<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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF THE WALT DISNEY COMPANY APPEARS HERE]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 22, 2000
----------------
To our Shareholders:
The 2000 annual meeting of shareholders of The Walt Disney Company will be
held at The Navy Pier, 600 East Grand Avenue, Chicago, Illinois, on Tuesday,
February 22, 2000, beginning at 10:00 a.m. local time. At the meeting, the
holders of both outstanding classes of common stock of the Company--"Disney
Group" common stock and "GO.com" common stock--will act on the following
matters:
(1) Election of ten directors, each for a term of one year;
(2) Ratification of the appointment of PricewaterhouseCoopers LLP as the
Company's independent accountants for fiscal 2000;
(3) Consideration of two shareholder proposals, if presented to the
meeting; and
(4) Any other matters that properly come before the meeting.
All holders of record of shares of Disney Group common stock and GO.com
common stock at the close of business on December 28, 1999 are entitled to
vote at the meeting or any postponements or adjournments of the meeting.
IF YOU PLAN TO ATTEND:
Please note that space limitations make it necessary to limit attendance to
shareholders 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
begin at 9:00 a.m. Each shareholder may be asked to present valid picture
identification, such as a driver's license or passport. Shareholders holding
stock in brokerage accounts ("street name" holders) will need to bring a copy
of a brokerage statement reflecting stock ownership as of the record date.
Cameras, recording devices and other electronic devices will not be permitted
at the meeting.
By order of the Board of Directors,
/s/ Marsha L. Reed
Marsha L. Reed
Vice President and Secretary
January 5, 2000
Burbank, California
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
About the Meeting......................................................... 1
What is the purpose of the annual meeting?.............................. 1
Who is entitled to vote at the meeting?................................. 1
What are the voting rights of "Disney Group" shareholders and "GO.com"
shareholders?.......................................................... 1
Who can attend the meeting?............................................. 1
What constitutes a quorum?.............................................. 2
How do I vote?.......................................................... 2
Can I vote by telephone or electronically?.............................. 2
Can I change my vote after I return my proxy card?...................... 2
How do I vote my 401(k) shares?......................................... 2
What are the Board's recommendations?................................... 3
What vote is required to approve each item?............................. 3
Stock Ownership........................................................... 4
Who are the largest owners of the Company's stock?...................... 4
How much stock do the Company's directors and executive officers own?... 4
Item 1--Election of Directors............................................. 6
Directors Standing for Election......................................... 6
Directors Continuing in Office.......................................... 8
Certain Relationships and Related Transactions.......................... 11
Executive Compensation.................................................. 11
Report of the Compensation Committee and the Executive Performance
Subcommittee......................................................... 11
Compensation Committee Interlocks and Insider Participation........... 14
Employment Agreement with Michael D. Eisner........................... 15
Executive Compensation Summary Table.................................. 17
Option Exercises and Values for Fiscal 1999........................... 18
Retirement Plans...................................................... 18
Comparison of Five-Year and Fifteen-Year Cumulative Total Returns....... 19
Item 2--Ratification of Appointment of Independent Accountants............ 21
Item 3--Shareholder Proposals............................................. 21
Other Matters............................................................. 24
Additional Information.................................................... 24
</TABLE>
i
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[LOGO OF THE WALT DISNEY COMPANY APPEARS HERE]
500 South Buena Vista Street
Burbank, California 91521
----------------
PROXY STATEMENT
----------------
This proxy statement contains information related to the annual meeting of
shareholders of The Walt Disney Company to be held on Tuesday, February 22,
2000, beginning at 10:00 a.m., at The Navy Pier, 600 East Grand Avenue,
Chicago, Illinois, and at any postponements or adjournments thereof.
ABOUT THE MEETING
What is the purpose of the annual meeting?
At the Company's annual meeting, shareholders will act upon the matters
outlined in the notice of meeting on the cover page of this proxy statement,
including the election of directors, ratification of the Company's independent
auditors and consideration of two shareholder proposals, if presented to the
meeting. In addition, the Company's management will report on the performance
of the Company during fiscal 1999 and respond to questions from shareholders.
Who is entitled to vote at the meeting?
Only shareholders of record at the close of business on the record date,
December 28, 1999, are entitled to receive notice of the annual meeting and to
vote the shares of common stock that they held on that date at the meeting, or
any postponements or adjournments of the meeting.
Until November 17, 1999, the Company had only one class of common stock
outstanding. On that date, the Company's shareholders approved an amendment to
the Company's certificate of incorporation to authorize the issuance of a
second class of common stock, known as "GO.com" common stock, shares of which
were subsequently issued in connection with the Company's acquisition of
Infoseek Corporation. At the same time, the Company's shareholders authorized
the reclassification of the then-outstanding shares of common stock of The
Walt Disney Company into "Disney Group" common stock. Accordingly, the Company
now has two outstanding classes of common stock: Disney Group common stock and
GO.com common stock.
What are the voting rights of "Disney Group" shareholders and "GO.com"
shareholders?
Holders of Disney Group common stock and GO.com common stock will vote
together as a single class on all matters to be acted upon at the annual
meeting.
Each outstanding share of Disney Group common stock will be entitled to one
vote on each matter to be voted upon at the meeting. Each outstanding share of
GO.com common stock will also be entitled to one vote on each matter to be
voted upon at the meeting, although the voting rights of GO.com shares are
subject to adjustment from time to time in the future in accordance with the
terms of the Company's certificate of incorporation.
Who can attend the meeting?
All shareholders as of the record date, or their duly appointed proxies, may
attend the meeting, and each may be accompanied by one guest. Seating,
however, is limited. Admission to the meeting will be on a
1
<PAGE>
first-come, first-served basis. Registration will begin at 8:00 a.m., and
seating will begin at 9:00 a.m. Each shareholder may be asked to present valid
picture identification, such as a driver's license or passport. Cameras,
recording devices and other electronic devices will not be permitted at the
meeting.
Please note that if you hold your shares in "street name" (that is, through
a broker or other nominee), you will need to bring a copy of a brokerage
statement reflecting your stock ownership as of the record date and check in
at the registration desk at the meeting.
What constitutes a 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 the record date will
constitute a quorum, permitting the meeting to conduct its business. As of the
record date, 2,138,683,859 shares of common stock of the Company were
outstanding, consisting of 2,095,320,234 shares of Disney Group common stock
and 43,363,625 shares of GO.com common stock. Proxies received but marked as
abstentions and broker non-votes will be included in the calculation of the
number of shares considered to be present at the meeting.
How do I vote?
If you complete and properly sign the accompanying proxy card and return it
to the Company, it will be voted as you direct. If you are a registered
shareholder and attend the meeting, you may deliver your completed proxy card
in person. "Street name" shareholders who wish to vote at the meeting will
need to obtain a proxy form from the institution that holds their shares.
Can I vote by telephone or electronically?
If you are a registered shareholder (that is, if you hold your stock in
certificate form), you may vote by telephone, or electronically through the
Internet, by following the instructions included with your proxy card.
If your shares are held in "street name," please check your proxy card or
contact your broker or nominee to determine whether you will be able to vote
by telephone or electronically.
The deadline for voting by telephone or electronically is 11:59 p.m. on
February 21, 2000.
Can I change my vote after I return my proxy card?
Yes. Even after you have submitted your proxy, you may change your vote at
any time before the proxy 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 you attend the
meeting in person and so request, although attendance at the meeting will not
by itself revoke a previously granted proxy.
How do I vote my 401(k) shares?
If you participate in the Disney Salaried Savings and Investment Plan or the
ABC, Inc. Savings and Investment Plan, you may vote an amount of shares of
Disney Group common stock equivalent to the interest in Disney Group common
stock credited to your account as of the record date. You may vote 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 relevant trustee will vote your shares in accordance
with your duly executed instructions received by February 16, 2000.
If you do not send instructions, the share equivalents credited to your
account will be voted by the trustee in the same proportion that it votes
share equivalents for which it did receive timely instructions.
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You may also revoke previously given voting instructions by February 16,
2000 by filing with the trustee either a written notice of revocation or a
properly completed and signed voting instruction card bearing a later date.
What are the Board's recommendations?
Unless you give other instructions on your proxy card, the persons named as
proxy holders on the proxy card will vote in accordance with the
recommendations of the Board of Directors. The Board's recommendation is set
forth together with the description of each item in this proxy statement. In
summary, the Board recommends a vote:
. for election of the nominated slate of directors (see page 6);
. for ratification of the appointment of PricewaterhouseCoopers LLP as the
Company's independent auditors for fiscal 2000 (see page 21); and
. against approval of each of the shareholder proposals (see pages 21 and
22).
With respect to any other matter that properly comes before the meeting, the
proxy holders will vote as recommended by the Board of Directors or, if no
recommendation is given, in their own discretion.
What vote is required to approve each item?
Election of Directors. The affirmative vote of a plurality of the votes cast
at the meeting is 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.
Other Items. For each other item, 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 negative vote.
If you hold your shares in "street name" through a broker or other nominee,
your broker or nominee may not be permitted to exercise voting discretion with
respect to some of the matters to be acted upon. Thus, if you do not give your
broker or nominee specific instructions, your shares may not be voted on those
matters and will not be counted in determining the number of shares necessary
for approval. Shares represented by such "broker non-votes" will, however, be
counted in determining whether there is a quorum.
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STOCK OWNERSHIP
Who are the largest owners of the Company's stock?
Except as set forth below, the Company knows of no single person or group
that is the beneficial owner of more than 5% of either class of the Company's
common stock.
<TABLE>
<CAPTION>
Title Percent
of Name and address Amount and nature of of
Class of beneficial owner beneficial ownership class
------ --------------------------- -------------------- -------
<S> <C> <C> <C>
GO.com Steven T. Kirsch 4,716,914(1) 10.8%
1399 Moffett Park Drive
Sunnyvale, California 94089
</TABLE>
(1) Includes 4,176,558 shares held in a trust of which Mr. Kirsch is trustee
and 540,356 shares in a trust of which Mr. Kirsch and his wife are co-
trustees.
How much stock do the Company's directors and executive officers own?
The following table shows the amount of common stock of the Company
beneficially owned (unless otherwise indicated) by the Company's directors,
the executive officers of the Company named in the Summary Compensation Table
below and the directors and executive officers of the Company as a group.
Except as otherwise indicated, all information is as of December 17, 1999.
<TABLE>
<CAPTION>
Aggregate Number Acquirable Percent of
of Shares within Shares
Beneficially Owned(1)(2) 60 Days(3) Outstanding(4)
--------------------------------------------- ------------------
Disney Disney
Name Disney Group GO.com Group GO.com Group GO.com
<S> <C> <C> <C> <C> <C> <C>
Reveta F. Bowers........ 4,664 -- 10,850 -- * --
John F. Cooke........... 11,401 -- 210,000 -- * --
Roy E. Disney........... 17,771,976 -- 600,000 -- * --
Michael D. Eisner....... 12,387,409(5) 78,000 -- -- * *
Judith L. Estrin........ 1,664 -- -- -- * --
Stanley P. Gold......... 13,981 -- 12,000 -- * --
Sanford M. Litvack...... 34,252 -- 1,050,000 -- * --
Ignacio E. Lozano, Jr. . 17,329 -- 12,000 -- * --
Louis M. Meisinger...... 72 -- 75,000 -- * --
George J. Mitchell...... 8,677 -- 8,400 -- * --
Thomas S. Murphy........ 3,198,672 -- -- -- * --
Leo J. O'Donovan, S.J. . -- -- 2,400 -- * --
Sidney Poitier.......... 5,632 -- 12,000 -- * --
Irwin E. Russell........ 14,397 -- 12,000 -- * --
Robert A.M. Stern....... 3,266 -- 12,000 -- * --
Andrea Van de Kamp...... 1,072 -- -- -- * --
Raymond L. Watson....... 37,756 -- 12,000 -- * --
Gary L. Wilson.......... 5,339 -- 12,000 -- * --
All current directors
and executive officers
as a group (20
persons)............... 33,530,019 80,500 2,698,350 -- 1.7% *
</TABLE>
* Represents less than 1% of the Company's outstanding common stock.
4
<PAGE>
(1) The number of shares shown includes shares that are individually or
jointly owned, as well as shares over which the individual has either sole
or shared investment or voting authority. Certain of the Company's
directors and executive officers disclaim beneficial ownership of some of
the shares included in the table, as follows:
. Mr. Eisner--88,800 shares held by his wife directly and as custodian for
their children, 36,000 shares held in a trust for his children, 4,800
shares held in a trust for other family members, 21,600 shares held in a
trust of which Mr. Eisner is a trustee and 9,600 shares held in a trust
of which Mr. Eisner is the income beneficiary;
. Mr. Disney--768,960 shares held in trusts for the benefit of his
children or grandchildren, of which Mr. Disney is the trustee; and 1,248
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;
. Mr. Gold--4,820 shares held by his wife and 1,248 shares beneficially
owned by Shamrock Holdings, Inc., of which he is an officer and
director;
. Mr. Litvack--450 shares held by a trust of which he is a co-trustee;
. Mr. Lozano--1,320 shares that he holds as custodian for the benefit of
his child;
. Thomas Murphy--52,170 shares held in trust for the benefit of a non-
family member and 1,320 shares owned by Mr. Murphy's wife; and
All current directors and executive officers as a group disclaim
beneficial ownership of a total of 987,536 shares.
(2) For executive officers, the numbers include interests in shares held in
the Disney Salaried Savings and Investment Plan, with respect to which
participants have voting power but no investment rights: Mr. Eisner--
26,458 shares; Mr. Litvack--2,752 shares; Mr. Meisinger--72 shares; Mr.
Cooke--11,401 shares; and all current executive officers as a group 47,282
shares. For non-employee directors participating in the Company's 1997
Non-Employee Directors Stock and Deferred Compensation Plan, the numbers
include share units credited as of September 30, 1999, to the director's
account: Ms. Bowers--3,514; Mr. Gold--2,933; Sen. Mitchell--3,577; Mr.
Murphy--5,054; Mr. Poitier--2,857; Mr. Russell--2,397; Mr. Stern--2,341;
Ms. Van de Kamp--872; Mr. Watson--2,916; and Mr. Wilson--2,339.
Participating directors do not have current voting or investment power
with respect to these share units, which are payable solely in shares of
common stock upon termination of service.
(3) Reflects the number of shares that could be purchased by exercise of
options available at December 28, 1999 or within 60 days thereafter under
the Company's stock option plans.
(4) Based on the number of shares outstanding at December 28, 1999.
(5) Does not include 825,000 shares held by The Eisner Foundation, Inc., a
charitable not-for-profit corporation in which Mr. Eisner has no pecuniary
interest.
Based upon a review of filings with the Securities and Exchange Commission
and written representations that no other reports were required, the Company
believes that all of the Company's directors and executive officers complied
during fiscal 1999 with the reporting requirements of Section 16(a) of the
Securities Exchange Act of 1934.
5
<PAGE>
ITEM 1--ELECTION OF DIRECTORS
Directors Standing for Election
The Board of Directors is currently divided into three classes, having
three-year terms that expire in successive years. In 1998, the Company amended
its certificate of incorporation to provide for the elimination of the
classification of the Board by 2001. Under the amended certificate of
incorporation, all directors elected by shareholders after the 1998 annual
meeting, regardless of class, are elected for a one-year term.
The current term of office of directors in Classes I and III expires at the
2000 annual meeting. The Board of Directors proposes that the nominees
described below, all of whom are currently serving as Class I or Class III
directors, be re-elected for a new term of one year and until their successors
are duly elected and qualified.
Each of the nominees has consented to serve a one-year term. If any of them
become unavailable to serve as a director, the Board may designate a
substitute nominee. In that case, the persons named as proxies will vote for
the substitute nominee designated by the Board.
Class I and Class III Directors. The directors standing for election are:
Class I
Reveta F. Bowers Director since 1993
Mrs. Bowers, 51, has been an administrator and 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 Institute for Educational Advancement, The Fulfillment Fund,
the Coalition for Justice and Independent Educational Services.
Roy E. Disney Director since June 1984;
also from 1967 to March 1984
Mr. Disney, 69, 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, 73, 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 Sempra Energy, a holding company, and its
subsidiaries Southern California Gas Co. and San Diego Gas and Electric
Co., and a number of public service and charitable organizations.
George J. Mitchell Director since 1995
Senator Mitchell, 66, is special counsel to the law firm of Verner,
Liipfert, Bernhard, McPherson & Hand in Washington, D.C. and senior counsel
to the firm of Preti, Flaherty, Beliveau & Pachios in Portland, Maine. He
served as a United States Senator for fifteen years commencing in 1980, and
was Senate Majority Leader from 1989 to 1995. Senator Mitchell is a member
of the Board of Directors of UNUM Provident, a disability insurance
company; FDX Corporation, an international provider of transportation and
delivery services; Xerox Corporation, a manufacturer of photocopier
equipment; Unilever, an international food and personal care products
company; Staples, Inc., an office supply company; and Starwood Hotels &
Resorts. He has also served as Chairman of the Peace Negotiations in
Northern Ireland, the Ethics Committee of the U.S. Olympic Committee and
the National Health Care Commission.
6
<PAGE>
Gary L. Wilson Director since 1985
Mr. Wilson, 59, has been Chairman of the Board of Directors of Northwest
Airlines Corporation since 1997, having served as Co-Chairman of the Board
of Directors from 1991 to 1997 and as a director since 1989. From 1985
through 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. Mr. Wilson is a director of On Command Corporation, a provider
of in-room, on-demand video entertainment and information services to the
domestic lodging industry, and CB Richard Ellis Services, Inc., a
commercial real estate services company. He also serves on the board of
trustees of Duke University and the board of overseers of the Wharton
School at the University of Pennsylvania.
Class III
Judith L. Estrin Director since 1998
Ms. Estrin, 45, is Chief Technology Officer and Senior Vice President of
Cisco Systems Inc., a company that develops hardware and software to link
computer systems. She was formerly President and Chief Executive Officer of
Precept Software, Inc., a developer of networking software of which she was
co-founder, from March 1995 until its acquisition by Cisco in April 1998.
Ms. Estrin was a computer industry consultant from September 1994 to March
1995, and served Network Computer Devices as President and Chief Executive
Officer from October 1993 to September 1994 and as Executive Vice President
from July 1988 to October 1993. She also serves as a director of FDX
Corporation, an international provider of transportation and delivery
services, and Sun Microsystems, Inc., a supplier of network computing
products.
Sanford M. Litvack Director since 1995
Mr. Litvack, 63, currently serves as Vice Chairman of the Board of
Directors, having previously served, from August 1994 to September 1999, as
Senior Executive Vice President and Chief of Corporate Operations of the
Company. He also served as the Company's General Counsel from April 1991
until July 1998. Mr. Litvack was a litigation partner with the law firm of
Dewey Ballantine from 1987 until joining the Company in 1991.
Sidney Poitier Director since 1994
Mr. Poitier, 72, is an actor, director and writer, serving as Chief
Executive Officer of Verdon-Cedric Productions, a film production company.
Mr. Poitier has won many awards, including the Academy Award(R) for Best
Actor, the American Film Institute's Lifetime Achievement Award and the
Kennedy Center Honors. 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. In addition, he
is the Ambassador to Japan from the Commonwealth of the Bahamas.
Robert A.M. Stern Director since 1992
Mr. Stern, 60, 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 Dean of
the Yale School of Architecture and previously served as a professor and
Director of the Historic Preservation Department at the Graduate School of
Architecture, Planning and Preservation at Columbia University. Mr. Stern
is the design architect of the Yacht and Beach Club hotels, the Boardwalk
Hotel 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
design architect of the Feature Animation Building at the Company's
headquarters in Burbank, California.
7
<PAGE>
Andrea Van de Kamp Director since 1998
Ms. Van de Kamp, 56, is Chairman of Sotheby's West Coast, a unit of the
international auction company, since 1989, and is a member of the Board of
Directors of Sotheby's North America. She also serves as a director of City
National Bank and Jenny Craig International, and as Chairman of the Board
of the Los Angeles Music Center, Inc. In addition, Ms. Van de Kamp is a
trustee of Pomona College, in Pomona, California.
Directors Continuing in Office
Class II Directors. The following Class II directors were elected at the
Company's 1998 annual meeting for terms ending in 2001:
Michael D. Eisner Director since 1994
Mr. Eisner, 57, has served as Chairman of the Board and Chief Executive
Officer of the Company since 1984. Prior to joining the Company, 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 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
Mr. Gold, 57, is President and Chief Executive Officer of Shamrock
Holdings, Inc. Since 1990, he has also served as 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.
Thomas S. Murphy Director since 1996
Mr. Murphy, 74, 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 in February 1996. Mr. Murphy is also a director
of Columbia/HCA Healthcare Corp., a provider of health care services, and
Doubleclick Inc., a provider of Internet advertising services.
Leo J. O'Donovan, S.J. Director since 1996
Since 1989, Fr. O'Donovan, 65, has been President of Georgetown University,
where he also holds an appointment as Professor of Theology. He serves on a
number of higher education boards, including that of the Association of
Catholic Colleges and Universities, and is a member of the Steering
Committee of Presidents for the America Reads initiative. He is a former
member of the National Council on the Arts of the National Endowment for
the Arts and past chair of the Consortium on Financing Higher Education.
Irwin E. Russell Director since 1987
Mr. Russell, 73, is an attorney presently engaged in private practice, who
has served as an attorney and executive in the entertainment industry for
many years. He serves as an independent 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, 73, 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,
8
<PAGE>
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 the Public Policy Institute of California,
a non-profit public policy research institute.
How are directors compensated?
Base Compensation. Each non-employee director receives a retainer based on
an annualized rate of $35,000, together with a fee of $1,000 per Board or
Committee meeting attended. Non-employee directors may elect to receive all or
part of their retainer and meeting fees either in common stock or in cash or
stock unit accounts. Any such elections are effective until termination of the
participating director's service as a director. All of the non-employee
directors other than Fr. O'Donovan are currently participating in this plan.
Directors who are also employees of the Company receive no additional
compensation for service as directors.
Options. Each non-employee director receives an automatic grant, on March 1
of each year, of options to purchase 6,000 shares of common stock. For fiscal
1999, Ms. Bowers, Fr. O'Donovan and Messrs. Gold, Lozano, Mitchell, Murphy,
Poitier, Russell, Stern, 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, which was $34.91 in the case of options granted in
1999.
How often did the Board meet during fiscal 1999?
The Board of Directors met seven times during fiscal 1999. Each director
attended more than 75% of the total number of meetings of the Board and
Committees on which he or she served.
What committees has the Board established?
The Board of Directors has standing Executive, Compensation, Audit Review
and Nominating Committees, and the Compensation Committee has a standing
Executive Performance Subcommittee. During 1999, the Board also established a
Capital Stock Committee in connection with the issuance of the GO.com common
stock.
9
<PAGE>
BOARD COMMITTEE MEMBERSHIP
<TABLE>
<CAPTION>
Executive Audit Capital
Executive Compensation Performance Review Nominating Stock
Name Committee Committee Subcommittee Committee Committee Committee
<S> <C> <C> <C> <C> <C> <C>
Reveta F. Bowers........ * * * *
Roy E. Disney........... *
Michael D. Eisner....... *
Judith L. Estrin........ *
Stanley P. Gold......... * ** **
Sanford M. Litvack...... *
Ignacio E. Lozano, Jr. . * * **
George J. Mitchell...... * * **
Thomas S. Murphy........ * **
Leo J. O'Donovan, S.J. . * *
Sidney Poitier.......... * *
Irwin E. Russell........ *
Robert A.M. Stern.......
Andrea Van de Kamp...... *
Raymond L. Watson....... ** * *
Gary L. Wilson.......... * *
</TABLE>
* Member.
** Chair.
Executive Committee. The Executive Committee 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 1999, the
Executive Committee held no meetings, but took action by unanimous written
consent four times.
Compensation Committee. The Compensation Committee is charged with reviewing
the Company's general compensation strategy (except with respect to matters
entrusted to the Executive Performance Subcommittee 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 1999, the Compensation
Committee met seven times.
Executive Performance Subcommittee. The Executive Performance Subcommittee
of the Compensation Committee has as its principal responsibility to review
and advise the Board with respect to performance-based compensation of
corporate officers who are, or who are likely to become, subject to Section
162(m) of the Internal Revenue Code. (Section 162(m) limits the deductibility
of compensation in excess of $1,000,000 paid to a corporation's chief
executive officer and four other most highly compensated executive officers,
unless certain conditions are met.) The Subcommittee met seven times during
fiscal 1999.
10
<PAGE>
Audit Review Committee. The Audit Review Committee met three times during
fiscal 1999. 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 policies
relating to 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, including "Year 2000" matters; and
review the activities and recommendations of the Company's management audit
department.
Nominating Committee. The Nominating Committee 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 shareholders.
Any shareholder 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 did not
meet during fiscal 1999.
Capital Stock Committee. The Capital Stock Committee was formed in November
1999 in connection with the issuance of the GO.com common stock. The functions
of this Committee include the implementation and interpretation of the
Company's "Common Stock Policies," which were adopted by the Board to set out
certain policies and procedures relating to the allocation of interests
between the "Disney Group" and "GO.com" and other matters that may affect the
Company's two classes of common stock. The Committee is charged with
overseeing the implementation of these policies, except as they relate to
dividends, with respect to which all determinations are made by the Board of
Directors as a whole. The Committee is also responsible for adopting
additional general policies, as necessary, governing the relationships between
the two classes of stock.
Certain Relationships and Related Transactions
During fiscal 1999, Company subsidiaries retained the firm of Robert A.M.
Stern Architects, of which Mr. Stern is Senior Partner, for architectural
services relating to the Celebration project in Florida and the Edison
International Stadium in California. Payments to Mr. Stern's firm for these
services aggregated $71,731 during the year. Mr. Stern's firm also provided
architectural services during the year to Oriental Land Co., Ltd., the
Japanese corporation that owns and operates Tokyo Disneyland and is developing
a second theme park, Tokyo DisneySea, and two Disney-branded hotels under
license from the Company's subsidiary Disney Enterprises, Inc.
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 1999, the Company paid Senator Mitchell
an aggregate of $50,000 for these services.
Executive Compensation
The following Report of the Compensation Committee and the Executive
Performance Subcommittee and the performance graphs included elsewhere in this
proxy statement do not constitute soliciting material and should not be deemed
filed or incorporated by reference into any other Company 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
graphs by reference therein.
Report of the Compensation Committee and the Executive Performance
Subcommittee
The Compensation Committee of the Board of Directors and the Committee's
Executive Performance Subcommittee have furnished the following report on
executive compensation for fiscal 1999.
11
<PAGE>
What is the Company's philosophy of executive officer compensation?
The Company's compensation program for executives consists of three key
elements:
. a base salary,
. a performance-based annual bonus, and
. periodic grants of stock options.
The Compensation Committee and the Executive Performance Subcommittee
believe that this three-part approach best serves the interests of the Company
and its shareholders. It enables the Company to meet the requirements of the
highly competitive environment in which the Company operates while ensuring
that executive officers are compensated in a way that advances both the short-
and long-term interests of shareholders. Under this approach, compensation for
these officers involves a high proportion of pay that is "at risk"--namely,
the annual bonus and stock options. The variable annual bonus permits
individual performance to be recognized on an annual basis, and is based, in
significant part, on an evaluation of the contribution made by the officer to
Company performance. (Bonus arrangements applicable to the Company's Chief
Executive Officer are described below.) Stock options relate a significant
portion of long-term remuneration directly to stock price appreciation
realized by all of the Company's shareholders.
Base Salary. Base salaries for the Company's executive officers, as well as
changes in such salaries, are based upon recommendations by the Chief
Executive Officer, Michael Eisner, taking into account such factors as
competitive industry salaries; a subjective assessment of the nature of the
position; the contribution and experience of the officer, and the length of
the officer's service. Under Mr. Eisner's direction, Vice Chairman of the
Board Sanford Litvack reviews all salary recommendations with the Compensation
Committee, which then approves or disapproves such recommendations. Mr. Eisner
reviews any salary recommendations for Mr. Litvack with the Compensation
Committee.
Annual Bonus. Annual bonuses for fiscal 1999 paid to executive officers of
the Company were granted under the Company's Annual Bonus Performance Plan for
Executive Officers (formerly the 1997 Cash Bonus Performance Plan). This plan,
which permits the payment of awards in stock as well as cash, is administered
by the Executive Performance Subcommittee and provides for performance-based
bonuses for executives who are "covered employees" under Section 162(m) of the
Internal Revenue Code.
Under the plan, the Subcommittee establishes specific annual "performance
targets" for each covered executive officer for performance periods of one or
more years. 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 actual performance relative
to the target remains substantially uncertain within the meaning of Section
162(m). At the same time, the Subcommittee establishes an objective formula or
standard for calculating the maximum bonus payable to each participating
executive officer. The maximum bonus for any fiscal year may not 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). 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 Subcommittee wanted flexibility to recognize exceptional
individual performance when warranted.
Within these limits, the Subcommittee has sole discretion to determine the
actual amount of each bonus, and whether payment or vesting of a bonus will be
deferred, subject in each case to the plan's terms and any other written
commitment authorized by the Subcommittee. The Subcommittee may also exercise
"negative discretion" by establishing additional conditions or terms for the
payment of bonuses, such as the establishment of other financial, strategic or
individual goals, which may be objective or subjective.
12
<PAGE>
For fiscal 1999, the Subcommittee established an overall Company performance
target based upon the achievement of a specified level of net income for the
Company as a whole. After the end of the fiscal year, the Subcommittee
confirmed that the 1999 target had not been achieved and accordingly that no
annual bonuses could or would be paid under the plan to the Chief Executive
Officer or the other executives who are "covered employees" under Section
162(m) of the Internal Revenue Code. Accordingly, no such bonuses were paid.
However, the Subcommittee did make a special bonus award to one "covered
employee," Louis Meisinger, for extraordinary services to the Company
unrelated to the performance target under the Plan. This award was made
pursuant to the Company-wide bonus pool described below.
For bonus-eligible executives other than "covered employees" under Section
162(m), the Company's Chief Executive Officer, working with Mr. Litvack,
develops a Company-wide bonus pool following each fiscal year. 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 shareholders'
equity. In addition, consideration is given to the need to keep the Company
competitive in overall compensation. The amount of the bonus pool is subject
to the approval of the Compensation Committee. 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.
Stock Options. During fiscal 1999, the Compensation Committee's stock option
guidelines provided generally for the grant of stock options to executive
officers upon initial employment, promotion, execution of a new employment
agreement and/or when all previously granted stock options have either fully
vested or are within twelve months of fully vesting. Following the end of the
year, the Compensation Committee decided to implement revised guidelines that
will in the future emphasize the making of annual grants.
In carrying out the Committee's guidelines, Mr. Litvack, under the direction
of Mr. Eisner, recommends to the Compensation Committee (or to the Executive
Performance Subcommittee, in the case of executive officers subject to Section
162(m)), for review and approval, the number of options to be granted, within
a range associated with the individual's salary level. Mr. Eisner and/or Mr.
Litvack may make recommendations that deviate 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.
How is the Company's Chief Executive Officer compensated?
As Chief Executive Officer, Mr. Eisner is compensated pursuant to an
employment agreement entered into in January 1997, which replaced his 1989
employment agreement. The agreement, which extends through September 30, 2006,
subject to earlier termination under certain circumstances, provides for an
annual base salary of $750,000, the same base salary that Mr. Eisner has
received since 1984. Mr. Eisner's bonuses for fiscal 1997 and 1998 were
determined under the Annual Bonus Performance Plan described above, and
beginning in fiscal 1999 bonuses were to be determined pursuant to a bonus
formula based on a compounded earnings growth rate of the Company above a
specified level. (See "Employment Agreement with Michael D. Eisner" below.)
However, in November 1998 the Company requested a renegotiation of the bonus
formula pursuant to a provision of Mr. Eisner's employment agreement that
permits such a renegotiation under certain circumstances. The Company and Mr.
Eisner subsequently entered into an amendment of his employment agreement to
provide that Mr. Eisner's bonus for fiscal year 1999 would be determined under
the Company's Annual Bonus Performance Plan, rather than pursuant to the bonus
formula, and that a new bonus plan would be negotiated for future years. As a
result, Mr. Eisner received no bonus for fiscal 1999. In December 1999, the
Company and Mr. Eisner further agreed that Mr. Eisner would be included in the
Annual Bonus Performance Plan for fiscal 2000 and that the Company and Mr.
Eisner would continue the negotiations which were not completed in fiscal 1999
regarding a bonus formula for future years.
13
<PAGE>
Because it is the Company's intent to continue to structure Mr. Eisner's
performance-based compensation in a manner that complies with Section 162(m)
of the Internal Revenue Code (see "How is the Company addressing Internal
Revenue Code limits on deductibility of compensation?" below), any new bonus
formula will be submitted to the Company's shareholders for approval if
required for compliance with Section 162(m).
In connection with the 1997 employment agreement, the Compensation Committee
granted Mr. Eisner options to acquire 24,000,000 shares of Company common
stock (as adjusted to give effect to the 1998 stock split), 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.
How is the Company addressing Internal Revenue Code limits on deductibility of
compensation?
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public corporations for compensation over $1,000,000 paid for any
fiscal year to the corporation's chief executive officer and four other most
highly compensated executive officers as of the end of any fiscal year.
However, the statute exempts qualifying performance-based compensation from
the deduction limit if certain requirements are met. The Executive Performance
Subcommittee currently intends to structure performance-based compensation,
including stock option grants and annual bonuses, to executive officers who
may be subject to Section 162(m) in a manner that satisfies those
requirements.
The Board, the Compensation Committee and the Executive Performance
Subcommittee 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 Company's efforts, that compensation intended by the
Company to satisfy the requirements for deductibility under Section 162(m)
does in fact do so.
<TABLE>
<S> <C>
Members of the Compensation Committee Members of the Executive Performance Subcommittee
Thomas S. Murphy (Chairman) Stanley P. Gold (Chairman)
Reveta F. Bowers Reveta F. Bowers
Stanley P. Gold Ignacio E. Lozano, Jr.
Ignacio E. Lozano, Jr. Sidney Poitier
Sidney Poitier
Raymond L. Watson
</TABLE>
Compensation Committee Interlocks and Insider Participation
None of the members of the Board's Compensation Committee 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. Mr. Murphy
was Chairman of the Board and Chief Executive Officer of Capital
Cities/ABC, Inc. prior to its acquisition by the Company, but has not held any
office with the Company or its subsidiaries since the acquisition.
None of the members of the Executive Performance Subcommittee is or has been
an officer or employee of the Company.
14
<PAGE>
Employment Agreement with Michael D. Eisner
Mr. Eisner serves as Chief Executive Officer of the Company pursuant to an
employment agreement entered on January 8, 1997, and amended on December 28,
1998. The agreement provides for Mr. Eisner's employment through September 30,
2006 (subject to earlier termination in certain circumstances as described
below), at a base salary of $750,000 per year. Under the agreement, bonus
compensation for fiscal years 1997 and 1998 was determined pursuant to the
terms of the Company's Annual Bonus Performance Plan. Thereafter, Mr. Eisner's
annual bonus compensation was to have been determined through a bonus formula
in his employment agreement which was approved by the Company's shareholders
in 1997. This formula tied Mr. Eisner's bonus each year to the growth of the
Company's earnings per share ("EPS") above an annual growth rate of 7.5% above
the average earnings per share of the Company for fiscal 1997 and 1998. The
formula then provided that the bonus for each year would be determined by
multiplying the amount, if any, by which the Company's reported EPS exceeded
the specified threshold level by a specified "Bonus Percentage," and then
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.
However, Mr. Eisner's employment agreement has been amended to provide that
his bonus for fiscal years 1999 and 2000 will be determined under the
Company's Annual Bonus Performance Plan and that the Company and Mr. Eisner
will continue to negotiate a bonus formula for future years (see "How is the
Company's Chief Executive Officer Compensated?" above).
In connection with the employment agreement, the Committee also granted to
Mr. Eisner, on September 30, 1996, stock options with respect to a total of
24,000,000 shares of common stock of the Company under the Company's 1995
Stock Incentive Plan. Of this total, an option with respect to 15,000,000
shares bears an exercise price of $21.10, 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 3,000,000 shares, bear exercise
prices in excess of fair market value on the date of grant: one, with an
exercise price of $26.38 (125% of fair market value), vests on September 30,
2004; the second, with an exercise price of $31.66 (150% of fair market
value), vests on September 30, 2005; and the third, with an exercise price of
$42.21 (200% of fair market value), vests on September 30, 2006. The three
additional options expire on September 30, 2011.
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 could 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 shareholder 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.
Mr. Eisner is 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.
15
<PAGE>
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 of 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 the salary and to the bonus payments
provided for in his agreement as described above.
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.
16
<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 other most highly
compensated executive officers of the Company who served in such capacities as
of September 30, 1999 (the "named executive officers") for services rendered to
the Company during each of the last three fiscal years.
EXECUTIVE COMPENSATION SUMMARY TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
-------------------- ------------
Number
of Stock
Name and Principal Fiscal Options All Other
Positions Year Salary(1) Bonus Granted Compensation(2)
<S> <C> <C> <C> <C> <C>
Michael D. Eisner 1999 $750,000 $ 0 0 $3,820
Chief Executive Officer 1998 764,423 5,000,000 0 3,820
and Chairman of the Board 1997 750,000 9,900,000 0 3,820
Roy E. Disney 1999 $537,692 $ 0 0 $ 620
Vice Chairman of the Board 1998 509,615 410,000 0 620
1997 500,000 700,000 0 620
Sanford M. Litvack 1999 $750,000 $ 0 0 $3,820
Vice Chairman of the Board 1998 764,423 1,100,000 375,000 3,820
1997 749,616 1,475,000 600,000 3,820
Louis M. Meisinger(3) 1999 $650,000 $ 350,000 0 $2,295
Executive Vice President 1998 162,500 250,000 375,000 0
and General Counsel 1997 -- -- -- --
John F. Cooke 1999 $600,000 $ 0 0 $3,495
Executive Vice President-- 1998 611,538 300,000 0 3,495
Corporate Affairs 1997 600,000 575,000 0 3,495
</TABLE>
(1) Fiscal 1999 and fiscal 1997 included 52 weekly pay periods, while fiscal
1998 included 53 such periods.
(2) 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 SEC
rules. The amounts shown in this column include the following:
. Matching contributions by the Company under the Disney Salaried Savings
and Investment Plan, all of which are invested in common stock of the
Company. During fiscal 1998, the Company's matching contributions were
$3,200 for each of Messrs. Eisner, Litvack and Cooke, and $2,000 for
Mr. Meisinger. Mr. Disney did not participate in the plan.
. 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
1999, the Company paid $620 in premiums on behalf of Messrs. Eisner,
Disney and Litvack, and $295 on behalf of Messrs. Meisinger and Cooke.
(3) Mr. Meisinger joined the Company in July 1998.
17
<PAGE>
Option Exercises and Values for Fiscal 1999
The table below sets forth the following information with respect to option
exercises during fiscal 1999 by each of the named executive officers and the
status of their options at September 30, 1999:
. the number of shares of common stock acquired upon exercise of options
during fiscal 1999;
. the aggregate dollar value realized upon the exercise of such options;
. the total number of exercisable and non-exercisable stock options held at
September 30, 1999, and
. the aggregate dollar value of in-the-money exercisable options at
September 30, 1999.
AGGREGATED OPTION EXERCISES DURING FISCAL 1999
AND
OPTION VALUES ON SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
Number of
Shares Number of Unexercised Value of Unexercised In-the-
Acquired Upon Options 9/30/99 Money Options 9/30/99(1)
Exercise of Value Realized ------------------------- ------------------------------
Name Option Upon Exercise Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Michael D. Eisner....... 1,999,992 $49,906,505 0 24,000,000 $ 0 $68,400,000
Roy E. Disney........... 0 0 480,000 120,000 4,865,088 1,216,272
Sanford M. Litvack...... 274,000 6,706,472 750,000 825,000 7,642,200 670,320
Louis M. Meisinger...... 0 0 75,000 300,000 0 0
John F. Cooke........... 210,000 3,821,580 0 405,000 0 3,269,565
</TABLE>
(1) In accordance with SEC 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
$25.66, the average of the high and low common stock price reported for
New York Stock Exchange transactions on September 30, 1999.
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. Retirement 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 1999, the maximum compensation limit under a tax-qualified
plan was $160,000 and the maximum annual benefit accruable under a tax-
qualified defined benefit plan was $130,000. Benefits under this plan are
provided by the Company on a noncontributory basis.
18
<PAGE>
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 Years of Credited Service
Compensation Highest ----------------------------------------
Five 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...................... 88,757 118,371 148,084 177,675 205,988
450,000...................... 132,069 176,121 220,291 264,300 307,050
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, 1999, the estimated annual payments under the Company's
retirement plans would be based upon an average compensation of $750,000 for
Mr. Eisner, $477,346 for Mr. Disney, $715,500 for Mr. Litvack, $662,019 for Mr.
Meisinger and $595,000 for Mr. Cooke. Messrs. Eisner, Disney and Cooke each
have fifteen years, Mr. Litvack has nine years and Mr. Meisinger has two years
of credited service.
Comparison of Five-Year and Fifteen-Year Cumulative Total Returns
The following two graphs compare the performance of the Company's common
stock (that is, the single class of common stock of the Company that existed
before the creation of two classes in November 1999) with the performance of
the Standard & Poor's 500 Composite Stock Price Index and a peer group index
over two periods extending through the end of fiscal 1999. The first period
covers the five fiscal years beginning on October 1, 1994, while the second
period covers the fifteen fiscal years beginning on 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, September 30, 1994 and
September 30, 1984 in the Company's common stock, the S&P 500 Index and each of
the peer group indices, and that all dividends were reinvested.
The peer group represented in the graphs includes the corporations (other
than the Company) that make up the Standard & Poor's Entertainment Index, a
published industry index, together with The News Corporation Limited, which is
not included in the Standard and Poor's Entertainment Index but is engaged in
many of the same businesses as the Company.
19
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
CUMULATIVE TOTAL RETURN
Based on reinvestment of $100 beginning September 30, 1994
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Measurement Period THE WALT S&P CUSTOM
(Fiscal Year Covered) DISNEY COMPANY 500 INDEX COMPOSITE INDEX (4 STOCKS)
- ------------------- -------------- --------- -------------------------
<S> <C> <C> <C>
Measurement Pt- 9/94 $100 $100 $100
FYE 9/95 $149 $130 $119
FYE 9/96 $165 $156 $103
FYE 9/97 $212 $219 $121
FYE 9/98 $202 $235 $193
FYE 9/99 $207 $315 $262
</TABLE>
SOURCE: GEORGESON SHAREHOLDER COMMUNICATIONS INC.
COMPARISON OF FIFTEEN-YEAR CUMULATIVE TOTAL RETURN
CUMULATIVE TOTAL RETURN
Based on reinvestment of $100 beginning September 30, 1984
[PERFORMNACE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Measurement Period THE WALT S&P CUSTOM
(Fiscal Year Covered) DISNEY COMPANY 500 INDEX COMPOSITE INDEX (4 STOCKS)
- ------------------- -------------- --------- -------------------------
<S> <C> <C> <C>
Measurement Pt- 9/84 $100 $100 $100
FYE 9/85 $145 $114 $134
FYE 9/86 $275 $151 $215
FYE 9/87 $543 $216 $359
FYE 9/88 $456 $189 $286
FYE 9/89 $855 $252 $384
FYE 9/90 $644 $228 $204
FYE 9/91 $815 $300 $276
FYE 9/92 $1,043 $333 $347
FYE 9/93 $1,092 $376 $594
FYE 9/94 $1,128 $390 $512
FYE 9/95 $1,682 $506 $610
FYE 9/96 $1,867 $608 $529
FYE 9/97 $2,397 $854 $621
FYE 9/98 $2,276 $916 $987
FYE 9/99 $2,337 $1,229 $1,342
</TABLE>
SOURCE: GEORGESON SHAREHOLDER COMMUNICATIONS INC.
The 4-stock Custom Composite Index consists of King World Productions
(beginning 12/84), News Corp. ADR (beginning 3Q86), Time Warner Inc. and
Viacom Inc.
20
<PAGE>
ITEM 2--RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Company has appointed PricewaterhouseCoopers LLP as the Company's
independent accountants for the fiscal year ending September 30, 2000.
PricewaterhouseCoopers 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 PricewaterhouseCoopers LLP in fiscal
1999 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, services in connection with the
monitoring of compliance with the Company's codes of conduct for licensees and
manufacturers and consultations on various tax, information services and
business process matters.
Representatives of PricewaterhouseCoopers LLP will be present at the annual
meeting to respond to appropriate questions and to make such statements as
they may desire.
The Board of Directors recommends that shareholders vote "FOR" ratification
of the appointment of PricewaterhouseCoopers LLP as the Company's independent
accountants for fiscal 2000.
In the event shareholders do not ratify the appointment, the appointment
will be reconsidered by the Audit Review Committee and the Board of Directors.
ITEM 3--SHAREHOLDER PROPOSALS
The Company has been notified that the following shareholders of the Company
intend to present the proposals set forth below for consideration at the
annual meeting. Unless provided below, the address and stock ownership of each
of the proponents will be furnished by the Corporate Secretary of the Company
to any person, orally or in writing as requested, promptly upon receipt of any
oral or written request therefor.
Proposal 1--Management Compensation
Mrs. Mary F. Morse has submitted the following proposal:
"I, Mary F. Morse, of 212 Highland Avenue, Moorestown, NJ, 08057 being the
owner of $2000.00 or more of Company stock, held over one year and to be held
beyond the meeting date, present the following Proxy Proposal:
"I propose that the Officers and Directors consider the reduction of all top
management base salaries, and the discontinuance of all bonuses immediately,
and options, rights, SAR's, etc., including "Separation Contracts', after
termination of any existing programs for top management.
"This does not include any programs for employees.
"REASONS:
" "The SEC Rules of 1934', as amended, do not allow shareowners
participation in the determination of the amount of remuneration of Management
or Directors. However, it is permissible to ask shareowners approval of
suggestions through proxy ballot to enhance the value of shareowners
investment. Were it not so, Management and Directors would have complete say
in all matters, and the shareowners might as well not vote at all!
"The Company lost millions through "Separation Contracts' with two former
highly compensated employees. It is a correct and necessary procedure to
recover moneys lost through Management and/or Director's actions.
"Management receiving as much as the President of the USA are compensated
enough to run one company, in comparison to that of running Our Country, and
looking after Foreign Affairs as well.
21
<PAGE>
"Management is already well paid with base pay, life insurance, retirement
plans, paid vacations, free use of vehicles and other perks.
"Options, rights, SAR's, are available elsewhere, and a higher offer would
induce transfers, not necessarily "attain and hold' qualified persons.
"Who writes the objections to my proposal? Is it not the same persons who
nominate and pay the directors who in turn will provide Management these
exorbitant extras above a good base salary? Shareowners should start reading
and realizing that these persons are not providing them entertainment on an
individual choice basis, as do athletes, movie stars, and similar able
performers.
" "Align management with shareowners' is a repeated ploy or "line' to lull
us as to continually increasing their take of our assets. Do we get any
options to purchase at previous [presumed] lower rates, expecting prices to
increase?
"If they filled out a daily work or production sheet, what would it show?
"Please vote "YES' for this proposal."
The Board of Directors of the Company recommends a vote "AGAINST" this
proposal for the following reasons.
The approach of the Board of Directors to the issue of executive
compensation is described in detail in the Report of the Compensation
Committee and Executive Performance Subcommittee included in this proxy
statement. As indicated in that Report, the Board believes that a balanced
approach to executive compensation, involving a combination of base salaries,
discretionary bonuses and periodic grants of stock options, best serves the
interests of the Company's shareholders by promoting efforts to advance both
the short-term and long-term interests of the Company. Under this approach,
the compensation of the Company's employees in general, and its senior
management in particular, is closely tied to both the Company's overall
performance and the performance of the business unit in which the employee
operates.
In implementing this policy, the Board of Directors, and the Company's
senior management under the Board's direction, must also seek to ensure that
the Company's compensation policies are adequate to enable the Company to
retain and motivate employees whose services are critical to the Company's
success in a highly competitive and constantly changing business environment.
In the Board's judgment, the restrictions proposed in this resolution,
including salary reductions and discontinuance of performance-related forms of
compensation such as bonuses and stock options, could significantly harm the
Company's ability to meet these objective.
Under these circumstances, the Board believes that this proposal would do a
disservice to the interests of the Company and its shareholders. 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.
Proposal 2--Election of Directors
Mr. Peter H. Arkison has submitted the following proposal:
"RESOLVED that the Board of Directors should submit the names of at
least two qualified individuals to the shareholders for each position
on the board of directors to be voted upon by the shareholders. Each
nominee should be submitted in such a manner as to make it impossible
for the shareholders to know which is the one preferred by the Board,
except that a simple statement may be included indicating that person's
time of service on the board. Proxies submitted on behalf of management
should be prepared in such a way that each candidate will receive
approximately the same number of votes if the shareholders do not make
a choice in favor of particular candidates.
22
<PAGE>
"STATEMENT IN SUPPORT OF RESOLUTION
"It is the legal right and duty of the shareholders to elect the Board of
Directors. At the present time, the Board of Directors nominates one candidate
for each position to be filled on the Board. Under the proxy system, the
shareholders do not have a meaningful way of saying that they do not like a
particular candidate.
"It is possible for a shareholder to withhold authority for voting for a
particular director; however, since there is not a meaningful alternative
choice presented, the chosen candidate wins.
"The shareholders have the right to make a choice of whom they want to run
their company; this Resolution takes a step towards allowing them to exercise
that right. With the vast number of shareholders, only those whose names
appear on the proxy ballot submitted with the Notice of the Annual Meeting
have a chance at being elected to the board. This Resolution attempts to
address this problem by seeking to have the Board submit two equally qualified
candidates for each position.
"Discretion is left with the Board to determine how information about the
candidates is presented; the only requirement is that they be presented in a
similar manner.
"The proxy ballots are to be designed and distributed in a manner that would
result in all candidates receiving approximately the same number of votes.
That means that those shareholders who actually take the time and effort to
vote for specific candidates will be the ones who choose the new members of
the Board. Every vote then becomes very important.
"The Resolution seeks to change the way that the company is governed. It
seeks return of the control of the corporation to the shareholders. It seeks
to terminate the Board of Directors becoming a self perpetuating body by
giving shareholders the opportunity to remove the present directors by voting
for the alternative choices. The Board then would become more accountable to
the shareholders for its actions.
"A YES vote is needed for effective shareholder governance."
The Board of Directors of the Company recommends a vote "AGAINST" this
proposal for the following reasons.
This proposal calls upon the Company to adopt a procedure that would involve
contested elections for each position on the Board of Directors, with the
incumbent Board prohibited from providing any meaningful guidance to
shareholders in choosing between the contestants. As far as the Board is
aware, no other publicly held company has adopted a procedure of this kind.
In the Board's judgment, the adoption of this approach would seriously
impede the Board's ability to exercise its fiduciary responsibilities to all
of the Company's shareholders, by restricting its ability to identify and
support candidates for election to the Board. The Board currently has a
Nominating Committee, charged with responsibility for soliciting
recommendations for Board candidates; developing and reviewing background
information; and making recommendations to the Board. The Nominating Committee
also has responsibility for reviewing and making recommendations to the Board
with respect to candidates proposed by shareholders. The Board believes this
procedure best serves the interests of the Company's shareholders.
Moreover, as a practical matter, it is difficult to understand how any board
of directors would be able to identify qualified candidates of the highest
caliber who would be willing to take on the burden of an annual election
contest, without the recommendation and backing of the incumbent Board. The
proposal does not suggest how these contests would be conducted, financed or
regulated, but any such contests would likely entail substantial additional
costs that would have to be borne by the Company, and thus indirectly by the
shareholders.
23
<PAGE>
In addition, requiring that each position on the Board of Directors be
contested would create risks of promoting instability, potentially depriving
the Company of the benefits of accumulated experience and knowledge of the
Company and its businesses, and could adversely affect the Board's ability to
maintain and develop diversity in its composition. In the Board's judgment,
these risks make this proposal inadvisable and contrary to the interests of
the Company's shareholders.
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. If any other matter is properly brought before the
meeting for action by shareholders, 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 holder.
ADDITIONAL INFORMATION
Advance Notice Procedures. Under the Company's bylaws, no business may be
brought before an annual meeting unless it is specified in the notice of the
meeting (which includes shareholder proposals that the Company is required to
include in its proxy statement pursuant to Rule 14a-8 under the Securities
Exchange Act of 1934) or is otherwise brought before the meeting by or at the
direction of the Board or by a shareholder entitled to vote who has delivered
notice to the Company (containing certain information specified in the bylaws)
not less than 90 or more than 120 days prior to the first anniversary of the
preceding year's annual meeting. These requirements are separate from and in
addition to the SEC's requirements that a shareholder must meet in order to
have a shareholder proposal included in the Company's proxy statement.
Shareholder Proposals for the 2001 Annual Meeting. Shareholders interested
in submitting a proposal for inclusion in the proxy materials for the
Company's annual meeting of shareholders in 2001 may do so by following the
procedures prescribed in SEC Rule l4a-8. To be eligible for inclusion,
shareholder proposals must be received by the Company's Corporate Secretary no
later than September 8, 2000.
Proxy Solicitation Costs. The proxies being solicited hereby are being
solicited by the Company. 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. 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, facsimile or electronic means. 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
Vice President and Secretary
January 5, 2000
24
<PAGE>
[DISNEY LOGO APPEARS HERE]
Printed on recycled paper.
<PAGE>
- --------------------------------------------------------------------------------
IF YOU WISH TO VOTE BY TELEPHONE OR INTERNET
PLEASE READ THE INSTRUCTIONS BELOW
- --------------------------------------------------------------------------------
The Walt Disney Company encourages you to take advantage of new and convenient
ways to vote your shares for matters to be covered at the 2000 Annual Meeting of
Stockholders. Please take the opportunity to use one of the three voting
methods outlined below to cast your ballot. We've made it easier than ever.
<TABLE>
<CAPTION>
VOTE BY PHONE - 1-800-690-6903
<S> <C>
Use any touch-tone telephone to vote your proxy 24
John Doe hours a day, 7 days a week. Have your proxy card in
xxxxxxxxxxxxxxxxx hand when you call. You will be prompted to enter
xxxxxxxxxxxxxxxxx your 12-digit Control Number which is located below
and then follow the simple instructions the Vote
Voice provides you.
VOTE BY INTERNET - WWW.PROXYVOTE.COM
Use the Internet to vote your proxy 24 hours a day, 7
days a week. Have your proxy card in hand when you
access the web site. You will be prompted to enter
your 12-digit Control Number which is located below
to obtain your records and create an electronic
ballot.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in
the postage-paid envelope we've provided or return it
to The Walt Disney Company, c/o ADP, 51 Mercedes Way,
Edgewood, NY 11717.
</TABLE>
If you vote by phone or vote using the Internet, please do not mail your proxy.
THANK YOU FOR VOTING
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
The Board recommends a vote FOR items 1 and 2 and AGAINST items 3 and 4
- ------------------------------------------------------------------------------------------------------------------------------------
THE WALT DISNEY COMPANY
Please mark your votes as
indicated in this example [x]
For multiple accounts only!! - Mark this box to discontinue annual report
mailing for this account [_]
<S> <C> <C> <C> <C>
(1) ELECTION OF DIRECTORS:
(01) Reveta F. Bowers, (02) Roy E. Disney, (03) Ignacio E. Lozano, Jr., (04) George J. Mitchell, (05) Gary L.
Wilson, (06) Judith L. Estrin, (07) Sanford M. Litvack, (08) Sidney Poitier, (09) Robert A.M. Stern, (10) Andrea
Van de Kamp
FOR ALL WITHHOLD ALL FOR ALL EXCEPT: To withhold authority to vote, mark "For All
Except" and write the nominee's number on the
[_] [_] [_] line below.
______________________________________________
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
(2) To ratify the appointment [_] [_] [_] (3) To approve the stockholder proposal with [_] [_] [_]
of PricewaterhouseCoopers respect to management compensation
as the Company's independent
accountants for 2000.
(4) To approve the stockholder proposal with [_] [_] [_]
respect to election of directors
- -----------------------------------------------------------------------------------------------------------------------------------
7777777777 888,888,888 PLEASE MARK ALL 1234567890 422786049257
CHOICES LIKE THIS [X]
SIGNATURE DATE JOHN DOE
--------------------------------------------- -------------- XXXXXXXXXXXXXXX
SIGNATURE DATE XXXXXXXXXXXXXXX
--------------------------------------------- --------------
(Joint Owners)
</TABLE>
