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MAVIS SCANLON
Michael Eisner, who earned the dubious distinction of dead-last place in Business Week's April survey of executive pay and company performance, landed a 33% bump in his base salary, to $1 million a year, and earned the ire of shareholders.
On top of that there was the $11.5 million bonus, $3 million of which is deferred - with interest - until 2004. By rejiggering his employment contract in June 2000, Disney accelerated the vesting schedule for millions of options he was granted in 1996.
The fat options package Disney awarded Eisner in 1996 is the subject of a shareholder proposal to be voted on at Disney's March 6 annual meeting. The proposal, described in Disney's recently released proxy, would limit the options received by any executive officer to no more than 5% of the total options awarded in a single year and would limit the total options awarded to executive officers to no more than 10% of the total options granted in a single year.
In January 2000, Eisner was granted options to acquire 2 million shares of Disney Internet Group, or 7.24% of the total number of options granted to employees in the fiscal year. He received no Disney options last year, but his split-adjusted grant of 24 million options in 1996 amounted to a whopping 26.2% of the options granted by Disney that year.
The shareholder who submitted the proposal, Michele McGoey, says in the proxy that holders of Disney's stock have suffered "mediocre returns" over the past four years. Eisner's options have risen dramatically.
Disney shares rose during the period, but not as much as the S&P 500 or other media companies. The company says the changes in the vesting of Eisner's options were due to of tax considerations.
Another fun fact from Disney's proxy: the company paid more than $766,000 in its 2000 fiscal year to the powerful Washington lobbying firm Verner, Liipfert, Bernhard, McPherson & Hand - the firm that passed along confidential AOL Time Warner data it was reviewing to a prominent Disney lobbyist, who in turn passed it on to Disney executives who had not signed confidentiality agreements.
OPS BORROW Get it while the getting is good. Adelphia Communications and Mediacom Communications both substantially increased securities offerings last week. Adelphia raised $1.5B in a stock and bond offering in a deal that was increased 71% from its original $885M. Adelphia sold 17M shares of Class A common shares for $44.75 each, as well as about $750M of five-year convertible subordinated debt. The family of chairman John Rigas will buy about $167M of the notes and about 5.8M shares of Class B common stock at $43.10 each. Proceeds will be used to pay down debt and for general corporate purposes. Mediacom said Thursday it entered an agreement to sell $500M of 9.5% senior notes due Jan. 15, 2013, up from $300M. Proceeds will go to repaying bank debt.
RATINGS CHANGES Fitch increased its rating on the senior unsecured debt of Time Warner following the close of its acquisition by AOL. All the combined company's outstanding and future debt will be cross-guaranteed, Fitch said. Classic Communications, on the other hand, got a warning and a debt rating reduction from S&P, based on the possibility it may be in violation of certain bank covenants by this quarter's end.
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