At the first annual Fast Company Impact Council meeting on April 18, 2019, Abigail Disney drew headlines when she said that Disney CEO Bob Iger’s 2018 pay raise was “insane.” Ms. Disney is the daughter of Roy E. Disney and granddaughter of Disney cofounder Roy O. Disney. She said her opinion was formed by her discussions with Disneyland cast members in Anaheim, California, who said they were struggling to pay their bills on what they make now.
The Walt Disney Company responded by saying that it pays its employees a starting hourly rate that is double the federal minimum wage. They also provide a free of charge opportunity for employees to earn a college or vocational degree on the company’s dime. Clearly, the company believes it does provide good compensation benefits for its employees. But let’s examine the Iger compensation issue in more detail.
While researching our book Entrepreneurship the Disney Way with my co-author Rob Mathews, we came across many cast members at Disney parks and resorts who have had thirty-plus year careers as restaurant servers, maintenance workers and custodial staff in the parks. Surely these people could have found other jobs elsewhere if they were that unhappy working for the Mouse, especially with the labor shortage that is currently happening in this country.
Many of the executives we spoke to started out at the hourly wage level and worked their way up into the same jobs that Ms. Disney discusses. Over the ten years we spent writing the book, everyone we spoke to who had interactions with Iger had nothing but positive things to say. Our takes was that he asks questions, listens and makes informed decisions before completing a deal, and they are very happy he is running the company.
Perhaps some of the negative feelings about Iger are because of how easy he makes his job look to those on the outside. He is usually calm, poised, and under control. Sometimes it looks like his good fortune has just fallen into his lap. But as if so often the case, a person has to work really hard to make things look easy — which means that Iger must work very hard. My guess is that meticulous preparation and tireless relationship building went into the deals he has made that propel Disney to new heights. And as one executive told me, the higher you go in the company the jobs get exponentially harder.
Steve Jobs, George Lucas, and Rupert Murdoch all made deals with Iger because they trusted and, yes, liked him. Keep in mind that these deals were made as they company was implementing some 14 years of bold capital investment projects — under Iger. Because the deals and projects were successful, the company’s stock price has risen from roughly $25 per share when he began as CEO to today’s $133 per share with a market cap of $239 billion, no doubt contributing to Abigail Disney’s reported $500 million net worth. Had Iger not extended Eisner’s legacy into another Disney Golden Age, it is doubtful he would still be CEO of the company. Just keeping the trains running on time is not enough to secure a long executive career at Disney.
Evidence of Iger’s contributions can also be seen in the struggle Disney has had in finding a worthy successor: He is indeed a tough act to follow. We, the Disney fans, have voted for Iger’s compensation with our movie and park ticket purchases, and the Disney stockholders have noticed. Iger is at an age where he could retire and enjoy the rest of his life on personal pursuits. So the board helps Iger make the decision to stay partly by the compensation packages they put in place. And keep in mind that historically, the Disney stockholders have removed executives who no longer create significant value for the company. In fact, the last two corporate transitions were led by Ms. Disney’s father, Roy.
There are five key ways to amass a fortune in a capital system: inherit it, win it gambling, gain it though a con or illegal activity, be world class in a high profile profession, or create value that the market rewards for starting or running a company well. Ironically, the three people on the stage at the summit— Howard W. Buffett, Lady Lynn Forester de Rothschild and Abigail Disney — are descendants of or married into family fortunes. Ms. Disney is entitled to her fortune as much as Iger is his. The difference is that hers comesfrom value creators, and his is because he is a value creator. That Iger started his career in show business as a weatherman and then worked his way up to being a well-compensated Chief Executive Officer should be applauded, not criticized. Why limit the next generation from diligently pursuing their own lofty goals one day?