.55%
2001 1.60% 2005 0.45%
2002 1.10% 2006 0.40%"
</TABLE>
Mr. Eisner's employment agreement provides that either the Company or
Mr. Eisner may at any time request a renegotiation of the bonus formula if
circumstances arise that cause the results of the bonus formula to be "unfair
and inequitable." These circumstances include a combination with another
company, capital restructuring, material changes in accounting rules or tax
laws, severe or prolonged recession or inflation or any other circumstances,
whether intrinsic or extrinsic to the Company, that would materially affect
the formula results. If in such circumstances the parties are unable to reach
agreement on a substitute formula, the matter may be submitted to arbitration.
In all cases, the Company will be permitted to seek stockholder approval or
take such other steps as are reasonably required in order for the Company to
claim the deductibility of any bonus paid pursuant to a substitute formula.
Any change in the bonus formula may be made only on a prospective basis (i.e.,
only with respect to future years or a year as to which the deadline under
federal tax law for establishing a performance-based plan has not passed) and
could increase (or decrease) the cost to the Company.
In the event that the bonus formula plan set forth above is not approved by
the Company's stockholders, the Company and Mr. Eisner may agree upon a new
formula plan to be submitted for stockholder approval in 1998. If no agreement
is reached on a new formula, or if stockholder approval of that new plan is
not obtained, Mr. Eisner's bonus will thereafter be determined at the
discretion of the Board of Directors. Any such bonus
23
<PAGE>
outside of the plan might not be deductible under Section 162(m); however, if
the 1997 Cash Bonus Performance Plan is approved by the Company's
stockholders, the Company would have the option of including him in that plan.
Also, in the event that no agreement is reached on a new formula or no
stockholder approval is obtained, Mr. Eisner would have the option of
terminating his employment agreement upon one year's prior notice given at any
time after October 1, 1998. In the event of such a termination, Mr. Eisner
would be entitled to continued payment of bonuses for the fiscal year in which
the termination becomes effective and for the following 24-month post-
termination period, subject to reduction to twelve months if he takes
employment with another major entertainment company (other than as an
independent producer) within twelve months of the effective date of
termination. The agreement provides that bonuses for such 24-month post-
termination period will not be less than the bonuses for the two full fiscal
years prior to the effective date of termination and that any bonus for a
twelve-month period will not be less than the average of the bonuses for the
two prior fiscal years; any stock options that are then vested or vest within
three months following the effective date of termination will remain
exercisable for twelve months from such date.
Under the employment agreement, in the event that a post-termination bonus
or bonuses become payable in respect of the 24 months following the
termination date of the employment agreement in September 2006, and the bonus
formula is then in effect, the post-termination bonuses for each year of such
24-month period (i.e., fiscal 2007 and fiscal 2008) will be calculated
pursuant to the bonus formula with a Bonus Percentage of 0.35% for fiscal 2007
and 0.30% for fiscal 2008. Any such bonus or bonuses will be paid only after
such payment is no longer subject to Section 162(m).
Recommendation of the Board of Directors. The Board believes that the bonus
formula set forth in the Chief Executive Officer Bonus Compensation Plan, as a
component of the full compensation package contained in Mr. Eisner's new
employment agreement and which continues the risk/reward philosophy of his
1989 agreement, is in the best interests of the Company and its stockholders.
In approving the new agreement, including the bonus formula, the Compensation
Committee and the Executive Performance Plan Committee and the Board took into
account, among other things, Mr. Eisner's substantial contributions to the
Company in the course of its growth since he first became Chief Executive
Officer; the increased challenge of sustaining the Company's growth through
the coming decade in view of its greater size (particularly as a result of the
acquisition of ABC), rapidly evolving technology and increasingly competitive
global environment; and the desirability of obtaining Mr. Eisner's commitment
to carry out the long-term future projects of the Company beyond the term of
the 1989 agreement.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE PERFORMANCE-BASED COMPENSATION PLAN FOR THE CHIEF EXECUTIVE
OFFICER OF THE COMPANY.
ITEM 4--RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Company has appointed Price Waterhouse LLP as the Company's independent
accountants for the fiscal year ending September 30, 1997. Price Waterhouse
LLP has served as the Company's independent accountants since the
incorporation of Walt Disney Productions in 1938. Services provided to the
Company and its subsidiaries by Price Waterhouse LLP in fiscal 1996 included
the examination of the Company's consolidated financial statements, limited
reviews of quarterly reports, services related to filings with the Securities
and Exchange Commission and consultations on various tax and information
services matters.
Representatives of Price Waterhouse LLP will be present at the annual
meeting to respond to appropriate questions and to make such statements as
they may desire.
Ratification of the appointment of Price Waterhouse LLP as the Company's
independent accountants for fiscal 1997 will require the affirmative vote of a
majority of the shares of Common Stock represented in person or by proxy and
entitled to vote at the annual meeting. In the event stockholders do not
ratify the appointment of Price Waterhouse LLP, the appointment will be
reconsidered by the Audit Review Committee and the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION
OF THE APPOINTMENT OF PRICE WATERHOUSE LLP AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS FOR FISCAL 1997.
24
<PAGE>
ITEM 5--STOCKHOLDER PROPOSALS
CONTRACT SUPPLIER STANDARDS
The Burke-Lazarus 1995 Trust, of 554 Kansas Street, San Francisco,
California 94107, owner of 300 shares of common stock, and the General Board
of Pension and Health Benefits of the United Methodist Church, 1201 Davis
Street, Evanston, Illinois 60201, owner of an undisclosed number of shares of
common stock having a market value in excess of $1,000, have submitted the
following proposal:
"Whereas:
"The public is concerned about the conditions under which clothing and
goods they purchase are produced. The media has made people aware that more
companies are contracting with independent producers for goods and services
outside of the United States. A survey conducted by Marymount University in
1995, indicates 75% of respondents stated they would avoid shopping in
stores if they were aware that stores sold goods made under sweatshop
conditions. Seventy-eight percent said they would be willing to pay a
dollar more for a $20 garment not made in sweatshops.
"Disturbing information has surfaced about independent producers with
regard to working conditions, wage levels, use of child labor and abuse of
workers. In May, 1996, a human rights group released information indicating
that workers at N.S. Mart in Haiti, where shirts are sewn for Disney,
receive as little as $10.77 per week (28 cents an hour), a marginal
survival wage. This salary does not allow for workers and their families to
meet their immediate needs.
"We believe companies like Disney must take some responsibility for any
human rights abuses in plants where their products are made. On July 16,
1996, Department of Labor Secretary Robert Reich addressed the Fashion
Industry Forum, stating, "The eradication of sweatshops is everyone's
responsibility from companies to consumers'. President Clinton recently
invited companies to join the White House Apparel Industry Partnership,
charging the group to develop tough criteria to discourage use of
sweatshops and provide information to consumers.
"Companies must take concrete steps to assure shareholders and consumers
that employees who work for their suppliers are guaranteed basic rights,
including freedom of association, healthful working conditions, a
sustainable community wage, and a work environment free of child labor and
abuse.
"Disney can be a leader in this effort by enforcing strong supplier
standards. Through the use of independent monitoring of its code of conduct
(a system used by The Gap, Inc. in El Salvador), there can be greater
assurance of adherence to the company's standards.
"Resolved: Shareholders request the Board of Directors to report on its
contract supplier standards, and review compliance mechanisms for vendors,
subcontractors and buying agents in the countries where it sources. A
summary of the results should be reported to shareholders by September,
1997. This review should include:
"1. Summary of current company policies regarding supplier standards of
conduct.
"2. Policies to implement ongoing adjustment of salaries to ensure
adequate purchasing power and a sustainable community wage.
"3. Establishment of procedures for internal compliance and external
monitoring, in conjunction with local non-governmental organizations.
"4. Standards clearly defining the right of workers to organize, and
required work hours per week.
"5. Provision for supplier standards to be translated into the
languages of employees where the company has contracts, and
distribution to employees.
25
<PAGE>
"6. Procedures should be developed to encourage suppliers to raise
standards rather than terminate contracts.
"These standards should be made available to shareholders and other
interested parties upon request."
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "AGAINST" THIS
PROPOSAL FOR THE FOLLOWING REASONS.
The Company recognizes the importance, as both an ethical and a business
responsibility, of obtaining appropriate assurances that its products are
manufactured in accordance with all applicable laws and that the rights and
welfare of workers engaged in the production of Disney merchandise are
respected.
With the exception of a single manufacturing facility in Europe owned by a
Company subsidiary, the Company does not engage directly in manufacturing.
Most consumer products sold under the "Disney" name or featuring Disney
characters or properties are manufactured by independent licensees of the
Company or by independent manufacturers pursuant to manufacturing agreements
with Company licensees. Some merchandise sold at retail facilities operated by
Company entities, such as the Disney Stores and theme parks, is produced by
manufacturers operating under direct manufacturing agreements with Company
subsidiaries. At the end of fiscal 1996, the Company had approximately 3,800
licensees around the world; more than 2,000 manufacturers in the United States
and abroad were engaged in the production of Disney-branded merchandise for
those licensees; and more than 2,000 manufacturers in this country and abroad
were engaged in the manufacture of goods for the Company's subsidiaries.
The Company has adopted a number of policies and practices designed to
protect the interests of workers engaged in the manufacture of Disney
merchandise.
. Disney licensing agreements currently impose strict employment-related
conditions on licensees themselves as well as their suppliers and
manufacturers, requiring, among other things, that they not engage in child
labor; that they provide a safe and healthy workplace in compliance with all
applicable laws; that they employ only voluntary labor and not use corporal
punishment or other forms of mental or physical coercion as a form of
discipline; that they comply with all applicable wage and hour laws, including
minimum wage, overtime and maximum hour laws; that they utilize fair
employment practices as defined by applicable laws; that they not discriminate
in hiring or employment on grounds of race, religion, national origin,
political affiliation, sexual preference or gender; and that they comply with
all applicable environmental laws. These provisions also apply to
manufacturers that enter into manufacturing agreements directly with Company
subsidiaries.
. Disney licensees, and the manufacturers with which they contract, must
agree to provide the Company with all information it may request about
manufacturing facilities, and authorize Disney to engage in activities such as
unannounced on-site inspections in order to monitor compliance with applicable
laws. Manufacturers under direct contract to supply products to the Company's
subsidiaries must also meet these requirements. The Company has retained an
independent monitoring firm to undertake such inspections on behalf of the
Company in key U.S. apparel manufacturing locations. The Company has recently
strengthened its internal monitoring of foreign manufacturers under direct
contract to provide goods to Company subsidiaries, and has also retained an
international auditing firm to conduct inspections and investigations of
manufacturers used by Company licensees outside the United States.
. Before a licensee may engage any manufacturer to produce Disney
merchandise, it must obtain the Company's written consent to do so, and the
manufacturer must enter into a manufacturer's agreement with the Company,
committing itself, among other things, to the employment-related conditions
described above. The Company may withhold its consent, for example, if it
believes a proposed manufacturer will not comply with Disney standards. In
certain countries, the Company has a policy not permitting Disney licensing or
manufacturing activities at all. At present, for example, the Company does not
authorize any such activity in Myanmar (formerly Burma).
26
<PAGE>
. Before any licensing agreement is renewed, the licensee must certify to
the Company that it, and its manufacturers and suppliers, have complied with
all of the employment-related conditions in its licensing agreement with the
Company.
. Whenever the Company learns of a violation of a licensing or manufacturing
agreement, its policy is to work with the licensee toward a correction of the
problem, if practicable. In a particularly egregious situation, or if the
licensee or a manufacturer reveals a pattern of poor performance or lack of
cooperation, the Company may terminate the agreement immediately.
. In countries in which significant or widespread labor or other social or
political issues have been identified, the Company also seeks advice from U.S.
governmental authorities, including the Department of Commerce, the State
Department or the relevant U.S. embassy, in order to ensure that the company's
practices are consistent with U.S. governmental policy.
. During fiscal 1996, the Company took further steps to strengthen its
efforts in reviewing the performance of licensees and manufacturers and
monitoring their compliance with the Company's standards. As noted above, the
Company has increased its use of third-party investigators, both domestically
and internationally. In addition, the Company has organized an International
Labor Standards Group to review existing policies and practices and to
consider means of strengthening their effectiveness, including increased
monitoring of compliance. This Group, which includes representatives from the
Company's consumer products licensing and retail businesses as well as its
corporate human resources, controllership and legal departments, is authorized
to draw on other resources from within the Company and to seek input from
third parties as it deems appropriate. In this connection, the Company has
retained Price Waterhouse LLP to assist the Group in its review. The Group
will report on the results of its review to the Company's senior management on
an ongoing basis, and provide a forum for efforts to strengthen the Company's
performance.
In the specific case of Haiti, cited in the proposal, the Company currently
has three licensees that have or contract with manufacturing operations in
Haiti. Contrary to the claims made in the stockholder proposal, the Company
believes, based on its own investigations and information provided by the U.S.
embassy in Haiti, that average wages paid at these facilities are
substantially above of local minimum wage rates. The Company further believes
that these wage rates, and employment conditions generally at the facilities
used by Disney licensees and their manufacturers, are in keeping with standard
industry practices in Haiti.
Against this background, the Company believes that the concerns reflected in
the stockholder proposal have already been substantially addressed and will
continue to be the subject of close scrutiny by the International Labor
Standards Group. Moreover, the Company's management does not believe it would
be appropriate or in the best interests of its stockholders for the Company to
adopt some of the policies called for in the stockholder proposal, which would
require the Company to engage in activities promoting specific social and
economic changes in other countries. Instead, the Company believes that its
efforts should remain focused on continuing efforts to strengthen existing
policies and practices and to enhance the monitoring of compliance by
licensees and their manufacturers.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "AGAINST" THIS
PROPOSAL, AND YOUR PROXY WILL BE SO VOTED IF THE PROPOSAL IS PRESENTED UNLESS
YOU SPECIFY OTHERWISE.
FINANCIAL AND SOCIAL ACCOUNTABILITY IN EXECUTIVE COMPENSATION
The Corporation of the Convent of the Sisters of St. Joseph, of Chestnut
Hill, Philadelphia 19118, owner of 31,000 shares of common stock; The Domini
Social Equity Fund, of 6 St. James Avenue, Boston, Massachusetts 02116, owner
of 29,000 shares of common stock; and the Sisters of the Blessed Sacrament, of
1663 Bristol Pike, Bensalem, Pennsylvania 19020, owner of 200 shares of common
stock, have submitted the following proposal:
"Whereas: We believe that financial, social and environmental criteria
should be taken into account in setting compensation for corporate
officers. Public scrutiny on compensation is intensifying, with serious
27
<PAGE>
concerns being expressed about the widening chasm between salaries of top
corporate officers and their employees as well as contract workers.
Concerns include:
"--CEO compensation at large corporations leaped 23% in 1995 to an average
of $4.37 million, according to Pearl Meyer and Partners. That figure
represents $2,100 an hour, or 183 times the average U.S. worker's 1995
hourly earnings.
"--Disney Chairman and CEO Michael Eisner's 1995 total compensation was
estimated at approximately $14.78 million by the Corporate Social Ratings
Monitor (KLD & Co. Inc.). Business Week's 1996 Executive Compensation
Scoreboard issue stated that "Eisner gave shareholders the least return for
the $228 million he has garnered since 1993' (April 22, 1996).
"--Contract apparel workers under license to Disney in Haiti are reportedly
compensated at as little as 28 cents per hour or $10.77 per week. We
believe this is a less than a sustainable wage.
"--Shareholders support the company's decision to source production in
Haiti and other developing countries. However, the company should bear
responsibility for ensuring that its contractors pay a sustainable wage. A
study of Haitian contractors by a human rights group found that another
Haiti apparel factory pays workers 90 cents per hour or three times what
Disney contract workers are paid.
"--The relationship between compensation and the social impact of company
decisions is a crucial question for our company to consider. Specifically,
the company needs to address the impact of paying high CEO and officer
salaries, low wages to contract workers in the U.S., and poverty wages to
contract workers in Haiti and other low wage countries. Companies are
beginning to adopt policies assuring that a sustainable wage is paid to
workers to provide enough compensation to support themselves and their
families. Bristol-Myers Squibb and Proctor & Gamble are two companies that
have established a living wage policy for their global operations.
"RESOLVED: shareholders request that the Board institute an Executive
Compensation Review, and prepare a report available to shareholders by
October 1997 with a summary of the results and recommended changes in
practice. The review shall cover pay, benefits, perks, stock options, and
special arrangements in the compensation packages for all top officers. The
review will address:
"1. Ways to link our company's executive compensation more closely to
financial performance and social and environmental criteria.
"2. Comparison of compensation packages for company officers with both the
lowest and average wages for Disney contract workers in the U.S. and three
low wage countries, including Haiti.
"3. Whether a cap should be placed on compensation packages for officers to
prevent our company from paying excessive compensation."
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "AGAINST" THIS
PROPOSAL FOR THE FOLLOWING REASONS.
This proposal also raises the issue of international labor practices
addressed by the previous proposal, as well as calling for a review of
executive compensation policies. As noted in the discussion above, the Company
agrees that international labor standards and practices warrant close
attention and is taking appropriate steps to ensure that its policies are
properly applied and strengthened. Also as noted above, the Company believes
the proposal's statements concerning Haiti are factually incorrect.
With respect to the remainder of the proposal, the approach of the Board of
Directors to the overall issue of executive compensation is set forth in
detail in the Report of the Compensation Committee of the Board above. As
indicated in that Report, the Company believes that a balanced approach to
executive compensation, involving base salaries, discretionary bonuses and
periodic grants of stock options, best serves the interests of the Company by
promoting efforts to advance both the short-term and long-term interests of
stockholders. In the special case of the Chief Executive Officer, the Board
believes that particular weight should be assigned to long-term performance,
and accordingly the Company's existing and proposed new employment agreement
with Michael Eisner emphasize appreciation in stockholder value as a principal
basis for compensation.
28
<PAGE>
In this connection, the Company notes the reference in the proposal to $228
million in compensation received by the Company's Chief Executive Officer
since 1993. It is important for all stockholders to note that of this amount
(which refers to compensation through 1995), more than $202 million (or nearly
89% of the total) resulted from the exercise by Mr. Eisner in 1993 of stock
options granted at the beginning of his service with the Company nine years
earlier, directly reflecting growth in value for all stockholders over that
period. Of the remaining $26 million, some $24 million represented bonuses
under Mr. Eisner's employment agreement, which were also directly tied to the
Company's performance, as described under "Employment Agreements--1989
Employment Agreement with Michael D. Eisner." Thus, nearly 98% of Mr. Eisner's
compensation in the period cited was directly related to, and dependent upon,
growth in stockholder value.
In matters of executive compensation, the Board considers it entirely
appropriate to keep the emphasis on overall return to stockholders. The Board
does not believe that this focus in any way detracts from the Company's
commitments to ensuring the quality and integrity of its products, protecting
the environment, promoting ethical, equitable and productive work environments
and preserving and enhancing the worldwide significance and value of the
"Disney" brand. All of these concerns are core components of protecting and
advancing the interests of the Company and its stockholders.
The Company does not believe that an additional review of executive
compensation policies, beyond the continuing monitoring by the Compensation
Committee or the Executive Performance Plan Committee, would serve a useful
purpose. Nor does the Company believe it would be meaningful to undertake a
comparative study of U.S. and foreign manufacturing wage rates and the
Company's executive compensation policies. As noted in the Report of the
Compensation Committee, executive compensation policies must be determined in
the context of the highly competitive environment in which the Company
operates, the magnitude of the responsibilities borne by the Company's
executives and the extent to which their efforts contribute responsibly to the
growth of stockholder value.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "AGAINST" THIS
PROPOSAL, AND YOUR PROXY WILL BE SO VOTED IF THE PROPOSAL IS PRESENTED UNLESS
YOU SPECIFY OTHERWISE.
OTHER MATTERS
As of the date of this proxy statement, the Company knows of no business
that will be presented for consideration at the annual meeting other than the
items referred to above. In the event that any other matter is properly
brought before the meeting for action by stockholders, proxies in the enclosed
form returned to the Company will be voted in accordance with the
recommendation of the Board of Directors or, in the absence of such a
recommendation, in accordance with the judgment of the proxy holders.
STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
Any proposal of a stockholder intended to be presented at the Company's 1998
annual meeting of stockholders must be received by the Secretary of the
Company, for inclusion in the Company's proxy statement relating to the 1998
annual meeting, by September 12, 1997.
QUARTERLY REPORTS
All stockholders (both record and "street name" holders) who wish to receive
the Company's quarterly reports may call the Company at (818) 553-7200
(between 8 a.m. and 5 p.m. Pacific time) or write to Shareholder Services, The
Walt Disney Company, 500 South Buena Vista Street, Burbank, California 91521-
9722, to be included on the Company's mailing list.
29
<PAGE>
ADDITIONAL INFORMATION
The cost of soliciting proxies in the enclosed form will be borne by the
Company. The Company has retained Georgeson & Co., 100 Wall Street, New York,
New York 10005, to aid in the solicitation of proxies. For these services, the
Company will pay Georgeson & Co. a fee of $15,000 and reimburse it for certain
out-of-pocket disbursements and expenses. Officers and regular employees of
the Company may, but without compensation other than their regular
compensation, solicit proxies by further mailing or personal conversations, or
by telephone, telex or facsimile. The Company will, upon request, reimburse
brokerage firms and others for their reasonable expenses in forwarding
solicitation material to the beneficial owners of stock.
By order of the Board of Directors,
/s/ Marsha L. Reed
Marsha L. Reed
Corporate Secretary
January 9, 1997
30
<PAGE>
ANNEX 1
1997 CASH BONUS PERFORMANCE PLAN
FOR EXECUTIVE OFFICERS
SECTION 1. PURPOSE OF PLAN
The purpose of the Plan is to promote the success of the Company by
providing to participating executives bonus incentives that qualify as
performance-based compensation within the meaning of Section 162(m) of the
Code.
SECTION 2. DEFINITIONS AND TERMS
2.1 Accounting Terms. Except as otherwise expressly provided or the context
otherwise requires, financial and accounting terms are used as defined for
purposes of, and shall be determined in accordance with, generally accepted
accounting principles, as from time to time in effect, as applied and
reflected in the consolidated financial statements of the Company, prepared in
the ordinary course of business.
2.2 Specific Terms. The following words and phrases as used herein shall
have the following meanings unless a different meaning is plainly required by
the context:
"Base Salary" in respect of any Performance Period means the aggregate
base annualized salary of a Participant from the Company and all affiliates
of the Company at the time Participant is selected to participate for that
Performance Period, exclusive of any commissions or other actual or imputed
income from any Company-provided benefits or perquisites, but prior to any
reductions for salary deferred pursuant to any deferred compensation plan
or for contributions to a plan qualifying under Section 401(k) of the Code
or contributions to a cafeteria plan under Section 125 of the Code.
"Base Salary Multiple" means an amount equal to ten times Base Salary or,
in the case of the Chief Executive Officer, twenty times Base Salary.
"Bonus" means a cash payment or payment opportunity as the context
requires.
"Business Criteria" means any one or any combination of Net Income,
Return on Equity, Return on Assets or EPS.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" means the Executive Performance Plan Committee which has been
established to administer the Plan in accordance with Section 3.1 and
Section 162(m) of the Code.
"Company" means The Walt Disney Company and any successor, whether by
merger, ownership of all or substantially all of its assets or otherwise.
"EPS" for any Year means earnings per share of the Company, as reported
in the Company's Consolidated Statement of Income set forth in the audited
annual financial statements of the Company for the Year.
"Executive" means a key employee (including any officer) of the Company
who is (or in the opinion of the Committee may during the applicable
Performance Period become) an "executive officer" as defined in Rule 3b-7
under the Securities Exchange Act of 1934.
"Net Income" for any Year means the consolidated net income of the
Company, as reported in the audited financial statements of the Company for
the Year.
"Participant" means an Executive selected to participate in the Plan by
the Committee.
"Performance Period" means the Year or Years with respect to which the
Performance Targets are set by the Committee.
A-1
<PAGE>
"Performance Target(s)" means the specific objective goal or goals (which
may be cumulative and/or alternative) that are timely set in writing by the
Committee for each Executive for the Performance Period in respect of any
one or more of the Business Criteria.
"Plan" means the 1997 Cash Bonus Performance Plan for Executive Officers
of the Company, as amended from time to time.
"Return on Assets" means Net Income divided by the average of the total
assets of the Company at the end of the fiscal quarters of the Year, as
reported by the Company in its consolidated financial statements.
"Return on Equity" means the Net Income divided by the average of the
common stockholders equity of the Company at the end of each of the fiscal
quarters of the Year, as reported by the Company in its consolidated
financial statements.
"Section 162(m)" means Section 162(m) of the Code, and the regulations
promulgated thereunder, all as amended from time to time.
"Year" means any one or more fiscal years of the Company commencing on or
after October 1, 1996 that represent(s) the applicable Performance Period
and end(s) no later than September 30, 2001.
SECTION 3. ADMINISTRATION OF THE PLAN
3.1 The Committee. The Plan shall be administered by a Committee consisting
of at least three members of the Board of Directors of the Company, duly
authorized by the Board of Directors of the Company to administer the Plan,
who (i) are not eligible to participate in the Plan and (ii) are "outside
directors" within the meaning of Section 162(m).
3.2 Powers of the Committee. The Committee shall have the sole authority to
establish and administer the Performance Target(s) and the responsibility of
determining from among the Executives those persons who will participate in
and receive Bonuses under the Plan and, subject to Sections 4 and 5 of the
Plan, the amount of such Bonuses and shall otherwise be responsible for the
administration of the Plan, in accordance with its terms. The Committee shall
have the authority to construe and interpret the Plan (except as otherwise
provided herein) and any agreement or other document relating to any Bonus
under the Plan, may adopt rules and regulations governing the administration
of the Plan, and shall exercise all other duties and powers conferred on it by
the Plan, or which are incidental or ancillary thereto. For each Performance
Period, the Committee shall determine, at the time the Business Criteria and
the Performance Target(s) are set, those Executives who are selected as
Participants in the Plan.
3.3 Requisite Action. A majority (but not fewer than two) of the members of
the Committee shall constitute a quorum. The vote of a majority of those
present at a meeting at which a quorum is present or the unanimous written
consent of the Committee shall constitute action by the Committee.
3.4 Express Authority (and Limitations on Authority) to Change Terms and
Conditions of Bonus. Without limiting the Committee's authority under other
provisions of the Plan, but subject to any express limitations of the Plan and
Section 5.8, the Committee shall have the authority to accelerate a Bonus
(after the attainment of the applicable Performance Target(s)) and to waive
restrictive conditions for a Bonus (including any forfeiture conditions, but
not Performance Target(s)), in such circumstances as the Committee deems
appropriate. In the case of any acceleration of a Bonus after the attainment
of the applicable Performance Target(s), the amount payable shall be
discounted to its present value using an interest rate equal to Moody's
Average Corporate Bond Yield for the month preceding the month in which such
acceleration occurs.
SECTION 4. BONUS PROVISIONS.
4.1 Provision for Bonus. Each Participant may receive a Bonus if and only if
the Performance Target(s) established by the Committee, relative to the
applicable Business Criteria, are attained. The applicable
A-2
<PAGE>
Performance Period and Performance Target(s) shall be determined by the
Committee consistent with the terms of the Plan and Section 162(m).
Notwithstanding the fact that the Performance Target(s) have been attained,
the Company may pay a Bonus of less than the amount determined by the formula
or standard established pursuant to Section 4.2 or may pay no Bonus at all,
unless the Committee otherwise expressly provides by written contract or other
written commitment.
4.2 Selection of Performance Target(s). The specific Performance Target(s)
with respect to the Business Criteria must be established by the Committee in
advance of the deadlines applicable under Section 162(m) and while the
performance relating to the Performance Target(s) remains substantially
uncertain within the meaning of Section 162(m). At the time the Performance
Target(s) are selected, the Committee shall provide, in terms of an objective
formula or standard for each Participant, and for any person who may become a
Participant after the Performance Target(s) are set, the method of computing
the specific amount that will represent the maximum amount of Bonus payable to
the Participant if the Performance Target(s) are attained, subject to Sections
4.1, 4.3, 4.7, 5.1 and 5.8.
4.3 Maximum Individual Bonus. Notwithstanding any other provision hereof, no
Executive shall receive a Bonus under the Plan for any fiscal year in excess
of $15 million, in the case of the Chief Executive Officer, or $10 million,
in the case of any other Executive or, if less (in the case of both the Chief
Executive Officer or any other Executive), his or her Base Salary Multiple. No
Executive shall receive aggregate bonuses under this Plan in excess of $75
million in the case of the Chief Executive Officer or $50 million in the case
of any other Executive.
4.4 Selection of Participants. For each Performance Period, the Committee
shall determine, at the time the Business Criteria and the Performance
Target(s) are set, those Executives who will participate in the Plan.
4.5 Effect of Mid-Year Commencement of Service. To the extent compatible
with Sections 4.2 and 5.8, if services as an Executive commence after the
adoption of the Plan and the Performance Target(s) are established for a
Performance Period, the Committee may grant a Bonus that is proportionately
adjusted based on the period of actual service during the Year; the amount of
any Bonus paid to such person shall not exceed that proportionate amount of
$10 million ($15 million in the case of the Chief Executive Officer).
4.6 Changes Resulting From Material Acquisitions, Dispositions or
Recapitalizations; Extraordinary Items; Accounting Changes. Subject to Section
5.8, if, after the Performance Target(s) are established for a Performance
Period, a change occurs in the applicable accounting principles or practices,
the amount of the Bonuses paid under this Plan for such Performance Period
shall be determined without regard to such change.
4.7 Committee Discretion to Determine Bonuses. The Committee has the sole
discretion to determine the standard or formula pursuant to which each
Participant's Bonus shall be calculated (in accordance with Section 4.2),
whether all or any portion of the amount so calculated will be paid, and the
specific amount (if any) to be paid to each Participant, subject in all cases
to the terms, conditions and limits of the Plan and of any other written
commitment authorized by the Committee. To this same extent, the Committee may
at any time establish additional conditions and terms of payment of Bonuses
(including but not limited to the achievement of other financial, strategic or
individual goals, which may be objective or subjective) as it may deem
desirable in carrying out the purposes of the Plan and may take into account
such other factors as it deems appropriate in administering any aspect of the
Plan. The Committee may not, however, increase the maximum amount permitted to
be paid to any individual under Section 4.2 or 4.3 of the Plan or award a
Bonus under this Plan if the applicable Performance Target(s) have not been
satisfied.
4.8 Committee Certification. No Executive shall receive any payment under
the Plan unless the Committee has certified, by resolution or other
appropriate action in writing, that the amount thereof has been accurately
determined in accordance with the terms, conditions and limits of the Plan and
that the Performance Target(s) and any other material terms previously
established by the Committee or set forth in the Plan were in fact satisfied.
4.9 Time of Payment. Any Bonuses granted by the Committee under the Plan
shall be paid as soon as practicable following the Committee's determinations
under this Section 4 and the certification of the Committee's findings under
Section 4.8. Any such payment shall be in cash or cash equivalent, subject to
A-3
<PAGE>
applicable withholding requirements. Notwithstanding the foregoing, the
Committee, in its sole discretion (but subject to any prior written
commitments and to any conditions consistent with Section 5.8 that it deems
appropriate), defer the payout or vesting of any Bonus. In the case of the
delay of a Bonus otherwise payable at or after the attainment and
certification of the applicable Performance Target(s), any additional amount
payable shall be based on Moody's Average Corporate Bond Yield over the
deferral period.
SECTION 5. GENERAL PROVISIONS
5.1 No Right to Bonus or Continued Employment. Neither the establishment of
the Plan nor the provision for or payment of any amounts hereunder nor any
action of the Company (including, for purposes of this Section 5.1, any
predecessor or subsidiary), the Board of Directors of the Company or the
Committee in respect of the Plan, shall be held or construed to confer upon
any person any legal right to receive, or any interest in, a Bonus or any
other benefit under the Plan, or any legal right to be continued in the employ
of the Company. The Company expressly reserves any and all rights to discharge
an Executive in its sole discretion, without liability of any person, entity
or governing body under the Plan or otherwise. Notwithstanding any other
provision hereof and notwithstanding the fact that the Performance Target(s)
have been attained and/or the individual maximum amounts pursuant to Section
4.2 have been calculated, the Company shall have no obligation to pay any
Bonus hereunder nor to pay the maximum amount so calculated, unless the
Committee otherwise expressly provides by written contract or other written
commitment.
5.2 Discretion of Company, Board of Directors and Committee. Any decision
made or action taken by the Company or by the Board of Directors of the
Company or by the Committee arising out of or in connection with the creation,
amendment, construction, administration, interpretation and effect of the Plan
shall be within the absolute discretion of such entity and shall be conclusive
and binding upon all persons. No member of the Committee shall have any
liability for actions taken or omitted under the Plan by the member or any
other person.
5.3 Absence of Liability. A member of the Board of Directors of the Company
or a member of the Committee of the Company or any officer of the Company
shall not be liable for any act or inaction hereunder, whether of commission
or omission.
5.4 No Funding of Plan. The Company shall not be required to fund or
otherwise segregate any cash or any other assets which may at any time be paid
to Participants under the Plan. The Plan shall constitute an "unfunded" plan
of the Company. The Company shall not, by any provisions of the Plan, be
deemed to be a trustee of any property, and any obligations of the Company to
any Participant under the Plan shall be those of a debtor and any rights of
any Participant or former Participant shall be limited to those of a general
unsecured creditor.
5.5 Non-Transferability of Benefits and Interests. Except as expressly
provided by the Committee, no benefit payable under the Plan shall be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any such attempted action be void and no such
benefit shall be in any manner liable for or subject to debts, contracts,
liabilities, engagements or torts of any Participant or former Participant.
This Section 5.5 shall not apply to an assignment of a contingency or payment
due after the death of the Executive to the deceased Executive's legal
representative or beneficiary.
5.6 Law to Govern. All questions pertaining to the construction, regulation,
validity and effect of the provisions of the Plan shall be determined in
accordance with the laws of the State of Delaware.
5.7 Non-Exclusivity. Subject to Section 5.8, the Plan does not limit the
authority of the Company, the Board or the Committee, or any subsidiary of the
Company, to grant awards or authorize any other compensation under any other
plan or authority, including, without limitation, awards or other compensation
based on the same Performance Target(s) used under the Plan. In addition,
Executives not selected to participate in the Plan may participate in other
plans of the Company.
A-4
<PAGE>
5.8 Section 162(m) Conditions; Bifurcation of Plan. It is the intent of the
Company that the Plan and Bonuses paid hereunder satisfy and be interpreted in
a manner, that, in the case of Participants who are or may be persons whose
compensation is subject to Section 162(m), satisfies any applicable
requirements as performance-based compensation. Any provision, application or
interpretation of the Plan inconsistent with this intent to satisfy the
standards in Section 162(m) of the Code shall be disregarded. Notwithstanding
anything to the contrary in the Plan, the provisions of the Plan may at any
time be bifurcated by the Board or the Committee in any manner so that certain
provisions of the Plan or any Bonus intended (or required in order) to satisfy
the applicable requirements of Section 162(m) are only applicable to persons
whose compensation is subject to Section 162(m).
SECTION 6. AMENDMENTS, SUSPENSION OR TERMINATION OF PLAN
The Board of Directors or the Committee may from time to time amend, suspend
or terminate in whole or in part, and if suspended or terminated, may
reinstate, any or all of the provisions of the Plan. Notwithstanding the
foregoing, no amendment may be effective without Board of Directors and/or
stockholder approval if such approval is necessary to comply with the
applicable rules under Section 162(m) of the Code.
[RECYCLE LOGO]
PRINTED ON RECYCLED PAPER
A-5
<PAGE>
PROXY FORM The Walt Disney Company PROXY FORM
Annual Meeting of Stockholders - To Be Held February 25, 1997
THE BOARD OF DIRECTORS SOLICITS THIS PROXY
The undersigned hereby appoint(s) SANFORD M. LITVACK, RICHARD D. NANULA, and
DAVID K. THOMPSON, and each of them, attorney, agent and proxy of the
undersigned, with full power of substitution, to vote all shares of common stock
of The Walt Disney Company that the undersigned would be entitled to cast if
personally present at the 1997 Annual Meeting of Stockholders of the Company,
and at any postponement or adjournment thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED BY THE UNDERSIGNED. IF NO CHOICE IS
SPECIFIED, THE PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES FOR DIRECTOR
---
LISTED ON THE REVERSE SIDE, FOR PROPOSAL NUMBER 2, FOR PROPOSAL NUMBER 3, FOR
--- --- ---
PROPOSAL NUMBER 4, AGAINST PROPOSAL NUMBER 5, AGAINST PROPOSAL NUMBER 6 AND
------- -------
ACCORDING TO THE DISCRETION OF THE PROXY HOLDERS ON ANY OTHER MATTERS THAT MAY
PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENT OR ADJOURNMENT THEREOF.
Please date, sign exactly as your name appears on the form and mail the proxy
promptly. When signing as an attorney, executor, administrator, trustee or
guardian, please give your full title as such. If shares are held jointly, both
owners must sign.
CONTINUED AND TO BE VOTED AND SIGNED ON REVERSE
<PAGE>
Fold & Tear Here Fold & Tear Here
(1) ELECTION OF DIRECTORS: REVETA F. BOWERS, ROY E. DISNEY,
IGNACIO E. LOZANO, JR., GEORGE J. MITCHELL, GARY L. WILSON
FOR all nominees (except as marked to the contrary) [_]
WITHHOLD authority to vote for all nominees [_]
WITHHOLD authority to vote for the individual nominees identified in
the space provided below
--------------------------------------------------------------------
FOR AGAINST ABSTAIN
--- ------- -------
(2) To approve the 1997 Cash Bonus
Performance Plan [_] [_] [_]
(3) To approve a performance-based [_] [_] [_]
compensation plan for the Chief
Executive Officer of the Company
(4) To ratify the appointment of Price [_] [_] [_]
Waterhouse LLP as the Company's
independent accountants for the
1997 fiscal year
(5) To approve the stockholder proposal [_] [_] [_]
with respect to contract supplier
standards
(6) To approve the stockholder proposal [_] [_] [_]
with respect to executive
compensation
PLEASE MARK ALL CHOICES LIKE THIS [X]
SIGNATURE _________________________________ DATE ____________________
SIGNATURE _________________________________ DATE ____________________
