I am pleased to invite you to our 2007 Annual Meeting of shareholders, which will be held on
Thursday, March 8, 2007, at 10 a.m. at the Ernest N. Morial Convention Center in New Orleans,
Louisiana. We hope you will join us in supporting the revitalization of New Orleans following the
devastating effects of Hurricane Katrina.
At the meeting, we will be electing all 11 members of our Board of Directors, as well as
considering ratification of the selection of PricewaterhouseCoopers LLP as our independent
registered public accountants, an amendment to our stock incentive plan, approval of terms of our
executive performance plan and up to two proposals from shareholders.
As you know, Senator George Mitchell recently retired as Chairman of the Board of Directors, and
we welcome John Pepper as our new Chairman. Father Leo ODonovan will also be retiring at the
end of this meeting. I want to thank Senator Mitchell and Father ODonovan for their years of
leadership and insightful service on our Board.
You may vote your shares using the Internet or the telephone by following the instructions on the
enclosed proxy card or voting instruction form. Of course, you may also vote by returning the
enclosed proxy card or voting instruction form.
We see the annual meeting as an important opportunity to communicate with our shareholders
and we look forward to seeing you there should you be able to attend. A map and other
instructions are included in the enclosed materials. If you cannot attend, you can still listen to the
meeting, which will be webcast and available on our Investor Relations website.
Thank you very much for your continued interest in The Walt Disney Company.
Sincerely,
Robert A. Iger
President and Chief Executive Officer
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
500 South Buena Vista Street
Burbank, California 91521
January 12, 2007
Notice of Meeting
The 2007 Annual Meeting of shareholders of The Walt Disney Company will be held at the
Ernest N. Morial Convention Center, 900 Convention Center Boulevard, New Orleans,
Louisiana, on Thursday, March 8, 2007, beginning at 10:00 a.m. The items of business are:
Shareholders of record of Disney common stock (NYSE: DIS) at the close of business on
January 8, 2007, are entitled to vote at the meeting and any postponements or adjournments
of the meeting. A list of these shareholders is available at the offices of the Company in
Burbank, California.
Alan N. Braverman
Senior Executive Vice President, General Counsel
and Secretary
If you plan to attend the meeting, 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
drivers 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 (including cellular phones with photographic capabilities),
recording devices and other electronic devices will not be permitted at the meeting.
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
Table of Contents
1
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
Presiding over all meetings of the Board The Companys Corporate Governance
of Directors and shareholders, including Guidelines specify that the Chairman of
regular executive sessions of the Board the Board will be an independent Director
in which management Directors and unless the Board determines that the best
other members of management do not interests of the shareholders would be
participate; otherwise better served, in which case the
Establishing the annual agenda of the Board will disclose in the Companys
Board and agendas of each meeting in proxy statement the reasons for a different
consultation with the Chief Executive arrangement and appoint an independent
Officer; director as Lead Director with duties and
Advising Committee chairs, in con- responsibilities detailed in the Corporate
sultation with the Chief Executive Offi- Governance Guidelines.
cer, on meeting schedules, agenda and
information needs for the Board commit- Committees
tees;
Defining the subject matter, quality, The Board of Directors has four standing
quantity and timeliness of the flow of committees: Audit, Governance and
information between management and Nominating, Compensation and Executive.
the Board and overseeing the dis- Information regarding these committees is
tribution of that information; provided below. The charters of the Audit,
Coordinating periodic review of manage- Governance and Nominating and
ments strategic plan for the Company; Compensation Committees are available
Leading the Board review of the succes- on the Companys Investor Relations
sion plan for the Chief Executive Officer website under the Corporate Gover-
and other key members of senior man- nance heading at www.disney.com/
agement; investors and in print to any shareholder
Coordinating the annual performance who requests them from the Companys
review of the Chief Executive Officer and Secretary.
other key senior managers;
Consulting with Committee Chairs about The members of the Audit Committee are:
the retention of advisors and experts;
Acting as the principal liaison between Robert W. Matschullat (Chair)
the independent directors and the Chief Monica C. Lozano
Executive Officer on sensitive issues; John E. Pepper, Jr.
Working with the Governance and Nomi- Orin C. Smith
nating Committee to develop and main-
tain the agreed-on definitions of the role The functions of the Audit Committee are
of the Board and the organization, proc- described below under the heading Audit
esses and governance guidelines Committee Report. The Audit Committee
necessary to carry it out; met ten times during fiscal 2006. All of the
After consulting with other Board members of the Audit Committee are
members and the Chief Executive Offi- independent within the meaning of SEC
cer, making recommendations to the regulations, the listing standards of the
Governance and Nominating Committee New York Stock Exchange and the
as to the membership of various Board Companys Corporate Governance Guide-
Committees and Committee Chairs; lines. The Board has determined that
2
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
Mr. Matschullat, the chair of the Commit- Executive Officer, evaluating the perform-
tee, and Messrs. Pepper and Smith are ance of the Chief Executive Officer and,
qualified as audit committee financial either as a committee or together with the
experts within the meaning of SEC regu- other independent members of the Board,
lations, and that they have accounting and determining and approving the compensa-
related financial management expertise tion level for the Chief Executive Officer,
within the meaning of the listing standards and making recommendations regarding
of the New York Stock Exchange. compensation of other executive officers
and certain compensation plans to the
The members of the Governance and Board (the Board has delegated to the
Nominating Committee are: Committee the responsibility for approving
these arrangements). Additional
Monica C. Lozano (Chair) information on the roles and
Judith L. Estrin responsibilities of the Compensation
Aylwin B. Lewis Committee is provided under the heading
John E. Pepper, Jr. Compensation Committee Report,
below. In fiscal 2006, the Compensation
The Governance and Nominating Commit- Committee met ten times. All of the
tee is responsible for developing and members of the Committee are
implementing policies and practices relat- independent within the meaning of the list-
ing to corporate governance, including ing standards of the New York Stock
reviewing and monitoring implementation Exchange and the Companys Corporate
of the Companys Corporate Governance Governance Guidelines.
Guidelines. In addition, the Committee
assists the Board in developing criteria for The members of the Executive Committee
open Board positions, reviews back- are:
ground information on potential candi-
dates and makes recommendations to the Robert A. Iger
Board regarding such candidates. The John E. Pepper, Jr. (Chair)
Committee also prepares and supervises
the Boards annual review of Director
independence and the Boards annual The Executive Committee serves primarily
self-evaluation, makes recommendations as a means for taking action requiring
to the Board with respect to Committee Board approval between regularly sched-
assignments and oversees the Boards uled meetings of the Board. The Executive
director education practices. The Commit- Committee is authorized to act for the full
tee met six times during fiscal 2006. All of Board on matters other than those
the members of the Governance and specifically reserved by Delaware law to
Nominating Committee are independent the Board. In practice, the Committees
within the meaning of the listing standards actions are generally limited to matters
of the New York Stock Exchange and the such as the authorization of transactions
Companys Corporate Governance Guide- including corporate credit facilities and
lines. borrowings. In fiscal 2006, the Executive
Committee held no meetings but took
action by unanimous written consent on
The members of the Compensation
one occasion.
Committee are:
3
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
Pursuant to the Guidelines, the Board In determining that each of the other Direc-
undertook its annual review of Director tors is or was independent, the Board
independence in November 2006. During considered the following relationships,
this review, the Board considered trans- which it determined were immaterial to the
actions and relationships between each Directors independence. The Board con-
Director or any member of his or her sidered that the Company and its sub-
immediate family and the Company and its sidiaries in the ordinary course of business
subsidiaries and affiliates, including those have during the last three years sold
reported under Certain Relationships and products and services to, and/or pur-
Related Party Transactions below. The chased products and services from,
Board also considered whether there were companies at which some of our Directors
any transactions or relationships between were officers during fiscal 2006. In each
Directors or any member of their immedi- case, the amount paid to or received from
ate family (or any entity of which a Director these companies in each of the last three
or an immediate family member is an years did not approach the 2% of total
executive officer, general partner or sig- revenue threshold in the Guidelines, falling
nificant equity holder) and members of the well below 1% in each case. The Board
Companys senior management or their also considered that some Directors were
affiliates. As provided in the Guidelines, directors (but not officers) of companies or
the purpose of this review was to institutions to which Disney sold products
determine whether any such relationships and services or made contributions or
or transactions existed that were incon- from which Disney purchased products
sistent with a determination that the Direc- and services during the fiscal year. The
tor is independent. Board determined that none of the
relationships it considered impaired the
As a result of this review, the Board affirma-
independence of the Directors.
tively determined that all of the Directors
nominated for election at the annual meet-
ing are independent of the Company and Director Selection Process
its management under the standards set
forth in the Corporate Governance Guide- Working closely with the full Board, the
lines, with the exception of Robert Iger, Governance and Nominating Committee
John Bryson and Steven Jobs. Mr. Iger is develops criteria for open Board positions,
considered an inside Director because of taking into account such factors as it
his employment as a senior executive of deems appropriate, including, among
the Company. Mr. Bryson is considered a others: the current composition of the
non-independent outside Director as a Board; the range of talents, experiences
result of the dollar amount of business and skills that would best complement
transactions during fiscal 2006 between the those already represented on the Board;
Company and its subsidiaries and Lifetime the balance of management and
Entertainment Television, a company that independent Directors, and the need for
employs Mr. Brysons wife in an executive financial or other specialized expertise.
capacity. During fiscal 2006, Lifetime Applying these criteria, the Committee
acquired programming and purchased considers candidates for Board member-
advertising time from, and sold advertising ship suggested by its members and other
time to, Company subsidiaries in an Board members, as well as management
aggregate amount that exceeded 2% of and shareholders. The Committee retains
Lifetimes total revenues for that year. a third-party executive search firm to iden-
Additional information regarding tify and review candidates upon request of
compensation provided to Mr. Brysons the Committee from time to time.
wife appears under Certain Relationships
and Related Party Transactions below. Once the Committee has identified a
Mr. Jobs is considered a non-independent prospective nomineeincluding pro-
outside director because during fiscal 2006 spective nominees recommended by
the Company acquired Pixar, of which shareholdersit makes an initial determi-
Mr. Jobs was chairman and chief executive nation as to whether to conduct a full
officer and the beneficial owner of 50.6% of evaluation. In making this determination,
the issued and outstanding equity. the Committee takes into account the
4
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
If the Committee decides, on the basis of All payments and grants other than the
its preliminary review, to proceed with stock option grants (which are made on
5
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
6
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
Companys insurers for a majority of such On May 5, 2006, the Company completed
advances and has submitted or will submit the acquisition of Pixar, of which Mr. Jobs
to the insurers demands for reimburse- was Chairman, Chief Executive Officer and
ment for the remaining amounts that have a holder of 50.6% of the outstanding
been advanced. Additional amounts (not shares, in exchange for the issuance of
included above) were paid directly by the approximately 279 million shares of
Companys insurers. Company common stock and the con-
version of previously issued equity awards
Certain Relationships and Related into approximately 45 million Disney equity
Person Transactions awards. As a shareholder of Pixar,
Mr. Jobs received 138,000,004 shares of
Director John Brysons wife, Louise Bry- Company common stock, which was his
son, serves as PresidentDistribution and pro rata portion of the shares issued in the
Affiliate Business Development for Life- transaction.
time Entertainment Television, a cable
television programming service in which Prior to the acquisition of Pixar, the
the Company has an indirect 50% equity Company and Pixar were parties to a
interest. Ms. Bryson received an Co-Production Agreement entered into on
aggregate salary (including car allowance February 24, 1997. Under the Co-
and payments of deferred compensation) Production Agreement, the Company and
of $585,243 for her services with Lifetime Pixar agreed to co-finance the production
during fiscal 2006 and received a bonus of costs of the animated films covered by the
$647,328 in fiscal 2006 with respect to her Co-Production Agreement, co-own the
services in fiscal 2005. She is also eligible films (with the Company having exclusive
for an annual bonus for fiscal 2006, distribution and exploitation rights),
although as of December 31, 2006, no co-brand the films and share equally in the
bonus determination for 2006 had been profits of the films and any related mer-
made by Lifetime with respect to chandise and other ancillary products,
Ms. Bryson. By agreement among the after recovery of all marketing and dis-
Company, Lifetime and Lifetimes other tribution costs (which were financed by
equity owner, The Hearst Corporation, the Company), a distribution fee paid to
neither the Company nor any of its the Company and any other fees or costs,
employees or affiliates participates in any including any third-party participations.
decision making at Lifetime with respect The Co-Production Agreement generally
to Ms. Brysons performance or provided that Pixar was responsible for
compensation. In addition, as noted the production of such films and that the
above, Lifetime acquired programming Company was responsible for the market-
and purchased advertising time from, and ing, promotion, publicity, advertising and
sold advertising time to, Company sub- distribution of such films. The
sidiaries, but the Company believes that Co-Production Agreement was due to
neither Mr. Bryson nor Ms. Bryson had a terminate in 2006 but the Company and
material direct or indirect interest in those Pixar entered into a Distribution Letter
transactions. Agreement on January 27, 2006 to extend
the Co-Production Agreement to cover an
Company President and Chief Executive additional film. The Co-Production
Officer and Director Robert Igers Agreement and the Distribution Agreement
father-in-law, Eugene Bay, is a principal of have now been superseded as a result of
Eugene Bay Associates, Inc., a marketing the Companys acquisition of Pixar. Ancil-
company that has been retained by the lary to the Co-Production Agreement, the
Companys subsidiary ESPN, Inc. since Company also made payments to Pixar for
1990 (prior to Mr. Igers marriage to licensing Pixars intellectual property and
Mr. Bays daughter) to provide sports for creative assistance in connection with
marketing services. Mr. Bays company consumer product designs. As disclosed
received a total of $110,908 for services in Pixars annual report on Form 10-K for
provided during fiscal 2006. the fiscal year ended December 31, 2005,
for Pixars fiscal years 2003, 2004, and
7
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
2005, the Company accounted for approx- inclusion in the proxy statement for our
imately 94%, 90%, and 93% respectively 2008 annual meeting, shareholder pro-
of Pixars total revenue of approximately posals must be received by the Companys
$262.5 million, $273.5 million and $289.1 Secretary no later than the close of busi-
million, respectively. ness on September 14, 2007. Proposals
should be sent to the Secretary, The Walt
Shareholder Communications Disney Company, 500 South Buena Vista
Street, Burbank, California 91521-1030 and
Generally. Shareholders may communi- follow the procedures required by SEC Rule
cate with the Company through its Share- 14a-8.
holder Services Department by writing to
500 South Buena Vista Street, MC 9722, Shareholder Director Nominations and
Burbank, California 91521, by calling Other Shareholder Proposals for Pre-
Shareholder Services at (818) 553-7200, or sentation at the 2008 Annual Meet-
by sending an e-mail to investor.relations@ ing. Under our bylaws, written notice of
disneyonline.com. Additional information shareholder nominations to the Board of
about contacting the Company is available Directors and any other business proposed
on the Companys investor relations web- by a shareholder that is not to be included
site (www.disney.com/investors) under My in the Proxy Statement must be delivered to
Shareholder Account. the Companys Secretary not less than 90
nor more than 120 days prior to the first
Shareholders and other parties interested in anniversary of the preceding years annual
communicating directly with the Chairman meeting. Accordingly, any shareholder who
of the Board or with the non- wishes to have a nomination or other busi-
management Directors as a group may do ness considered at the 2008 Annual Meet-
so by writing to the Chairman of the Board, ing must deliver a written notice (containing
The Walt Disney Company, 500 South the information specified in our bylaws
Buena Vista Street, Burbank, California regarding the shareholder and the pro-
91521-1030. Under a process approved by posed action) to the Companys Secretary
the Governance and Nominating Committee between November 9, 2007 and
of the Board for handling letters received by December 9, 2007. SEC rules permit man-
the Company and addressed to agement to vote proxies in its discretion
non-management members of the Board, with respect to such matters if we advise
the office of the Secretary of the Company shareholders how management intends
reviews all such correspondence and for- to vote.
wards to the Board a summary and/or cop-
ies of any such correspondence that, in the
opinion of the Secretary, deals with the
functions of the Board or Committees
thereof or that he otherwise determines
requires their attention. Directors may at
any time review a log of all correspondence
received by the Company that is addressed
to members of the Board and request cop-
ies of any such correspondence. Concerns
relating to accounting, internal controls or
auditing matters are immediately brought to
the attention of the Companys internal
audit department and handled in accord-
ance with procedures established by the
Audit Committee with respect to such mat-
ters.
8
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
9
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
10
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
Mr. Mayer and Ms. McCarthy are against the predetermined Company
employed pursuant to agreements performance goals and individual
described under Employment Agree- performance measures to determine
ments below. the appropriate adjustment to the
target bonus, as well as other
Mr. Igers salary was not changed during performance considerations related
the fiscal year, though Mr. Igers salary to unforeseen events during the year
was adjusted upon adoption of his (5) Make adjustments to the resulting
employment agreement in fiscal 2006 to preliminary bonus calculation to
provide that the full amount of the salary reflect the Companys performance
would be paid on a current basis instead relative to the performance of the
of deferring a portion of his salary as had S&P 500 index
been the case under his prior employment
agreement. These five steps are described below:
Mr. Staggs salary was increased to
$1,050,000 effective January 1, 2006 (1) Setting Company performance
according to the schedule set out in his goals. Early in each fiscal year, the
employment agreement as described Compensation Committee, working with
senior management and the Committees
below. Mr. Bravermans salary was
compensation consultant, sets perform-
increased to $850,000 effective October 1,
ance goals for the Company (which are in
2005. Mr. Mayers salary was increased to
addition to a performance target set in
$550,000 effective April 1, 2006.
compliance with Section 162(m) of the
Ms. McCarthys salary was increased to
Internal Revenue Code as described
$510,000 effective April 1, 2006. The
below under Compliance with Sec-
increases for Mr. Braverman, Mr. Mayer
tion 162(m)). Seventy percent of the pre-
and Ms. McCarthy were based on the
liminary bonus determination for each
factors described above.
named executive officer is based upon
Annual Bonus Incentives for Named performance against these goals. The
Executive Officers goals established for fiscal 2006 are dis-
cussed below under Decisions.
Purpose. The compensation program
provides for an annual bonus that is per- In determining the extent to which the
formance linked. The objective of the pre-set performance goals are met for a
program is to compensate individuals given period, the Committee exercises its
based on the achievement of specific judgment whether to reflect or exclude the
goals that are intended to correlate closely impact of changes in accounting princi-
with growth of long-term shareholder ples and extraordinary, unusual or
value. infrequently occurring events reported in
the Companys public filings. To the extent
Considerations. The annual bonus appropriate, the Committee will also con-
process for named executive officers sider the nature and impact of such events
involves five basic steps pursuant to the in the context of the remaining 30% of the
Companys Management Incentive Bonus bonus determination.
Program:
(2) Setting individual performance
At the outset of the fiscal year: measures. As it sets Company-wide
(1) Set overall Company performance performance goals, the Committee also
goals for the year sets individual performance measures for
(2) Set individual performance measures each named executive officer. These
for the year measures allow the Committee to play a
(3) Set a target bonus for each individual more proactive role in identifying perform-
ance objectives beyond purely financial
After the end of the fiscal year: measures, including, for example, excep-
tional performance of each individuals
(4) Measure actual performance functional responsibilities as well as
(individual and Company-wide) leadership, creativity and innovation, col-
11
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
12
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
fiscal year under the 2002 Executive Per- the current performance of Company
formance Plan must also be met. For fiscal executives or that, in the Committees
year 2006 the performance criterion was judgment, otherwise had a distorting pos-
adjusted net income, as defined in the itive or negative impact relative to the
Companys 2002 Executive Performance performance of Company executives.
Plan. Under that definition, adjusted net
income means net income adjusted, to After the end of the fiscal year, the Com-
the extent the Compensation Committee mittee determined that the performance
determines appropriate, to exclude the target for Section 162(m) compliance set
following items or variances: change in for the fiscal year under the 2002 Execu-
accounting principles; acquisitions; dis- tive Performance Plan had been met. The
positions of a business; asset impair- Committee also determined that fiscal
ments; restructuring charges; 2006 Company financial performance was
extraordinary, unusual or infrequent items; above the goals set forth at the beginning
and litigation costs and insurance recov- of the year for each financial measure. The
eries. In the event that the Section 162(m) Committee then adjusted 70% of the tar-
performance target for any fiscal year is get bonus upward based on this perform-
not met, no bonuses will be paid to any ance and adjusted the remaining 30% of
Section 162(m) executives under the 2002 the target bonus based on its evaluation of
Executive Performance Plan or the Man- achievement of individual performance
agement Incentive Bonus Program, even if goals. In making the adjustment based on
the performance goals under the program individual performance goals with respect
have been achieved. However, as noted to Mr. Iger, the Committee considered a
below under Policy with respect to the $1 variety of accomplishments by him during
million deduction limit, the Compensation the year, including the broad-based
Committee will retain the right to award operational improvements made during
bonuses outside of these plans in appro- the year including organizational changes
priate circumstances, including bonuses to position the Company for future per-
that may not be deductible in part or in formance, the successful acquisition and
full. integration of Pixar, the significant moves
made by the Company to leverage
Fiscal Year 2006 Decisions. At the technology in the creation and distribution
beginning of fiscal 2006, the Committee of its products, the significant creative
established performance goals for fiscal success of the Companys content during
2006 bonuses based upon the following the year, as well as the positive steps
four corporate financial measures: taken to further develop the culture of
quality, creativity and innovation at the
operating income; Company. Finally, the Committee
after-tax free cash flow (after-tax cash determined that the Company out-
flow from operations less investments in performed the S&P 500 companies with
theme parks, resorts and other respect to earnings per share change over
properties); the period by the maximum amount and
economic profit (net operating profit adjusted bonus awards upwards by 20%
after tax, minus a charge for capital in accordance with the terms of the pro-
employed in the business, based on the gram.
cost of capital); and
As a result of these determinations, the
earnings per share.
Committee awarded the bonus amounts
set forth in the Summary Compensation
For fiscal year 2006, the Committee gave Table.
equal weight to each of these measures.
Long-term Incentive Compensation
In setting these measures and determining
the extent to which they were satisfied, Purpose. The long-term incentive pro-
the Committee excluded the impact of gram provides a periodic award (typically
items (such as impairment of or gain or annual) that is performance based. The
loss on sales of assets acquired in earlier objective of the program is to align com-
periods) that it believed were not driven by pensation for named executive officers
13
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
over a multi-year period directly with the for vesting on each such anniversary date
interests of shareholders of the Company is also subject to a performance-based
by motivating and rewarding creation and vesting requirement; namely, that the
preservation of long-term shareholder Companys total shareholder return (as
value. The level of long-term incentive described below) as of each of the vesting
compensation is determined based on an dates must exceed the weighted average
evaluation of competitive factors in con- total shareholder return of corporations
junction with total compensation provided in the Standard & Poors 500 Index over
to named executive officers and the goals either the prior year or the prior three
of the compensation program described years. If the Section 162(m) based
above. performance test is met, but the total
shareholder return test is not met, on the
Mix of Restricted Stock Units and Stock first scheduled vesting date, the restricted
Options. The Companys long-term stock units subject at that time to the
incentive compensation generally takes performance requirement may still vest on
the form of a mix of restricted stock unit the second vesting date (i.e., on the fourth
grants and option awards. These two anniversary date), provided that the per-
vehicles reward shareholder value creation formance tests for the second vesting
in slightly different ways. Stock options date is met, and the named executive offi-
(which have exercise prices equal to the cer remains employed. For purposes of
market price at the date of grant) reward these determinations, total shareholder
named executive officers only if the stock return reflects (i) the aggregate change,
price increases. Restricted stock units are for the performance time period specified,
impacted by all stock price changes, so in the market value of the Companys
the value to named executive officers is stock or the S&P 500 Index, as the case
affected by both increases and decreases may be, and (ii) the value returned to
in stock price. shareholders in the form of dividends or
similar distributions, assumed to be
Approximately 60% of the total value of a reinvested on a pre-tax basis, during the
long-term compensation award typically performance period.
takes the form of restricted stock units,
with stock options accounting for the The foregoing performance-based require-
remaining value. The Committee may in ments do not relate to restricted stock unit
the future adjust this mix of award types or awards granted in lieu of cash under the
approve different award types, such as Companys annual bonus program,
restricted stock, as part of the overall because these bonus awards are granted
long-term incentive award. based on performance under the annual
bonus incentive program which, in the
Vesting of Restricted Stock case of awards to the named executive
Units. Restricted stock units granted as officers, were granted only upon sat-
long-term incentive compensation to isfaction of performance tests pursuant to
named executive officers generally have the requirements of Section 162(m).
scheduled vesting dates on or about the
second and fourth anniversary of the grant Stock Options. The long-term incentive
date. On each of those dates, 50% of the program calls for stock options to be
total award is scheduled to vest, con- granted with exercise prices of not less
tingent upon the named executive officers than fair market value of the Companys
continued employment with the Company. stock on the date of grant and to vest
For officers subject to Section 162(m) on ratably over four years, based on con-
the date of grant, vesting of all restricted tinued employment, with rare exceptions
stock units covered by the grant is subject made by the Committee. The Company
to the same performance criterion that is defines fair market value as the average of
established to satisfy the requirements for the high and low stock prices on the date
qualified performance-based compensa- of grant, which may be higher or lower
tion under Section 162(m). For these per- than the closing price on that day. The
sons, the scheduled vesting with respect Committee believes that the average of
to half of the restricted stock units eligible high and low prices is a better representa-
14
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
tion of the stock price on the date of grant Awards Table and the Non-Performance
and tends to be less volatile than the clos- Based Restricted Stock Awards Table.
ing price. The Committee will not grant
stock options with exercise prices below
the market price of the Companys stock In determining the annual grants of
on the date of grant (determined as restricted stock units and options, the
described above), and will not reduce the Committee considered any contractual
exercise price of stock options (except in requirements, market data on total com-
connection with adjustments to reflect pensation packages, the value of long-
recapitalizations, stock or extraordinary term incentive grants at targeted external
dividends, stock splits, mergers, spin-offs companies, total shareholder return, share
and similar events permitted by the rele- usage and shareholder dilution and,
vant plan) without shareholder approval. except in the case of the award to the
New option grants to named executive President and Chief Executive Officer, the
officers normally have a term of seven recommendations of the President and
years. Chief Executive Officer.
Stock Ownership and Holding Policy. The In October 2005, pursuant to the terms
incentive compensation program includes and conditions in his employment agree-
stock ownership and holding requirements ment, Mr. Iger was awarded 500,000
for the named executive officers. These performance-based restricted stock units.
officers are expected, over time, to Vesting of all of the units is generally sub-
acquire and hold Company stock ject to Mr. Igers continued employment
(including restricted stock units) equal in until dates specified in the agreement, as
value to at least three to five times their well as satisfaction of Section 162(m)
base salary amounts, depending on their performance objectives and achievement
positions. In addition, for all stock option of a total shareholder return test at speci-
grants made beginning in 2005, the named fied times over a period of four years.
executive officers are required, as long as
they remain employed by the Company, to
retain ownership of shares representing at Benefits and perquisites
least 75% of the after-tax gain realized
(100% in the case of the Chief Executive With limited exceptions, the Committee
Officer) upon exercise of such options for supports providing benefits and perqui-
a minimum of 12 months. The Committee sites to named executive officers that are
believes that this ownership and holding substantially the same as those offered to
policy further enhances the alignment of other officers of the Company at or above
named executive officer and shareholder the level of vice president. Exceptions
interests and thereby promotes the include eligibility for the Family Income
objective of increasing shareholder value. Assurance Plan described elsewhere in
this proxy statement; eligibility to receive
Periodic Review. The Committee intends basic financial planning services; eligibility
to review both the annual bonus program for enhanced excess liability coverage;
and the long-term incentive program and an increased automobile benefit. In
annually to ensure that their key elements addition, and in some instances in the
continue to meet the objectives described interest of security, the Company may also
above. make available to named executive offi-
cers personal use of corporate aircraft
Fiscal Year 2006 Decisions. In fiscal and, in the case of the President and Chief
2006, the Committee awarded long-term Executive Officer, security services and
compensation for named executive offi- equipment. For additional information on
cers pursuant to the program described the Family Income Assurance Plan and
above resulting in the awards of stock other benefits and/or perquisites available
options and restricted stock units identi- to named executive officers, see the text
fied in the Summary Compensation Table, following the Summary Compensation
the Stock Option Awards Table, the Long- Table and Employment Agreements
Term Incentive Performance Based Family Income Assurance Plan, below.
15
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
16
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
The following table provides 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, 2006 for services rendered to
the Company during each of the past three fiscal years. These five officers are referred to as
the named executive officers in this proxy statement.
1 The value shown is the number of restricted stock units times the market price of Disney common stock on the date of grant.
Additional information regarding stock units granted as part of the annual bonus is provided below under Restricted Stock
Units.
2 In accordance with SEC rules, disclosure of perquisites is omitted where the total incremental cost to the Company of such
perquisites is less than $50,000. Additional information regarding other compensation is provided in the Components of Other
Annual Compensation table, below.
3 This table does not include the award of performance-based restricted stock units. Awards of performance-based restricted
stock units are reported in the Long-Term Incentive Performance Based Awards table in the Restricted Stock Units section,
below, in the year they are awarded and information regarding vesting of these awards is provided in the LTIP Payouts column,
above. The restricted stock units reflected in this column have no performance vesting requirements either because they were
awarded before the current long-term incentive program requiring performance conditions for awards to executive officers was
in effect or because the recipient was not an executive officer at the time of the award. The value shown is the number of
restricted stock units times the market price of Disney common stock on the date of grant. Additional information regarding
these awards is set forth in the Non-Performance Based Restricted Stock Unit Awards table on page 22, below. Information
regarding awards outstanding as of September 30, 2006 is set forth in the Outstanding Restricted Stock Unit Awards at Fiscal
Year End table on page 23, below.
4 LTIP Payouts reflects Long-Term Incentive Plan payouts with respect to awards vesting during or with respect to the fiscal
years shown. Payout in respect of fiscal 2006 reflects vesting of performance-based units (awarded to Messrs. Iger and Staggs
in fiscal 2002 and to Mr. Braverman in fiscal 2004) based on performance during fiscal 2005 and 2006. The payout was in the
form of 130,076 shares of Company common stock for Messrs. Iger and Staggs and 127,469 shares for Mr. Braverman, each with
a market price of $33.05 on November 30, 2006, the date the awards were paid. Payout in respect of fiscal 2004 reflects vesting
of performance-based units awarded in fiscal 2002 based on performance during fiscal 2003 and 2004 in the form of 127,556
shares of Company common stock at a market price of $27.06 on November 30, 2004, the date the awards were paid. Shares
paid include shares with respect to dividends accruing on units from the date of award.
5 Additional information regarding other compensation is provided in the Components of All Other Compensation table, below.
6 Rehired June 27, 2005; bonus for 2005 includes sign-on bonus.
7 Bonus for 2005 includes a one-time, special award.
17
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
The following table identifies the incremental cost to the Company of each item included in
Other Annual Compensation in the Summary Compensation Table that exceeds 25% of the
total for each executive officer for each year in which the total for the officer exceeded
$50,000.
Personal
Automobile Air
Year Benefit Travel Security Other Total
Robert A. Iger 2006 $14,400 $67,879 $578,656 $660,935
2005 14,400 54,998 438,176 $ 4,109 511,683
Thomas O. Staggs 2005 $14,400 $20,607 $15,763 $ 50,770
In accordance with the SECs recent inter- of expenses for financial consulting. Execu-
pretations of its rules, for fiscal 2006 this tives also receive the following items for
table includes the incremental cost of which the Company does not incur
some items that are provided to execu- incremental costs: complimentary access
tives for business purposes but which may to the Companys theme parks and some
not be considered integrally related to the resort facilities, discounts on Company
executives duties. In addition, the cost of merchandise and resort facilities, and
providing security for Mr. Iger, which pre- access to tickets for sporting and other
viously had been set forth in a separate events for personal use if the tickets are
table, is now included in this table for fis- not needed for business use. The table
cal 2005 and fiscal 2006. As previously does not include medical benefits cover-
reported, in fiscal 2004, the cost of provid- age, life and disability insurance pro-
ing security for Mr. Iger was $474,116. tection, reimbursement for educational
expenses and access to favorably priced
The column labeled Other in the table group insurance coverage that are offered
above includes, for those named exec- through programs that are available to
utive officers who elected to receive it, substantially all of the Companys salaried
reimbursement of up to $450 for health employees.
club membership or exercise equipment,
reimbursement of up to $1,500 for an
annual physical exam and reimbursement
The following table identifies the amount of each item included in All Other Compensation in
the Summary Compensation Table.
18
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
Stock Options
The following table provides information with respect to option grants during fiscal year 2006
to the named executive officers. The options have an exercise price equal to the average of
the high and low trading prices of the Companys common stock on the New York Stock
Exchange on the grant date, have a seven-year life, and are scheduled to vest in equal
installments over four years beginning one year after grant date, subject to acceleration in
certain circumstances. The Compensation Committee, which administers the Companys
stock option and incentive plans, has general authority to accelerate, extend or otherwise
modify benefits under option grants in certain circumstances within overall plan limits.
These awards are also included in the Long-Term CompensationAwardsNumber of Stock
Options column of the Summary Compensation Table.
The hypothetical value of the options as of their date of grant is equal to the fair value of the
options on the grant date used to determine the compensation expense associated with the
grant in the Companys financial statements and has been calculated using the binomial
valuation model. The valuations were based upon the assumptions set forth below. It should
be noted that this model is only one of the methods available for valuing options, and the
Companys use of the model should not be interpreted as a prediction as to the actual value
that may be realized on the options. The actual value of the options may be significantly dif-
ferent, and the value actually realized, if any, will depend upon the excess of the market value
of the common stock over the option exercise price at the time of exercise.
19
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
The following table provides information with respect to option exercises during fiscal 2006
by each of the named executive officers and the status of their options at September 30,
2006. In accordance with SEC rules, values are calculated by subtracting the exercise price
from the average of the high and low prices reported for Disney common stock in New York
Stock Exchange transactions on the date of exercise, in the case of exercises, or on Sep-
tember 29, 2006, the last trading day before September 30, 2006, in the case of fiscal
year-end values.
OPTION EXERCISES AND YEAR END HOLDINGS
Number of Number of Value of Unexercised
Shares Value Unexercised In-the-Money
Acquired Realized Options 9/30/06 Options 9/30/06
On On
Exercise Exercise Exercisable Unexercisable Exercisable Unexercisable
Robert A. Iger 1,600,000 $7,961,600 3,487,913 966,681 $14,388,626 $7,137,082
Thomas O. Staggs 120,000 $ 618,277 2,068,436 368,026 $ 9,151,054 $2,513,777
Alan N. Braverman 225,000 $1,282,500 596,000 282,500 $ 3,554,200 $2,016,445
Kevin A. Mayer 160,000 $ 879,200
Christine M. McCarthy 199,852 81,800 $ 840,792 $ 539,044
The following table summarizes information, as of September 30, 2006, relating to equity
compensation plans of the Company pursuant to which grants of options, restricted stock,
restricted stock units or other rights to acquire shares may be granted from time to time.
EQUITY COMPENSATION PLANS
Number of securities
remaining available for
Number of securities Weighted-average future issuance under
to be issued upon exercise exercise price of equity compensation
of outstanding options, outstanding options, plans (excluding securities
warrants and rights warrants and rights reflected in column (a))
Plan category (a) (b) (c)
Equity compensation
plans approved by
security holders(1) 235,406,148(3) $25.79(4) 50,647,481(5)
Equity compensation
plans not approved by
security holders
Total(2) 235,406,148(3) $25.79(4) 50,647,481(5)
1 These plans are the Companys Amended and Restated 2005 Stock Incentive Plan, 1995 Stock Option Plan for
Non-Employee Directors, Amended and Restated 1995 Stock Incentive Plans, Amended and Restated 1997
Non-Employee Directors Stock and Deferred Compensation Plan, The Walt Disney Company/Pixar 1995 Stock Plan,
The Walt Disney Company/Pixar 1995 Director Option Plan, and The Walt Disney Company/Pixar 2004 Equity
Incentive Plan (Disney/Pixar Plans were assumed by the Company in connection with the acquisition of Pixar).
2 Does not include 105,247 shares, at a weighted average exercise price of $154.27, granted under plans assumed
in connection with acquisition transactions (other than the Disney/Pixar Plans) and under which no additional
options may be granted.
3 Includes an aggregate of 23,226,101 restricted stock units and performance-based restricted stock units. Also
includes options to purchase an aggregate of 38,834,179 shares, at a weighted average exercise price of $16.05,
and 920,000 restricted stock units, in each case granted under plans assumed by the Company in connection
with the acquisition of Pixar, which plans were approved by the shareholders of Pixar prior to the Companys
acquisition.
4 Weighted average exercise price of outstanding options; excludes restricted stock units and performance-based
restricted stock units.
5 Includes 4,712,105 securities available for future issuance under plans assumed by the Company in connection
with the acquisition of Pixar, which plans were approved by the shareholders of Pixar prior to the Companys
acquisition. Prior to November 28, 2006, The Walt Disney Company/Pixar 2004 Equity Incentive Plan included a
provision automatically increasing the number of securities available for future issuance on January 1 of each
year by an amount equal to 3% of the outstanding shares of Company common stock times the percentage of
the Companys common stock into which Pixar shares were converted on the date of the acquisition of Pixar. On
November 28, 2006, the Board of Directors of the Company amended The Walt Disney Company/Pixar 2004
Equity Incentive Plan to eliminate this provision.
20
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
Each unit is a notional unit of measure- fourth anniversary if both tests are met at
ment equivalent to one share of Disney that time. If only the Section 162(m) based
common stock. The restricted stock units performance goal is met on the fourth
have no voting rights unless and until paid anniversary, then only one-quarter of the
in shares of Disney common stock. Prior award will vest on that date.
to vesting, dividends distributed on shares
result in credits of additional performance- Mr. Igers award of 500,000 units on
based restricted stock units that are dis- October 2, 2005 vests if the Companys
tributed when the related units vest. total shareholder return meets or exceeds
Except for 500,000 units granted to the total shareholder return for the S&P 500
Mr. Iger on October 2, 2005, in connection Index for the measurement period. There
with the execution of his employment are three performance periods, ending on
agreement, on each vesting date (i.e., the the last day of each fiscal year ending on or
second and fourth anniversary of the grant about September 30, 2008, 2009 and 2010.
date), one-half of the award becomes Of the total number of units, 60% vest on
vested and payable only if both the total or about September 30, 2008 assuming the
shareholder return and the Section 162(m) performance test is met, 20% (plus the first
based performance goals described under 60%, if not vested earlier) vest on or about
Vesting of Restricted Stock Units in the September 30, 2009 assuming the
Compensation Committee Report above performance test is met, and the final 20%
are met and the executive officer remains (plus the first 80%, if not vested earlier) of
employed by the Company. If the Sec- the units vest on or about September 30,
tion 162(m) based performance goal is met 2010 assuming the final performance test is
on the second anniversary but the total met. The vesting of this award is also sub-
shareholder return test is not met at that ject to the Section 162(m)-based perform-
time, then only one-quarter of the award ance goals described under Vesting of
will vest, but the units that did not vest on Restricted Stock Units in the Compensa-
the second anniversary will vest on the tion Committee Report above.
21
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
Vesting and payment of all units reflected Disney common stock or a combination
above will be accelerated upon the death thereof, as determined by the Compensa-
or disability of the executive officer or tion Committee, within 30 days following
upon a triggering event following a change the earliest date on which all applicable
in control of the Company, as defined vesting requirements have been satisfied.
under the Companys stock incentive The Compensation Committee intends to
plans, or upon the occurrence of an event pay awards in Disney common stock. Any
that triggers immediate vesting of out- shares of Disney common stock issued
standing awards under the executives under an award will be derived from the
employment agreement. share reserve under the Amended and
Restated 1995 Stock Incentive Plan and
If the performance goals are met for the the Amended and Restated 2005 Stock
applicable performance period, the Incentive Plan.
awards may be paid in cash, shares of
Non-Performance Based Units. The following table sets forth the number and grant value
per unit of the non-performance based restricted stock unit awards included in the Summary
Compensation Table.
Number of Number of
Shares, Units or Grant Value Shares, Units or Grant Value
Year Other Rights per Unit(1) Other Rights per Unit(1)
1 The value per unit for each award is equal to the fair value of the award on the grant date used to
determine the compensation expense associated with the grant in the Companys financial statements
and is equal to the average of the high and low prices of the Companys common stock on the New York
Stock Exchange on the date of the award.
Each of the restricted stock units identi- termination of the recipients employment
fied above is scheduled to vest in two except a termination by the Company for
tranches: 50% vests on the second anni- cause or a termination by the recipient that
versary of the date of grant, and the other is in breach of the recipients employment
50% two years thereafter. In addition, all agreement. Prior to vesting, dividends dis-
unvested units will vest upon the recipi- tributed on shares result in credits of addi-
ents death or disability, and unvested tional restricted stock units that are
bonus-related units will vest upon any distributed when the related units vest.
22
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
23
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
The table below illustrates the total combined estimated annual benefits payable under these
retirement plans to eligible salaried employees for various years of service assuming normal
retirement at age 65 and assuming all years of service are after 1984 (benefits are less for
service in or before 1984). 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.
24
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
Disney employee benefit plan. The effect federal rate for mid-term treasuries, reset
in Mr. Igers and Mr. Bravermans situation annually, no later than 30 days after
is that their aggregate retirement benefits Mr. Iger is no longer subject to the provi-
from the ABC, Inc. Retirement Plan, the sions of Section 162(m) of the Internal
Benefits Equalization Plan of ABC, Inc., Revenue Code (or at such later date as is
the Disney Salaried Retirement Plan and necessary to avoid the imposition of an
the Companys Amended and Restated additional tax on Mr. Iger under Sec-
Key Plan cannot be less than the retire- tion 409A of the Internal Revenue Code).
ment benefits they would have received
had all their years of credited service Mr. Iger is also eligible for an annual,
(currently 32 years for Mr. Iger and 13 performance-based bonus under the
years for Mr. Braverman) been performed Companys applicable annual incentive
while covered under the Disney Salaried plan (currently, the Companys Manage-
Retirement Plan and the Companys ment Incentive Bonus Program). The
Amended and Restated Key Plan. The agreement provides that the Compensa-
minimum transfer benefit does not cur- tion Committee will set a target bonus
rently apply to Mr. Braverman because his each year. The target will be not less than
retirement benefits calculated separately $7.25 million. The actual amount of the
under each of the aforementioned plans, bonus paid, if any, will be set by the
based on credited service while actually Committee based on the performance of
covered under each such plan, still pro- the Company pursuant to the then appli-
vide the greater retirement benefits. In cable annual incentive plan. Mr. Iger is
Mr. Igers case, the minimum transfer also eligible to receive equity-based long-
benefit began to apply in 2005 resulting in term incentive awards under the Compa-
a current total estimated aggregate annual nys applicable plans and programs. For
retirement benefit payable at age 65 of each fiscal year during the term of the
$972,291 determined on a straight-life agreement, Mr. Iger will be granted a long-
annuity basis. term incentive award having a target value
(as determined in accordance with the
Employment Agreements practices used to value the awards made
to other senior executive officers of the
Robert A. Iger. Mr. Iger is employed as Company) equal to four times the initial
President and Chief Executive Officer of annual base salary payable to him under
the Company pursuant to an employment the agreement. The Compensation Com-
agreement effective as of October 2, 2005. mittee may also increase the award value
Under the agreement, he has the duties of any award based on its evaluation of
and responsibilities customarily exercised Mr. Igers performance. These awards will
by the person serving as chief executive be subject to substantially the same terms
officer of a company of the size and nature and conditions (including vesting and
of the Company. The Company has also performance conditions) that will be estab-
agreed to nominate him for re-election as lished for other senior executives of the
a member of the Board at the expiration of Company in accordance with the Boards
each term of office, and he has agreed to policies for the grant of equity-based
continue to serve on the Board if elected. awards, as in effect at the time of the
award. The Compensation Committee will
The agreement, which has a term that determine the form and terms of any such
continues through the last day of the fiscal long-term incentive award in accordance
year of the Company ending on or about with the applicable plan, including, without
September 30, 2010, provides for Mr. Iger limitation, establishing performance con-
to receive an annual salary of no less than ditions and/or continued service require-
(and initially equal to) $2,000,000, payable ments as a condition to any such award
in accordance with the Companys prevail- vesting, in whole or in part.
ing payroll policies. The agreement pro-
vides that the portion of Mr. Igers base The minimum annual bonus and long-term
salary that was deferred pursuant to his incentive award opportunities described
prior employment agreement will be paid, above do not guarantee Mr. Iger any
together with interest at the applicable minimum amount of compensation. The
25
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
actual amounts payable to Mr. Iger in on or about September 30, 2008 or Sep-
respect of such opportunities will be tember 30, 2009) as of the last day of the
determined based on the extent to which fiscal year ending on or about September
any performance conditions and/or serv- 30, 2010. Additionally, to vest in any of
ice conditions applicable to such awards these units as of any such date, perform-
are satisfied and on the value of the ance conditions that were established by
Companys stock. Accordingly, Mr. Iger the Compensation Committee for the
may receive compensation in respect of purposes of complying with the require-
each such incentive opportunity that is ments of Section 162(m) of the Internal
greater or less than the stated target value Revenue Code must also be satisfied with
(and which could be zero), depending on respect to a performance period ending
whether, and to what extent, the appli- on the dates outlined above. Any units
cable performance and other conditions that do not vest as of an earlier measure-
are satisfied. ment date, because either the total share-
holder return condition or a performance
Pursuant to the agreement, Mr. Iger condition established under the 2002
received a one-time grant of 500,000 per- Executive Performance Plan was not sat-
formance restricted stock units, each of isfied as of such date, may nonetheless
which is the economic equivalent of one become vested as of a later measurement
share of the Companys common stock date, subject to the achievement of both
(and will be entitled to be credited with applicable conditions as of such date.
additional restricted stock units equivalent
in value to any dividends payable on the Mr. Iger is entitled to participate in
Companys common stock). Vesting of employee benefits and perquisites gen-
these units is contingent upon the sat- erally made available to senior executives
isfaction of two separate performance of the Company.
conditions. First, the Companys total
shareholder return from the grant date Mr. Igers employment may be terminated
until the end of the applicable measure- by the Company for cause, which is
ment period must meet or exceed the total defined as (i) conviction of a felony or the
shareholder return for the S&P 500 Index entering of a plea of nolo contendere to a
for the same period, which in each case felony charge; (ii) gross neglect, willful
will be determined based on results malfeasance or willful gross misconduct in
reported by a financial reporting service connection with his employment which
selected by the Compensation Committee. has had a material adverse effect on the
There will be three measurement periods business of the Company and its sub-
applicable to the total shareholder return sidiaries, unless he reasonably believed in
test, with one such period ending on the good faith that such act or non-act was in,
last day of each fiscal year ending on or or not opposed to, the best interests of
about September 30, 2008, September 30, the Company; (iii) his substantial and con-
2009 and September 30, 2010. This total tinual refusal to perform his duties,
shareholder return condition may be sat- responsibilities or obligations under the
isfied as to 60% of the performance-based agreement that continues after receipt of
restricted stock units as of the last day of written notice identifying the duties,
the fiscal year ending on or about Sep- responsibilities or obligations not being
tember 30, 2008; 80% of the performance- performed; (iv) a violation that is not timely
based restricted stock units (reduced by cured of the Companys code of conduct
any such performance-based restricted or any Company policy that is generally
stock units that become vested as of the applicable to all employees or all officers
last day of the fiscal year ending on or of the Company that he knows or reason-
about September 30, 2008) as of the last ably should know could reasonably be
day of the fiscal year ending on or about expected to result in a material adverse
September 30, 2009; and 100% of the effect on the Company; (v) any failure (that
performance-based restricted stock units is not timely cured) to cooperate, if
(reduced by any such performance-based requested by the Board, with any inves-
restricted stock units that become vested tigation or inquiry into his or the Compa-
as of the last day of the fiscal year ending nys business practices, whether internal
26
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
or external; or (vi) any material breach of (iii) subject, in each case, to the achieve-
the covenants for the benefit of the ment of the stated performance objectives
Company referenced below that is not as of such next measurement date, to vest
timely cured. In the event of such termi- with respect to a pro-rated portion (based
nation, the Companys only obligation is to on his service through the date of termi-
pay any amounts unconditionally accrued, nation) of any restricted stock and
earned or vested through the date of unvested stock units (including, but not
termination (such as his earned and limited to, the performance-based
deferred base salary). restricted stock units described above)
subject to any award granted to Mr. Iger
Mr. Iger has the right to terminate his (whether before, in connection with, or
employment for good reason, which is after the commencement date of the cur-
defined as (i) a reduction in any of his base rent agreement) that could, pursuant to
salary, annual target bonus opportunity or the terms of such award, have become
annual target long-term incentive award vested at the next measurement date with
opportunity; (ii) the failure to elect or respect to such restricted stock or stock
reelect him as a member of the Board, or units; (iv) to receive any other amounts
his removal from the position of Chief earned, unconditionally accrued or owing
Executive Officer; (iii) his removal from the to Mr. Iger but not yet paid (including any
position of President (other than in con- benefits due in accordance with appli-
nection with the appointment of another cable plans and programs of the
person who is acceptable to him to serve Company); (v) to vest with respect to any
as President); (iv) a material reduction in stock options granted to him prior to 2005
his duties and responsibilities (other than that would have become vested under the
in connection with the appointment of applicable terms of his prior employment
another person to serve as President); agreement; and (vi) to continued partic-
(v) the assignment to him of duties that are ipation for him and his eligible dependents
materially inconsistent with his position or in all medical, dental and hospitalization
duties or that materially impair his ability benefit plans or programs in which he and/
to function as Chief Executive Officer and or they were participating on the date of
any other position in which he is then serv- the termination of his employment (or
ing; (vi) relocation of his principal office to economically equivalent benefits) until the
a location that is both more than 50 miles earlier of (A) 24 months following termi-
from Manhattan and more than 50 miles nation of his employment and (B) the date,
outside of the greater Los Angeles area; or or dates, he receives equivalent coverage
(vii) a material breach of any material and benefits under the plans and pro-
provision of the agreement by the Com- grams of a subsequent employer.
pany.
If Mr. Igers employment ends at or within
If Mr. Iger exercises his right to terminate 30 days following the expiration of the
his employment agreement, or if the stated term of the Employment Agreement
Company terminates his employment in (i.e., the last day of the fiscal year ending
breach of the agreement, Mr. Iger is enti- on or about September 30, 2010), he will
tled, as his sole remedy, (i) to his salary be entitled to receive a separation pay-
(including deferred salary and interest) ment equal to the sum of (x) his current
earned through the date of termination; base salary and (y) the Average Bonus. In
(ii) to a cash severance payment in an addition, he and his eligible dependents
amount equal to twice the sum of (a) his will be entitled to continued participation
then current base salary and (b) the aver- in the Companys medical, dental and
age of the annual bonuses payable hospitalization benefit plans or programs
(including in such average a zero for any in which he and/or they were participating
year for which no such bonus is payable) on the date of the termination of his
to him with respect to each of the last employment (or economically equivalent
three completed fiscal years of the Com- benefits) until the earlier of (A) 12 months
pany for which the amount of such bonus following termination of his employment
has been determined at the date of such and (B) the date, or dates, he receives
termination (the Average Bonus); equivalent coverage and benefits under
27
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
the plans and programs of a subsequent provides for an annual salary of $875,000
employer. through December 31, 2003, $950,000 for
calendar year 2004, $1,000,000 for calen-
In the event that Mr. Igers employment dar year 2005, $1,050,000 for calendar
terminates due to his death or disability, year 2006 and $1,125,000 for the period of
all of the performance-based restricted January 1, 2007 through March 31, 2008.
stock units described above will vest and Mr. Staggs is also eligible for an annual
be payable, and any stock options granted bonus under the Companys 2002 Execu-
to him prior to 2005 that would have tive Performance Plan and the Companys
become vested under the applicable terms Management Incentive Bonus Program, as
of his prior employment agreement will well as performance-based stock unit
vest. In addition, if a Triggering Event as awards, and to be considered in the future
defined in the Companys 1995 Stock Plan for awards of stock options or other stock-
occurs within 12 months of a Change in based compensation of the Company.
Control as defined in the Stock Plan, the Mr. Staggs is entitled to participate in
500,000 performance-based restricted employee benefits and perquisites gen-
stock units awarded to Mr. Iger (as well as erally made available to senior executives
other outstanding stock options, restricted of the Company.
stock units, performance-based stock
units or other plan awards) will become Mr. Staggss employment may be termi-
fully vested and payable. A triggering nated by the Company in the event of
event is defined to include a termination of death or disability, in which case
employment by the Company other than Mr. Staggs or his estate is entitled to
for cause, a termination of employment receive 100% of his salary for an addi-
by the participant following a reduction in tional twelve months, 75% of such salary
position, pay or other constructive for twelve months thereafter and 50% for
termination, or a failure by the successor the next twelve months. He or his estate
company to assume or continue the plan will also be entitled to a pro rata bonus for
award. the year in which death or termination for
disability occurred (and a bonus for the
If any payments to Mr. Iger would be sub- prior year if bonuses have not yet been
ject to excise tax as an excess parachute paid for that year), calculated on the basis
payment under federal income tax rules, of an assumed bonus for the full year
the Company has agreed to pay Mr. Iger equal to the average of his annual
an additional amount to compensate for bonuses received for the prior two fiscal
the incremental tax costs to Mr. Iger of years in which bonuses were awarded.
such payments.
Mr. Staggss employment may be termi-
Mr. Igers employment agreement con- nated by the Company for gross negli-
tains covenants for the benefit of the gence, gross misconduct, willful gross
Company relating to non-competition neglect or malfeasance or resignation
during the term of employment, protection without Company consent (except as
of the Companys confidential information, described in the following paragraph). In
and non-solicitation of Company employ- the event of such termination, the
ees for one year following termination of Companys only obligation is to pay any
his employment for any reason. earned but unpaid salary and
unconditionally accrued benefits and
Thomas O. Staggs. Pursuant to an business expenses.
employment agreement entered into in
September 2003, Mr. Staggs is employed Mr. Staggs has the right to terminate his
as Senior Executive Vice President and employment upon at least 30 days notice
Chief Financial Officer of the Company, given to the Company within 60 days fol-
reporting to the Companys Chief Execu- lowing the occurrence of any of the follow-
tive Officer and, if determined by the ing events without his consent (except
Company in its sole discretion, the Chief that the Company will have 20 days after
Operating Officer of the Company. The notice to cure the conduct specified in the
agreement expires in March 2008 and notice): a failure by the Company to pro-
28
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
vide him with the compensation and bene- income tax rules, the Company has agreed
fits to which he is entitled under the to pay Mr. Staggs an additional amount
agreement; any failure by the Company to (not to exceed $4 million) to compensate
continue him in his position as Senior for the incremental tax costs to Mr. Staggs
Executive Vice President and Chief Finan- of such payments.
cial Officer; a material diminution in his
duties or assignment of duties that are Mr. Staggss employment agreement
materially inconsistent with those duties or contains provisions relating to
a change in his reporting relationship so non-competition during the term of
that he no longer reports to the Chief employment, protection of the Companys
Executive Officer of the Company; or confidential information and intellectual
relocation of his office more than 50 miles property, and non-solicitation of Company
from Los Angeles. Mr. Staggs duties and employees for two years following termi-
responsibilities will not be deemed to be nation of employment.
materially reduced solely by virtue of a
sale of the Company or all or substantially Alan N. Braverman. Pursuant to an
all of its assets or its combination with employment agreement entered into in
another entity, provided that Mr. Staggs September 2003, Mr. Braverman is
continues to have the same duties and employed as Senior Executive Vice Presi-
responsibilities and authority with respect dent and General Counsel of the Com-
to the Companys businesses as he had pany, reporting to the Companys
immediately prior to the time of the trans- President and Chief Executive Officer. The
action and that he continues to report agreement has a term of five years until
directly to the Chief Executive Officer (and September 2008 and provided for an initial
Chief Operating Officer, if applicable) of annualized salary of $750,000, with annual
the entity that manages all such busi- increases, if any, to be at the discretion of
nesses of the Company. the Company. Mr. Braverman is also eligi-
ble for an annual bonus under the
If Mr. Staggs exercises his right to termi- Companys 2002 Executive Performance
nate his employment agreement, or if the Plan and the Companys Management
Company terminates his employment in Incentive Bonus Program, as well as
breach of the agreement, Mr. Staggs is performance-based stock unit awards and
entitled, as his sole and exclusive remedy, to be considered in the future for awards
to his salary through the date of termi- of stock options or other stock-based
nation; salary for the balance of the origi- compensation of the Company.
nal employment term payable in Mr. Braverman is entitled to participate in
accordance with the original schedule; the employee benefits and perquisites gen-
right to exercise all stock options whether erally made available to senior executives
vested or unvested in full for the period of the Company.
provided in the applicable stock option
plan; the immediate vesting of all then Mr. Bravermans employment may be
outstanding stock unit awards; a pro rata terminated by the Company in the event of
bonus for the year in which the termination death or disability, in which case
occurs (and a bonus for the prior year if Mr. Braverman or his estate is entitled to
bonuses have not yet been paid for that receive 100% of his salary for an addi-
year), calculated on the basis of an tional twelve months, 75% of such salary
assumed bonus for the full year equal to for twelve months thereafter and 50% for
the average of his annual bonuses the next twelve months. He or his estate
received for the prior two fiscal years in will also be entitled to a pro rata bonus for
which bonuses were awarded; and other the year in which death or termination for
benefits in accordance with applicable disability occurred (and a bonus for the
plans and programs of the Company. prior year if bonuses have not yet been
paid for that year), calculated on the basis
If any payments to or benefits under of an assumed bonus for the full year
Mr. Staggss employment agreement equal to the average of his annual
would be subject to excise tax as an bonuses received for the prior two fiscal
excess parachute payment under federal years in which bonuses were awarded.
29
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
Mr. Bravermans employment may be date of termination; salary for the balance
terminated by the Company for gross of the original employment term payable in
negligence, gross misconduct, willful accordance with the original schedule; the
gross neglect or malfeasance or resig- right to exercise all stock options whether
nation without Company consent (except vested or unvested in full for the period
as described in the following paragraph). provided in the applicable stock option
In the event of such termination, the plan; the immediate vesting of all then
Companys only obligation is to pay any outstanding stock unit awards; a pro rata
earned but unpaid salary and bonus for the year in which the termination
unconditionally accrued benefits and occurs (and a bonus for the prior year if
business expenses. bonuses have not yet been paid for that
year), calculated on the basis of an
Mr. Braverman has the right to terminate assumed bonus for the full year equal to
his employment upon at least 30 days the average of his annual bonuses
notice given to the Company within 60 received for the prior two fiscal years in
days following the occurrence of any of which bonuses were awarded; and other
the following events without his consent benefits in accordance with applicable
(except that the Company will have 20 plans and programs of the Company.
days after notice to cure the conduct
specified in the notice) (good reason): a If any payments to or benefits under
failure by the Company to provide him Mr. Bravermans employment agreement
with the compensation and benefits to would be subject to excise tax as an
which he is entitled under the agreement excess parachute payment under federal
(including any reduction in his salary); any income tax rules, the Company has agreed
failure by the Company to continue him in to pay Mr. Braverman an additional
his position as Senior Executive Vice amount (not to exceed $2 million) to
President and General Counsel; a material compensate for the incremental tax costs
diminution in his duties or assignment of to Mr. Braverman of such payments.
duties that are materially inconsistent with
those duties or a change in his reporting Mr. Bravermans employment agreement
relationship so that he no longer reports to contains provisions relating to
the Chief Executive Officer and the Presi- non-competition during the term of
dent and Chief Operating Officer of the employment, protection of the Companys
Company; or relocation of his office more confidential information and intellectual
than 50 miles from Los Angeles. property, and non-solicitation of Company
Mr. Bravermans duties and employees for two years following termi-
responsibilities will not be deemed to be nation of employment.
materially reduced solely by virtue of a
sale of the Company or all or substantially Stock Incentive Plans Change in Control
all of its assets or its combination with Provisions. Under the terms of the
another entity, provided that Companys stock incentive plans, awards
Mr. Braverman continues to have the are generally subject to special provisions
same duties and responsibilities and upon the occurrence of a defined change
authority with respect to the Companys in control transaction unless this provi-
businesses as he had immediately prior to sion is superseded in an executives
the time of the transaction and that he employment agreement or otherwise
continues to report directly to the Chief waived. Under the plans, if within twelve
Executive Officer and President and Chief months of a change in control there
Operating Officer of the entity that man- occurs a triggering event with respect to
ages all such businesses of the Company. the employment of a plan participant, any
outstanding stock options, restricted
If Mr. Braverman exercises his right to stock units, performance-based restricted
terminate his employment agreement, or if stock units or other plan awards will gen-
the Company terminates his employment erally become fully vested and, in certain
in breach of the agreement, cases, paid to the plan participant. A trig-
Mr. Braverman is entitled, as his sole and gering event is defined to include a termi-
exclusive remedy, to his salary through the nation of employment by the Company
30
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
other than for cause, a termination of employed by the Company, the eligible
employment by the participant following a spouse, same sex domestic partner or
reduction in position, pay or other dependent child is entitled to receive an
constructive termination, or a failure by amount equal to 100% of the executives
the successor company to assume or salary in effect at the date of death for the
continue the plan award. Under the terms first year after such date of death, 75%
of the plans, payments under awards that thereof during the second year, and 50%
become subject to the excess parachute thereof during the third year. Applicable
tax rules may be reduced under certain provisions in the employment contracts of
circumstances. otherwise covered executives supersede
the provisions of the Family Income
Family Income Assurance Plan. The Assurance Plan for such executives. Dur-
Company has in effect a Family Income ing fiscal 2006, the Company incurred no
Assurance Plan for certain key executives. cost under this plan with respect to the
Coverage under this self-insured plan persons identified in the Summary Com-
provides that, in the event of the death of pensation Table.
a participating key executive while
$200
150
100
50
Sept 01 02 03 04 05 06
The Walt Disney Company 100 82 111 125 135 175
S&P 500 Index 100 80 99 113 127 137
Peer Group Index 100 72 86 98 109 122
The peer group index is a custom index by the separation of the company formerly
consisting of the companies that were known as Viacom, Inc. into two publicly
formerly included in the Standard & Poors held companies, CBS Corporation and
Entertainment and Leisure Index. Although Viacom, Inc.) (Class B common stock);
Standard & Poors discontinued this index resort and leisure-oriented companies
in January 2002, the Company believes the Carnival Corporation, Harrahs Entertain-
companies included in the index continue ment, Inc., Hilton Hotels Corporation, Mar-
to provide a representative sample of riott International, Inc. and Starwood Hotels
enterprises in the primary lines of business and Resorts Worldwide, Inc.; and
in which the Company engages. These consumer-oriented businesses Brunswick
companies are, in addition to The Walt Corporation, Darden Restaurants, Inc.,
Disney Company, media enterprises Time McDonalds Corporation, Starbucks Corpo-
Warner Inc, CBS Corporation (formerly ration, Yum! Brands, Inc. and Wendys
Viacom, Inc.) (Class B common stock) and International Inc.
Viacom Inc. (created on December 31, 2005
31
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
32
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
33
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
34
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
35
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
36
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
37
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
with our executive compensation philoso- shares used to settle the stock apprecia-
phy. The Board believes that by allowing tion rights upon exercise. This is con-
the Company to continue to offer its sistent with the 1995 Plan, which also
employees long-term, performance-based prohibits net share accounting.
compensation through the 2005 Plan, the
Company will promote the following key The 2005 Plan limits the number of shares
objectives: that can be issued pursuant to restricted
stock awards, restricted stock units and
aligning the interest of employees with stock awards, and the requested amend-
those of the shareholders; ment increases the maximum number of
reinforcing key Company goals and shares that can be issued pursuant to
objectives that help drive shareholder such awards by 7.0 million shares from
value; and 10.0 million shares to 17.0 million shares.
attracting, motivating and retaining Due to limits in each of the plans, as of
experienced and highly qualified January 11, 2007, and prior to the
employees who will contribute to the requested increase, 5.4 million shares
Companys financial success. remain available for such awards pursuant
to the 2005 Plan, 0.6 million shares remain
Shares Available Under Plans available for such awards pursuant to the
Disney/Pixar Plan and 0.2 million shares
As of January 11, 2007, and prior to the remain available for such awards pursuant
requested increase, 12.4 million shares to the 1995 Plan (in each case subject to
remain available for issuance of future increase upon cancellation of outstanding
awards pursuant to the 2005 Plan, awards). A total of 0.1 million shares are
0.6 million shares remain available for available for such awards pursuant to the
future awards pursuant to the Walt Disney 1997 Plan. Assuming approval of the
Company/Pixar 2004 Equity Incentive Plan requested increase, a total of 12.4 million
(which we refer to as the Disney/Pixar shares will be available for such awards
Plan), and 8.0 million shares remain avail- under the 2005 Plan.
able for future awards pursuant to the
Amended and Restated 1995 Stock
Incentive Plan (which we refer to as the
1995 Plan). The number of shares that may
be issued under these plans may increase
to the extent outstanding awards are
cancelled due to forfeiture of awards or
expiration of awards without exercise. A
total of 0.1 million shares are available for
future awards pursuant to the Amended
and Restated 1997 Non-Employee Direc-
tors Stock and Deferred Compensation
Plan (which we refer to as the 1997 Plan).
The shares that have been issued under
this plan are at all times fully vested and
not subject to forfeiture, so the author-
ization will not increase. Other plans
remain active with outstanding awards,
but no future awards may be made from
those plans. Assuming approval of the
requested increase, a total of 43.4 million
shares will be available for future awards
under the 2005 Plan.
38
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
The following table sets forth the number of shares authorized for future issuance (including
shares authorized for issuance pursuant to restricted stock, restricted stock unit and stock
awards) as of January 11, 2007 and after including the additional shares under the amend-
ment, along with the equity dilution represented by the shares available for future awards as
a percentage of the common shares outstanding.
On January 11, 2007, the equity overhang, factors have increased the level of over-
or the percentage of outstanding shares hang and, in light of these factors, the
(plus shares that could be issued pursuant Company believes its overhang level is
to plans) represented by all stock reasonable.
incentives granted and available for future
grant under all plans, was 11.4%1. The The following table sets forth information
equity overhang from all stock incentives regarding outstanding options and
granted and available would be approx- restricted stock units as of January 11,
imately 12.7% assuming approval of the 2007.
requested amendment. Equity overhang
following the original approval of the 2005 OUTSTANDING AWARDS (shares in millions)
Plan in February 2005 was 12.9%. Weighted Unvested
Average Weighted Average Restricted
Outstanding Exercise Remaining Years of Stock
Options Price Contractual Life Units
Current equity overhang includes options
214.5 $26.78 5.3 28.0
with exercise prices greater than the cur-
rent share price. In addition, over 50% of
the options outstanding on January 11, The Company has continued to manage
2007 are currently vested with exercise its run rate2 of awards granted over time to
prices below the current share price, levels it believes are reasonable while
representing options employees have ensuring that our overall executive com-
chosen to hold rather than exercise. The pensation program is competitive, rele-
options and units outstanding (as shown vant, and motivational. The run rate
in the following table) also include the increased in fiscal 2006 from fiscal 2005,
impact of the addition of 44 million options primarily due to awards given to new
and 1 million unvested restricted stock employees. In 2007, the Company reduced
units converted in connection with the its grant guidelines to further manage the
acquisition of Pixar in May 2006. Finally, run rate.
the Companys current share buyback
program has had the effect of reducing the
common shares outstanding. All of these
1 Equity overhang was calculated as all shares issuable upon exercise of outstanding options and vesting of outstanding restricted
stock units plus shares available for future grant divided by (a) basic common shares outstanding + (b) shares in the numerator.
39
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
The following table sets forth information regarding awards granted and earned, the run rate
for each of the last three fiscal years and the average run rate over the last three years.
3-Year
FY2004 FY2005 FY2006 Average
Stock options awards granted 27.0 18.9 23.8
Service-based restricted stock unit awards granted 5.1 7.6 8.7
Actual performance-based restricted stock units earned 0.4
Basic common shares outstanding at fiscal year end 2,040.4 1,968.8 2,061.7
Run rate 1.57% 1.37% 1.58% 1.51%
On January 11, 2007, the closing price of our common stock traded on the New York Stock
Exchange was $34.99 per share.
2 Run rate was calculated as (a) all option awards and non-performance restricted stock units granted in a fiscal year + (b) actual
performance-based restricted stock units earned and vested in a fiscal year, divided by the number of basic common shares out-
standing at the end of that fiscal year.
40
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
The Disney/Pixar Plan does not permit the gate authority to administer the 2005 Plan
granting of discounted options or stock as it deems appropriate, subject to the
options with reload features. Prior to express limitations set forth in the 2005
November 28, 2006, The Disney/Pixar Plan Plan. In the case of awards under the 2005
included an evergreen provision to Plan to non-employee Directors, the
automatically increase the number of powers of the Compensation Committee
shares available for future issuance. On will be exercised by the full Board.
November 28, 2006, the Board of Directors
of the Company amended the Disney/ Limits on Plan Awards
Pixar Plan to eliminate this provision. The
Disney/Pixar Plan does not prohibit the Assuming adoption of the requested
repricing of options, but the Board does amendment, the Board has reserved a
not intend to reprice options or stock maximum of 58,000,000 shares for issu-
appreciation rights granted from this plan ance pursuant to stock options, stock
without the approval of shareholders. In appreciation rights, restricted and unre-
addition, the Company is subject to stricted stock awards and stock units
exchange rules which prohibit the repric- under the 2005 Plan. Of this amount, no
ing of stock options without shareholder more than 17,000,000 shares may be
approval. issued pursuant to grants of all restricted
stock awards, restricted stock units and
Summary of 2005 Plan stock awards in the aggregate during the
term of the 2005 Plan. A participant may
The following is a summary of the receive multiple awards under the 2005
amended 2005 Plan. The full text of the Plan. A maximum of 4,500,000 shares may
2005 Plan, as amended, is attached as be granted under the 2005 Plan to an
Annex C to this proxy statement, and the individual pursuant to stock options and
following summary is qualified in its stock appreciation rights awarded during
entirety by reference to this Annex. any five consecutive calendar years. For
restricted stock, restricted stock units and
Plan Administration stock awards, a maximum of 2,500,000
shares may be granted under the 2005
The selection of employee participants in Plan to an individual during any five con-
the 2005 Plan, the level of participation of secutive calendar years. These limitations
each participant and the terms and con- on grants to an individual will be applied in
ditions of all awards are determined by the aggregate to all awards granted under any
Compensation Committee. It is intended equity-based compensation plan of the
that each member of the Compensation Company.
Committee will be an independent direc-
tor for purposes of the Companys Shares delivered under the 2005 Plan will
Corporate Governance Guidelines, the be authorized but unissued shares of
Compensation Committees charter and Disney common stock, treasury shares or
the New York Stock Exchange listing shares purchased in the open market or
requirements; a non-employee Director otherwise. To the extent that any award
within the meaning of Rule 16b-3 under payable in shares is forfeited, cancelled,
the Securities Exchange Act of 1934, as returned to the Company for failure to
amended, and an outside director within satisfy vesting requirements or upon the
the meaning of Section 162(m) of the occurrence of other forfeiture events, or
Code. Currently, the Compensation otherwise terminates without payment
Committee is comprised of five directors being made, the shares covered thereby
meeting these independence criteria. The will no longer be charged against the
Compensation Committee has the discre- maximum share limitation and may again
tionary authority to interpret the 2005 Plan, be made subject to awards under the 2005
to prescribe, amend and rescind rules and Plan. Notwithstanding the foregoing, upon
regulations relating to the 2005 Plan, and exercise of a stock-settled stock
to make all other determinations neces- appreciation right, the number of shares
sary or advisable for the administration of subject to the award being exercised shall
the 2005 Plan. The Committee may dele- be counted against the maximum
41
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
42
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
The Company has not issued any SARs Section 162(m) Awards
under any of its currently effective
compensation plans, and does not cur- Awards of options and stock appreciation
rently have any SARs outstanding. rights granted under the 2005 Plan will
automatically qualify for the performance-
Restricted Stock. A restricted stock based compensation exception under
award represents shares of Disney com- Section 162(m) of the Code pursuant to
mon stock that are issued subject to their expected terms. In addition, awards
restrictions on transfer and vesting of restricted stock, stock units or stock
requirements as determined by the Com- awards may qualify under Section 162(m)
pensation Committee. Vesting require- if they are granted in accordance with the
ments may be based on the continued Companys 2002 Executive Performance
service of the participant for specified time Plan (or successor plans) and the
periods or on the attainment of specified performance conditions specified there-
business performance goals established under. Under Section 162(m), the terms of
by the Committee or both. Subject to the the award must state, in terms of an
transfer restrictions and vesting require- objective formula or standard, the method
ments of the award, the participant will of computing the amount of compensation
have the same rights as one of Disneys payable under the award, and must pre-
shareholders, including all voting and clude discretion to increase the amount of
dividend rights, during the restriction peri- compensation payable under the terms of
od, unless the Committee determines the award (but may give the Compensa-
otherwise at the time of the grant. tion Committee discretion to decrease the
amount of compensation payable).
43
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
Awards under the 2005 Plan are generally The 2005 Plan has a term of seven years
subject to special provisions upon the expiring on December 30, 2011, unless
occurrence of a change in control (as terminated earlier by the Board of Direc-
defined in the 2005 Plan) transaction with tors. The Board may at any time and from
respect to the Company. Under the 2005 time to time and in any respect amend or
Plan, if within twelve months of a change modify the Plan. The Board may seek the
in control there occurs a triggering event approval of any amendment or mod-
(as defined in the 2005 Plan) with respect ification by the Companys shareholders
to the employment of the participant, any to the extent it deems necessary or advis-
outstanding stock options, SARs or other able in its sole discretion for purposes of
equity awards under the 2005 Plan will compliance with Section 162(m) or Sec-
generally become fully vested and tion 422 of the Code, the listing require-
exercisable, and, in certain cases, paid to ments of the New York Stock Exchange or
the participant. A triggering event is other exchange or securities market or for
defined generally to include a termination any other purpose. No amendment or
of employment by the Company other than modification of the 2005 Plan will
for cause, a termination of employment by adversely affect any outstanding award
the participant following a reduction in without the consent of the participant or
position, pay or other constructive termi- the permitted transferee of the award.
nation event, or a failure by the successor
company to assume or continue the out- Plan Benefits
standing awards under the 2005 Plan.
Payments under awards that become Future benefits under the 2005 Plan are
subject to the excess parachute tax rules not currently determinable. During fiscal
may be reduced under certain circum- 2006, stock options were granted under
stances. the 1995 Stock Incentive Plan to the
Companys named executive officers, as
Limited Transferability set forth in the table captioned Stock
All options, stock appreciation rights, Option Awards above, and restricted stock
restricted stock and restricted stock units units were granted under the 1995 Stock
granted under the 2005 Plan are non- Incentive Plan to the Companys named
transferable except upon death, either by executive officers, as set forth in the
the participants will or the laws of descent tables captioned Long-term Incentive
and distribution or through a beneficiary Performance Based Awards and
designation, or in the case of nonqualified Non-performance Based Restricted Stock
options, during the participants lifetime to Unit Awards above. During fiscal 2006,
immediate family members of the partic- options and stock units were granted to
ipant as may be approved by the non-employee Directors pursuant to the
Compensation Committee. compensation arrangement described in
Corporate Governance and Board Mat-
Adjustments for Corporate Changes tersBoard Compensation, above.
In the event of stock splits, stock divi- U.S. Tax Treatment of Awards
dends, recapitalizations, reclassifications,
mergers, spin-offs or other changes Incentive Stock Options. An incentive
affecting the Company or shares of Disney stock option results in no taxable income
common stock, equitable adjustments to the optionee or a deduction to the
shall be made to the number of shares of Company at the time it is granted or
Disney common stock available for grant, exercised. However, the excess of the fair
as well as to other maximum limitations market value of the shares acquired over
under the 2005 Plan, and the number and the option price is an item of adjustment in
kind of shares of Disney common stock or computing the alternative minimum tax-
other rights and prices under outstanding able income of the optionee. If the optio-
awards and other terms of outstanding nee holds the stock received as a result of
awards affected by such events. an exercise of an incentive stock option
44
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
for at least two years from the date of the shares equal to the number of previously
grant and one year from the date of owned shares tendered will be considered
exercise, then the gain realized on dis- to have been received in a tax-free
position of the stock is treated as a long- exchange; the optionees basis and hold-
term capital gain. If the shares are ing period for such number of new shares
disposed of during this period, however, will be equal to the basis and holding
(i.e., a disqualifying disposition), then the period of the previously owned shares
optionee will include in income, as com- exchanged. The optionee will have com-
pensation for the year of the disposition, pensation income equal to the fair market
an amount equal to the excess, if any, of value on the date of exercise of the num-
the fair market value of the shares, upon ber of new shares received in excess of
exercise of the option over the option such number of exchanged shares; the
price (or, if less, the excess of the amount optionees basis in such excess shares
realized upon disposition over the option will be equal to the amount of such com-
price). The excess, if any, of the sale price pensation income; and the holding period
over the fair market value on the date of in such shares will begin on the date of
exercise will be a short-term capital gain. exercise.
In such case, the Company will be entitled
to a deduction, in the year of such a dis- Stock Appreciation Rights. Generally, the
position, for the amount includible in the recipient of a stand-alone SAR will not
optionees income as compensation. The recognize taxable income at the time the
optionees basis in the shares acquired stand-alone SAR is granted. If an employee
upon exercise of an incentive stock option receives the appreciation inherent in the
is equal to the option price paid, plus any SARs in cash, the cash will be taxed as
amount includible in his or her income as a ordinary income to the employee at the
result of a disqualifying disposition. time it is received. If an employee receives
the appreciation inherent in the SARs in
Non-Qualified Stock Options. A stock, the spread between the then current
non-qualified stock option results in no market value and the base price will be
taxable income to the optionee or taxed as ordinary income to the employee
deduction to the Company at the time it is at the time it is received. In general, there
granted. An optionee exercising such an will be no federal income tax deduction
option will, at that time, realize taxable allowed to the Company upon the grant or
compensation in the amount of the differ- termination of SARs. However, upon the
ence between the option price and the then settlement of an SAR, the Company will be
market value of the shares. Subject to the entitled to a deduction equal to the amount
applicable provisions of the Code, a of ordinary income the recipient is required
deduction for federal income tax purposes to recognize as a result of the settlement.
will be allowable to the Company in the
year of exercise in an amount equal to the
Other Awards. The current United States
taxable compensation recognized by the
federal income tax consequences of other
optionee.
awards authorized under the 2005 Plan are
The optionees basis in such shares is generally in accordance with the following:
equal to the sum of the option price plus (i) restricted stock is generally subject to
the amount includible in his or her income ordinary income tax at the time the
as compensation upon exercise. Any gain restrictions lapse, unless the recipient
(or loss) upon subsequent disposition of elects to accelerate recognition as of the
the shares will be a long-term or short- date of grant; (ii) stock unit awards are
term gain (or loss), depending upon the generally subject to ordinary income tax at
holding period of the shares. the time of payment; and (iii) unrestricted
stock awards are generally subject to
If a non-qualified option is exercised by ordinary income tax at the time of grant. In
tendering previously owned shares of the each of the foregoing cases, the Company
Companys common stock in payment of will generally be entitled to a correspond-
the option price, then, instead of the ing federal income tax deduction at the
treatment described above, the following same time the participant recognizes
generally will apply: a number of new ordinary income.
45
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
46
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
charged with the responsibility for estab- lished that one or more of these adjust-
lishing specific performance targets for ments will not be made as to a specific
each participant in the plan. Concurrently award or awards. In addition, the Commit-
with the selection of performance targets, tee may determine at the time the goals are
established that other adjustments will be
the Committee must establish an objective made under the selected business criteria
formula or standard for calculating the and applicable performance targets to take
maximum bonus payable to each partic- into account, in whole or in part, in any
ipating executive officer. The performance manner specified by the Committee, any
targets may be based on one or more of one or more of the following:
the following business criteria (which are
defined in the plan), or on any combination (a) gain or loss from all or certain claims
of them, on a consolidated basis: and/or litigation and insurance
recoveries;
Net income (or adjusted net income) (b) the impact of impairment of tangible
Return on equity (or adjusted return on or intangible assets;
equity) (c) restructuring activities reported in the
Return on assets (or adjusted return on Companys public filings; and
assets) (d) the impact of investments or acquis-
Earnings per share (diluted) (or adjusted itions.
earnings per share (diluted))
Each of the adjustments described in this
The targets must be established while the paragraph may relate to the Company as a
performance relative to the target remains whole or any part of the Companys busi-
substantially uncertain within the meaning ness or operations, as determined by the
of Section 162(m). The performance meas- Committee at the time the performance
urement periods are typically a single fiscal targets are established. The adjustments
year for bonuses and two fiscal years for are to be determined in accordance with
generally accepted accounting principles
vesting of restricted stock units, but may and standards, unless another objective
include more than two fiscal years. method of measurement is designated by
the Committee. Finally, adjustments will
With respect to adjusted net income, be made as necessary to any business
adjusted earnings per share, adjusted criteria related to the Companys stock to
return on assets and adjusted return on reflect changes in corporate capitalization,
equity, the plan generally requires that such as stock splits and certain
adjustments be made to net income, earn- reorganizations.
ings per share, return on assets and/or
return on equity, as the case may be, when The Compensation Committee has estab-
determining whether the applicable per- lished performance targets for bonuses for
fiscal 2007 based upon adjusted net
formance targets have been met, so as to income. The Committee believes that the
eliminate, in whole or in part, in any manner specific targets constitute confidential
specified by the Committee at the time the business information, the disclosure of
performance targets are established, the which could adversely affect the Company.
gain, loss, income and/or expense resulting
from the following items: Maximums. Under the plan, the max-
imum bonus for each fiscal year may not
(1) changes in accounting principles exceed:
that become effective during the
performance period; for the chief executive officer,
(2) extraordinary, unusual or infrequently $15,000,000, or, if less, 15 times base
occurring events reported in the salary; or
Companys public filings, excluding for other participants, $10,000,000 or, if
early extinguishment of debt; and less, 10 times base salary.
(3) the disposition of a business, in
whole or in part. The Compensation Committee has the
discretion to pay less than the maximum
The Committee may, however, provide at amount otherwise payable based on
the time the performance targets are estab- individual performance or other criteria the
47
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
48
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
this corporation at a price more than 5 Charter One Financial (5%); Con Agra (3%);
percent above the current fair market General Motors (3%); Footstar (5%); Harbor
price unless an offer is made to ALL Florida Bancshares (5%); Hologic (5%);
stockholders of that class of stock on a Lockheed Martin (5%); Maine & Maritimes
proportionate or randomly-selected (5%); Merck (5%); Saks (5%); Schering
basis; such offer to be open for a Plough Corp. (5%); Sprint Nextel (5%);
minimum of 45 days. Stanley Works (3%); Sunoco (5%); Webster
Financial Corp. (5%). The proposals appli-
This policy need not apply to pur- cation to the purchase of as few as 10,000
chases or acquisitions of less than shares, on the other hand, would sig-
10,000 shares. nificantly limit the flexibility of the Company
to engage in a range of possible trans-
Last year the owners of 236.3 million actions that may well be in the best interest
shares, representing approximately of all shareholders.
20% of shares voting, voted FOR my
similar proposal. Accordingly, the Board recommends
that you vote AGAINST this proposal,
If you AGREE, please mark YOUR and your proxy will be so voted if the
proxy FOR this proposal. proposal is presented unless you
specify otherwise.
The Board of the Company
recommends a vote AGAINST this Proposal 2Stockholder Rights Plan
proposal for the following reasons: Bylaw Amendment
The Board of Directors supports the con- Lucian Bebchuk has advised the Company
cept of preventing the payment of green- that he intends to present the following
mail. In response to the shareholder vote proposal for consideration at the annual
on this proposal in 2005, the Board meeting:
amended the Companys Bylaws to
prohibit the purchase of shares at a pre- It is hereby RESOLVED that pursuant
mium to market price from any owner of to Section 109 of the Delaware General
more than 2% of the Companys shares Corporation Law, 8 Del. C. 109, and
Article IX of the Companys By-Laws,
unless an offer to purchase at that price is
the Companys By-Laws are hereby
made to all shareholders or the purchase amended by adding to Article III of the
is approved by a shareholder vote. The Companys By-laws as follows:
Bylaw includes exceptions for purchases
pursuant to a stock repurchase program Section 12. Stockholder Rights
and purchases in connection with Plans
shareholder-approved stock option plans.
(a) Notwithstanding anything in
We believe this Bylaw provision appropri- these by-laws to the contrary,
ately addresses the dangers of greenmail. the adoption of a stockholder
The Companys Bylaw is substantially sim- rights plan, rights agreement or
ilar to provisions adopted by other large any other form of poison pill
companies. We believe that the application which is designed to or has the
of the prohibition in our Bylaws to pur- effect of making an acquisition
chases from holders of more than 2% of of large holdings of the
the Companys shares is a much more Companys shares of stock
appropriate means to address potential more difficult or expensive
greenmail than the proposals application (Stockholder Rights Plan), or
to any purchase of 10,000 shares or more. the amendment of any such
The 2% trigger is lower than that used by Stockholder Rights Plan which
some other companies, including: Alcoa has the effect of extending the
(5%); Anheuser-Busch (10%); Arizona Pub- term of the Stockholder Rights
lic Service Co. (5%); Avon Products (5%); Plan or any rights or options
Bear Stearns (5%); Brooks Automation Inc. provided thereunder, shall
(5%); Cardium Therapeutics, Inc. (5%); require the affirmative vote of
49
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
This By-law Amendment shall be effec- The Company has not had a shareholder
tive immediately and automatically as rights plan since 1999 and is not now
of the date it is approved by the vote of considering adopting such a plan. The
stockholders in accordance with Article Board believes, however, that shareholder
IX of the Companys By-laws. rights plans can be a useful tool in some
circumstances to protect the best inter-
SUPPORTING STATEMENT: I ests of shareholders. At other companies,
believe that it is undesirable for a potential purchasers have made offers in
poison pill not ratified by the the face of such plans, but the existence
stockholders to remain in place of the plans allows boards to protect
indefinitely without periodic strategies for realizing long-term value and
determinations by the Board of to maximize the value of stockholders
Directors that maintaining the pill investment by encouraging potential pur-
continues to be advisable. I also chasers to negotiate directly with the
believe that a Board should not board. The Board therefore believes it is
extend the life of a poison pill important to maintain flexibility to adopt
beyond one year without share- plans with terms appropriate to a variety
holder ratification when a sig- of circumstances.
nificant fraction of the directors
do not support such an extension. The proposed bylaw would limit the ability
of the Board to adopt shareholder rights
plans on terms that may be necessary to
The proposed By-law amend- protect shareholder interests. The
ment would not preclude the requirement for a 75% vote of the Board
Board from maintaining a poison to adopt a plan would permit a relatively
pill not ratified by the stock- small number of directors (as few as three
holders for as long as the Board on an eleven member Board) to block a
deems necessary consistent with plan. A small group of directors represent-
the exercise of its fiduciary duties, ing special interests (including possibly
but would simply ensure that the representatives of an acquiring company)
Board not do so without consider- could therefore block action that other
ing, within one year following the directors believe is in the best interests of
last decision to adopt or extend shareholders. The limitation of plans to
the pill, whether continuing to one year will permit potential purchasers
maintain the pill is in the best to wait out the expiration of the plan and
may hamper the ability of the Board to
50
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
identify, negotiate and complete a finan- Information About Voting and the
cially superior alternative that might take Meeting
more than a year to complete due to regu-
latory or other delays. In short, in the Shares Outstanding
dynamic and highly variable circum-
stances in which the Board might need to Shareholders owning Disney common
consider an acquisition transaction, the stock at the close of business on Jan-
proposed bylaw would raise limits that uary 8, 2007 (the record date), may vote at
could have consequences injurious to the 2007 Annual Meeting and any post-
shareholders interests. ponements or adjournments of the meet-
ing. On that date, 2,048,822,468 shares of
Moreover, the limitations imposed on the common stock were outstanding. Each
Boards exercise of its fiduciary duty by share is entitled to one vote on each mat-
the proposed bylaw amendment may vio- ter considered at the meeting.
late provisions of Delaware law that
expressly grant the Board (not stock- Voting
holders) the authority to create, issue and
fix the duration of rights. Faced with a Most shareholders have a choice of voting
similar proposal made by Professor Beb- over the Internet, by telephone or by using
chuk to a different company, a Delaware a traditional proxy card. Refer to your
court recently deferred ruling on the legal- proxy or voting instruction card to see
ity of the proposal until a bylaw was which options are available to you and
actually adopted, noting that the issue how to use them. The deadline for voting
presented was fraught with tension. by telephone or electronically is
There is an open legal question as to 11:59 p.m., Eastern Standard Time, on
whether the bylaw would be enforceable if March 7, 2007. If you are a registered
it were adopted. shareholder and attend the meeting, you
may deliver your completed proxy card in
In light of the restrictions the proposed person. Street name shareholders who
bylaw would place on the flexibility of the wish to vote at the meeting will need to
Board to act in the best interests of obtain a proxy form from the institution
shareholders and the doubts regarding its that holds their shares.
legality, the Board believes that the bylaw
should not be adopted. If you properly sign and return your proxy
card or complete your proxy via the tele-
phone or Internet, your shares will be
Accordingly, the Board recommends voted as you direct. If you sign and return
that you vote AGAINST this proposal, your proxy but do not specify how you
and your proxy will be so voted if the want your shares voted, they will be voted
proposal is presented unless you FOR the election of all nominees for Direc-
specify otherwise. tor as set forth under Election of
Directors, FOR the ratification of the
Other Matters appointment of the independent regis-
tered public accountants, FOR approval of
the amendments to the Amended and
Management is not aware of any other Restated 2005 Stock Incentive Plan, FOR
matters that will be presented at the approval of terms of the Amended 2002
Annual Meeting, and Company Bylaws do Executive Performance Plan and AGAINST
not allow proposals to be presented at the the shareholder proposals.
meeting unless presented to the Company
prior to the date of this Proxy Statement. You may revoke your proxy and change
However, if any other matter is properly your vote at any time before the Annual
presented at the meeting, the proxy hold- Meeting by submitting a written notice to
ers will vote as recommended by the the Secretary, by submitting a later dated
Board or, if no recommendation is given, and properly executed proxy (including by
in their own discretion. means of a telephone or Internet vote) or
by voting in person at the Annual Meeting.
51
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
If you participate in the Disney Salaried Executive Performance Plan and the share-
Savings and Investment Plan or its prede- holder proposals, except the shareholder
cessors or the Disney Hourly Savings and proposal regarding a Bylaw amendment
Investment Plan, you may give voting relating to stockholder rights plans, for
instructions as to the number of shares of which broker non-votes will have the
common stock equivalent to the interest in effect of a vote against the Bylaw
Disney common stock credited to your amendment.
account as of the record date. You may
provide voting instructions to Fidelity We will post preliminary results of voting
Management Trust Company by complet- at the meeting on our investor relations
ing and returning the proxy card accom- web site promptly after the meeting.
panying this proxy statement. The trustee
will vote your shares in accordance with Attendance at the Meeting
your duly executed instructions received
by March 5, 2007. If you do not send Subject to space availability, all share-
instructions, the trustee will vote the holders as of the record date, or their duly
number of shares equal to the share appointed proxies, may attend the meet-
equivalents credited to your account in the ing, and each may be accompanied by
same proportion that it votes shares in one guest. Since seating is limited, admis-
your plan for which it did receive timely sion to the meeting will be on a first-come,
instructions. You may revoke previously first-served basis. Registration will begin
given voting instructions by March 5, at 8:00 a.m., and seating will begin at 9:00
2007, by submitting to the trustee either a a.m. If you attend, please note that you
written notice of revocation or a properly may be asked to present valid picture
completed and signed proxy card bearing identification, such as a drivers license or
a later date. Your voting instructions will passport. Cameras (including cell phones
be kept confidential by the trustee. with photographic capabilities), recording
devices and other electronic devices will
Under New York Stock Exchange Rules, not be permitted at the meeting.
the proposals to elect Directors and to
Please also note that if you hold your
approve the appointment of independent
shares in street name (that is, through a
auditors are considered discretionary
broker or other nominee), you will need to
items. This means that brokerage firms
bring a copy of a brokerage statement
may vote in their discretion on these mat-
reflecting your stock ownership as of the
ters on behalf of clients who have not fur-
record date and check in at the registra-
nished voting instructions at least 10 days
tion desk at the meeting.
before the date of the meeting. In contrast,
the amendment to the Amended and
Restated 2005 Stock Incentive Plan,
approval of the terms of the Amended Other Information
2002 Executive Performance Plan and the
shareholder proposals are non- Stock Ownership
discretionary items. This means broker-
age firms that have not received voting Based on a review of filings with the Secu-
instructions from their clients on these rities and Exchange Commission, the
proposals may not vote on them. These Company is unaware of any holders of
so-called broker non-votes will be more than 5% of the outstanding shares of
included in the calculation of the number Disney common stock other than Ste-
of votes considered to be present at the ven P. Jobs, whose shareholdings are
meeting for purposes of determining a reflected in the following table and whose
quorum, but will not be considered in business address is One Infinite Loop,
determining the number of votes neces- Cupertino, CA. The following table shows
sary for approval and will have no effect the amount of Disney common stock
on the outcome of the vote for the beneficially owned (unless otherwise
amendments to the Amended and indicated) by our current Directors and
Restated 2005 Stock Incentive Plan, named executive officers and by Directors
approval of terms of the Amended 2002 and executive officers as a group. Except
52
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
53
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
holders, the Company or your broker may Disney Company, Shareholder Services,
discontinue mailings of multiple copies. If 500 South Buena Vista Street, MC 9722,
you wish to receive separate mailings for Burbank, California 91521, or by calling
multiple accounts at the same address, Shareholder Services at (818) 553-7200.
you should mark the designated box on
your proxy card. If you are voting by tele- Proxy Solicitation Costs
phone or the Internet and you wish to
receive multiple copies, you may notify us The proxies being solicited hereby are
at the address and phone number at the being solicited by the Board of Directors of
end of the following paragraph if you are a the Company. The cost of soliciting proxies
shareholder of record or notify your broker in the enclosed form will be borne by the
if you hold through a broker. Company. We have retained Georgeson
Shareholder Communications Inc., 17 State
Once you have received notice from your Street, New York, New York 10004, to aid in
broker or us that they or we will dis- the solicitation. For these services, we will
continue sending multiple copies to the pay Georgeson a fee of $17,500 and
same address, you will receive only one reimburse it for certain out-of-pocket dis-
copy until you are notified otherwise or bursements and expenses. Officers and
until you revoke your consent. If, at any regular employees of the Company may,
time, you wish to resume receiving sepa- but without compensation other than their
rate proxy statements or annual reports, or regular compensation, solicit proxies by
if you are receiving multiple statements further mailing or personal conversations, or
and reports and wish to receive only one, by telephone, telex, facsimile or electronic
please notify your broker if your shares are means. We will, upon request, reimburse
held in a brokerage account or us if you brokerage firms and others for their
hold registered shares. You can notify us reasonable expenses in forwarding solic-
by sending a written request to The Walt itation material to the beneficial owners of
stock.
54
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
Annex A
Corporate Governance Guideline on Director Independence
It is the policy of the Board of Directors who is a current employee of such a firm
that a substantial majority of Directors be and who participates in the firms audit,
independent of the Company and of the assurance or tax compliance (but not tax
Companys management. For a Director to planning) practice; or (D) a Director who
be deemed independent, the Board shall was, or whose immediate family member
affirmatively determine that the Director was, within the last three years (but is no
has no material relationship with the longer) a partner or employee of such a
Company or its affiliates or any member of firm and personally worked on the
the senior management of the Company or Companys audit within that time may
his or her affiliates. This determination not be deemed independent.
shall be disclosed in the proxy statement A Director who is, or whose immediate
for each annual meeting of the Companys family member is, or has been within the
shareholders. In making this determi- last three years, employed as an execu-
nation, the Board shall apply the following tive officer of another company where
standards: any of the Companys present executive
officers at the time serves or served on
A Director who is, or has been within the that companys compensation commit-
last three years, an employee of the tee may not be deemed independent.
Company, or whose immediate family A Director who is a current employee or
member is, or has been within the last general partner, or whose immediate
three years an executive officer of the family member is a current executive
Company may not be deemed officer or general partner, of an entity
independent. Employment as an interim that has made payments to, or received
Chairman or Chief Executive Officer will payments from, the Company for prop-
not disqualify a Director from being erty or services in an amount which, in
considered independent following that any of the last three fiscal years,
employment. exceeds the greater of $1 million or 2%
A Director who has received, or who has of such other entitys consolidated gross
an immediate family member who has revenues, may not be deemed
received, during any twelve-month independent.
period within the last three years, more Further to the provision above that
than $100,000 in direct compensation applies to goods and services generally,
from the Company, other than director a Director who is, or whose immediate
and committee fees and pension or family member is, an executive officer,
other forms of deferred compensation general partner or significant equity
for prior service (provided such holder (i.e., in excess of 10%) of an
compensation is not contingent in any entity that is a paid provider of pro-
way on continued service), may not be fessional services to the Company, any
deemed independent. Compensation of its affiliates, any executive officer or
received by a Director for former service any affiliate of an executive officer, and
as an interim Chairman or Chief Execu- which received payments with respect to
tive Officer and compensation received such services in an amount which, in the
by an immediate family member for serv- preceding twelve months, exceeds
ice as a non-executive employee of the $60,000 (but does not exceed the greater
Company will not be considered in of $1 million or 2% of such other entitys
determining independence under this consolidated gross revenues) may not
test. be deemed independent.
(A) A Director who is, or whose immedi- A Director who is, or whose immediate
ate family member is, a current partner family member is employed as an execu-
of a firm that is the Companys external tive officer of a tax-exempt entity that
auditor; (B) a Director who is a current received significant contributions (i.e.,
employee of such a firm; (C) a Director more than 2% of the annual con-
who has an immediate family member tributions received by the entity or more
A-1
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
than $200,000 in a single fiscal year, but excluding any person who is no
whichever amount is lower) from the longer an immediate family member as a
Company, any of its affiliates, any result of legal separation or divorce, or
executive officer or any affiliate of an death or incapacitation.
executive officer within the preceding
twelve-month period may not be The Board shall undertake an annual
deemed independent, unless the con- review of the independence of all
tribution was approved in advance by non-employee Directors. In advance of the
the Board of Directors. meeting at which this review occurs, each
non-employee Director shall be asked to
For purposes of these Guidelines, the provide the Board with full information
terms: regarding the Directors business and
other relationships with the Company and
affiliate means any consolidated sub- its affiliates and with senior management
sidiary of the Company and any other and their affiliates to enable the Board to
Company or entity that controls, is con- evaluate the Directors independence.
trolled by or is under common control
with the Company, as evidenced by the Directors have an affirmative obligation to
power to elect a majority of the board of inform the Board of any material changes
directors or comparable governing body in their circumstances or relationships that
of such entity; may impact their designation by the Board
executive officer means an officer as independent. This obligation includes
within the meaning of Rule 16a-1(f) under all business relationships between, on the
the Securities Exchange Act of 1934; and one hand Directors or members of their
immediate family means spouse, immediate family, and, on the other hand,
parents, children, siblings, mothers- and the Company and its affiliates or members
fathers-in-law, sons- and of senior management and their affiliates,
daughters-in-law, brothers- and whether or not such business relation-
sisters-in-law and anyone (other than ships are subject to the approval require-
employees) sharing a persons home, ment set forth in the following provision.
A-2
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
Annex B
Audit Committee Charter
The responsibilities of the Board of Direc- standing of financial controls and report-
tors of The Walt Disney Company include ing. At least one Committee member shall
oversight of the Companys systems of also have accounting or related financial
internal control, preparation and pre- management expertise, including at a
sentation of financial reports and com- minimum the expertise required by rules of
pliance with applicable laws, regulations the Securities and Exchange Commission
and Company policies. Through this Char- and listing standards of the New York
ter, the Board delegates certain Stock Exchange.
responsibilities to the Audit Committee to
assist the Board in the fulfillment of its No member of the Audit Committee shall
duties to the Company and its share- receive directly or indirectly any
holders. As more fully set forth below, the compensation from the Company other
purpose of the Committee is to assist the than his or her Directors fees and bene-
Board in its oversight of: fits.
Procedures. The Committee shall meet
the integrity of the Companys financial at least four times a year and may call
statements; special meetings as required. Meetings
the Companys compliance with legal may be called by the Chair of the Commit-
and regulatory requirements; tee or the Chairman of the Board. The
the qualifications and independence of presence in person or by telephone of
the Companys independent auditors; three members shall constitute a quorum.
and Meetings may be held at any time, any
the performance of the Companys place and in any manner permitted by
independent auditors and of the applicable law and the Companys Bylaws.
Companys internal audit function. Minutes of the Committees meetings shall
be kept. To the extent practicable, the
Authority. The Committee shall be given
meeting agenda, draft minutes from the
the resources and assistance necessary to
prior meeting and supporting materials
discharge its responsibilities, including
shall be provided to Committee members
appropriate funding, as determined by the
prior to each meeting to allow time for
Committee, unrestricted access to Com-
review. The Committee shall have author-
pany personnel and documents and the
ity to create and delegate specific tasks to
Companys independent auditors. The
such standing or ad hoc subcommittees
Committee shall also have authority, with
as it may determine to be necessary or
notice to the Chairman of the Board, to
appropriate for the discharge of its
engage outside legal, accounting and
responsibilities. The results of the meet-
other advisors as it deems necessary or
ings shall be reported regularly to the full
appropriate.
Board.
Membership. The Committee shall con- Responsibilities. The Companys execu-
sist of three or more directors, who shall tive management bears primary responsi-
be appointed annually and subject to bility for the Companys financial and
removal at any time, by the Board of other reporting, for establishing the sys-
Directors. Each Committee member shall tem of internal controls and for ensuring
meet the independence requirements compliance with laws, regulations and
established by rules of the Securities and Company policies. The Committees
Exchange Commission and listing stan- responsibilities and related key processes
dards of the New York Stock Exchange, as are described below. From time to time,
well as the independence standards set the Committee may take on additional
forth in the Companys Corporate Gover- responsibilities, at the request of the
nance Guidelines. Board.
All Committee members shall be finan- (a) Financial Reporting. The
cially literate, having a basic under- Committee shall monitor the prepara-
B-1
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
tion by management of the Companys audit, and (f) to discuss any other
quarterly and annual external financial matters the Committee deems
reports. In carrying out this responsi- appropriate;
bility, the Committee shall: meet periodically in private with the
Companys management;
review with management the
review earnings press releases, as
significant financial reporting
well as financial information and
issues, judgments and estimates
earnings guidance provided to
used in developing the financial
analysts and rating agencies and
reports, including analyses of the
discuss their appropriateness with
effects of alternative GAAP
management and the Companys
methods on the financial
independent auditors, paying
statements;
particular attention to any use of
review the accounting and reporting
pro forma or adjusted
treatment of significant transactions
non-GAAP information; and
outside the Companys ordinary
review draft quarterly and annual
operations;
financial statements and discuss
review with management and the
their appropriateness with
Companys independent auditors
management and the Companys
significant changes to the
independent auditors, including the
Companys accounting principles or
Companys disclosures under
their application as reflected in the
Managements Discussion and
financial reports;
Analysis of Financial Condition and
review with management and the
Results of Operations.
Companys independent auditors
the effect of regulatory and
(b) Relationship with Independent
accounting initiatives, as well as Auditors. The Committee shall bear
off-balance sheet structures, on the primary responsibility for overseeing
financial statements of the the Companys relationship with its
Company; independent auditors. In carrying out
meet periodically with the this responsibility, the Committee shall:
Companys independent auditors (in
private, as appropriate) (a) to review be directly responsible for the
their reasoning in accepting or appointment, compensation,
questioning significant decisions retention and oversight of the work
made by management in preparing of the Companys independent
the financial reports; (b) to review auditors, in consultation with the full
any audit problems or difficulties Board;
and managements response; (c) to review the scope and extent of
review any outstanding audit services to be provided;
disagreements with management review the overall audit plan,
that would cause them to issue a including the risk factors
non-standard report on the considered in determining the audit
Companys financial statements; scope;
(d) to examine the appropriateness review the independent auditors
of the Companys accounting annual letter pursuant to
principles (including the quality, not Independence Standards Board
just the acceptability, of accounting Standard No. 1, outlining all
principles) and the clarity of relationships that may impact their
disclosure practices used or independence;
proposed; (e) to determine if any review with the independent
restrictions have been placed by auditors the extent of non-audit
management on the scope of their services provided and related fees,
B-2
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
B-3
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
B-4
The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
Annex C
Amended and Restated 2005 Stock Incentive Plan
1. Purpose. The purpose of The Walt Common Stock means the Compa-
Disney Company Amended and Restated nys common stock, par value $0.01
2005 Stock Incentive Plan is to further per share.
align the interests of employees and direc-
tors with those of the shareholders by Committee means the Compensation
providing incentive compensation oppor- Committee of the Board, or such other
tunities tied to the performance of the committee of the Board appointed by
Common Stock and by promoting the Board to administer the Plan.
increased ownership of the Common Company means The Walt Disney
Stock by such individuals. The Plan is also Company, a Delaware corporation.
intended to advance the interests of the
Company and its shareholders by attract- Date of Grant means the date on
ing, retaining and motivating key person- which an Award under the Plan is
nel upon whose judgment, initiative and granted by the Committee, or such
effort the successful conduct of the later date as the Committee may
Companys business is largely dependent. specify to be the effective date of an
Award.
2. Definitions. Wherever the following
capitalized terms are used in the Plan, Disability means a Participant being
they shall have the meanings specified considered disabled within the mean-
below: ing of Section 409A(a)(2)(C) of the
Code, unless otherwise provided in an
Affiliate means (i) any entity that Award Agreement.
would be treated as an affiliate of the
Company for purposes of Rule 12b-2 Eligible Person means any person
under the Exchange Act and (ii) any who is an employee of the Company or
joint venture or other entity in which any Affiliate or any person to whom an
the Company has a direct or indirect offer of employment with the Company
beneficial ownership interest represent- or any Affiliate is extended, as
ing at least one-third ( 1 3) of the determined by the Committee, or any
aggregate voting power of the equity person who is a Non-Employee Direc-
interests of such entity or one-third tor.
( 1 3) of the aggregate fair market value Exchange Act means the Securities
of the equity interests of such entity, as Exchange Act of 1934, as amended.
determined by the Committee.
Fair Market Value of a share of
Award means an award of a Stock Common Stock as of a given date shall
Option, Stock Appreciation Right, be the average of the highest and
Restricted Stock Award, Stock Unit lowest of the New York Stock
Award or Stock Award granted under Exchange composite tape market
the Plan. prices at which the shares of Common
Stock shall have been sold regular way
Award Agreement means a written or on the date as of which Fair Market
electronic agreement entered into Value is to be determined or, if there
between the Company and a Partic- shall be no such sale on such date, the
ipant setting forth the terms and con- next preceding day on which such a
ditions of an Award granted to a sale shall have occurred. If the Com-
Participant. mon Stock is not listed on the New
York Stock Exchange on the date as of
Board means the Board of Directors which Fair Market Value is to be
of the Company. determined, the Committee shall
determine in good faith the Fair Market
Code means the Internal Revenue Value in whatever manner it considers
Code of 1986, as amended. appropriate.
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The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
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other terms of the Award. Subject to the permitted to delegate, to any appropriate
terms of the Plan, the Committee shall officer or employee of the Company,
have the authority to amend the terms of responsibility for performing certain minis-
an Award in any manner that is not incon- terial functions under the Plan. In the
sistent with the Plan, provided that no event that the Committees authority is
such action shall adversely affect the delegated to officers or employees in
rights of a Participant with respect to an accordance with the foregoing, all provi-
outstanding Award without the Partic- sions of the Plan relating to the Committee
ipants consent. The Committee shall also shall be interpreted in a manner consistent
have discretionary authority to interpret with the foregoing by treating any such
the Plan and Award Agreements issued reference as a reference to such officer or
under the Plan, to make factual determi- employee for such purpose. Any action
nations under the Plan, and to make all undertaken in accordance with the Com-
other determinations necessary or advis- mittees delegation of authority hereunder
able for Plan administration, including, shall have the same force and effect as if
without limitation, to correct any defect, to such action was undertaken directly by
supply any omission or to reconcile any the Committee and shall be deemed for all
inconsistency in the Plan or any Award purposes of the Plan to have been taken
Agreement hereunder. The Committee by the Committee.
may prescribe, amend, and rescind rules
and regulations relating to the Plan. The 3.4 Grants to Non-Employee Direc-
Committees determinations under the tors. Any Awards or formula for granting
Plan need not be uniform and may be Awards under the Plan made to Non-
made by the Committee selectively among Employee Directors shall be approved by
Participants and Eligible Persons, whether the Board. With respect to awards to such
or not such persons are similarly situated. directors, all rights, powers and authorities
The Committee shall, in its discretion, vested in the Committee under the Plan
consider such factors as it deems relevant shall instead be exercised by the Board,
in making its interpretations, determi- and all provisions of the Plan relating to
nations and actions under the Plan includ- the Committee shall be interpreted in a
ing, without limitation, the manner consistent with the foregoing by
recommendations or advice of any officer treating any such reference as a reference
or employee of the Company or such to the Board for such purpose.
attorneys, consultants, accountants or
other advisors as it may select. All inter-
pretations, determinations and actions by 4. Shares Subject to the Plan.
the Committee shall be final, conclusive,
and binding upon all parties. 4.1 Maximum Share Limitations. Subject
to adjustment pursuant to Section 4.3
3.3 Delegation of Authority. The Commit- hereof, the maximum aggregate number of
tee shall have the right, from time to time, shares of Common Stock that may be
to delegate to one or more officers of the issued and sold under all Awards granted
Company the authority of the Committee under the Plan shall be 58 million shares.
to grant and determine the terms and From such aggregate Plan limit, the max-
conditions of Awards granted under the imum number of shares of Common Stock
Plan, subject to the requirements of Sec- that may be issued under all Awards of
tion 157(c) of the Delaware General Restricted Stock, Stock Units and Stock
Corporation Law (or any successor provi- Awards under the Plan shall be limited to
sion) and such other limitations as the 17 million shares. Shares of Common
Committee shall determine. In no event Stock issued and sold under the Plan may
shall any such delegation of authority be be either authorized but unissued shares
permitted with respect to Awards granted or shares held in the Companys treasury.
to any member of the Board or to any To the extent that any Award involving the
Eligible Person who is subject to Rule issuance of shares of Common Stock is
16b-3 under the Exchange Act is a cov- forfeited, cancelled, returned to the
ered employee under Section 162(m) of Company for failure to satisfy vesting
the Code. The Committee shall also be requirements or other conditions of the
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The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
Award, or otherwise terminates without an change, or any other change affecting the
issuance of shares of Common Stock Common Stock, the Committee shall, in
being made thereunder, the shares of the manner and to the extent it considers
Common Stock covered thereby will no equitable to the Participants and con-
longer be counted against the foregoing sistent with the terms of the Plan, cause
maximum share limitations and may again an adjustment to be made in (i) the max-
be made subject to Awards under the Plan imum number and kind of shares provided
pursuant to such limitations. in Section 4.1 and Section 4.2 hereof,
Notwithstanding the foregoing, upon (ii) the number and kind of shares of
exercise of a stock-settled Stock Common Stock, units, or other rights
Appreciation Right, the number of shares subject to then outstanding Awards,
subject to the Award that are then being (iii) the exercise or base price for each
exercised shall be counted against the share or unit or other right subject to then
maximum aggregate number of shares of outstanding Awards, and (iv) any other
Common Stock that may be issued under terms of an Award that are affected by the
the Plan as provided above, on the basis event. Notwithstanding the foregoing, in
of one share for every share subject there- the case of Incentive Stock Options, any
to, regardless of the actual number of such adjustments shall, to the extent
shares used to settle the Stock Apprecia- practicable, be made in a manner con-
tion Right upon exercise. Any Awards or sistent with the requirements of Sec-
portions thereof that are settled in cash tion 424(a) of the Code.
and not in shares of Common Stock shall
not be counted against the foregoing 5. Participation and Awards.
maximum share limitations.
5.1 Designation of Participants. All Eligi-
4.2 Individual Participant Limi- ble Persons are eligible to be designated
tations. The maximum number of shares by the Committee to receive Awards and
of Common Stock that may be subject to become Participants under the Plan. The
Stock Options and Stock Appreciation Committee has the authority, in its dis-
Rights in the aggregate granted to any one cretion, to determine and designate from
Participant during any five consecutive time to time those Eligible Persons who
calendar year period shall be 4.5 million are to be granted Awards, the types of
shares. The maximum number of shares of Awards to be granted and the number of
Common Stock that may be subject to shares of Common Stock or units subject
Awards of Restricted Stock, Stock Units to Awards granted under the Plan. In
and Stock Awards in the aggregate selecting Eligible Persons to be Partic-
granted to any one Participant during any ipants and in determining the type and
five consecutive calendar year period shall amount of Awards to be granted under the
be 2.5 million shares. The foregoing limi- Plan, the Committee shall consider any
tations shall each be applied on an and all factors that it deems relevant or
aggregate basis taking into account appropriate.
Awards granted to a Participant under the
Plan as well as awards of the same type 5.2 Determination of Awards. The
granted to a Participant under any other Committee shall determine the terms and
equity-based compensation plan of the conditions of all Awards granted to Partic-
Company or any Affiliate. ipants in accordance with its authority
under Section 3.2 hereof. An Award may
4.3 Adjustments. If there shall occur any consist of one type of right or benefit
change with respect to the outstanding hereunder or of two or more such rights or
shares of Common Stock by reason of any benefits granted in tandem or in the alter-
recapitalization, reclassification, stock native. In the case of any fractional share
dividend, extraordinary dividend, stock or unit resulting from the grant, vesting,
split, reverse stock split or other dis- payment or crediting of dividends or divi-
tribution with respect to the shares of dend equivalents under an Award, the
Common Stock, or any merger, Committee shall have the discretionary
reorganization, consolidation, combina- authority to (i) disregard such fractional
tion, spin-off, or other similar corporate share or unit, (ii) round such fractional
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The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
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The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
action, as the case may be, shall be proposed transfer. The transfer of a Non-
deemed for purposes hereof to be a qualified Stock Option may be subject to
termination of the Service. such terms and conditions as the Commit-
tee may in its discretion impose from time
6.6 Stock Option Exercise; Tax With- to time. Subsequent transfers of a Non-
holding. Subject to such terms and con- qualified Stock Option shall be prohibited
ditions as shall be specified in an Award other than in accordance with Section 13.2
Agreement, a Stock Option may be hereof.
exercised in whole or in part at any time
during the term thereof by notice in the 6.8 Additional Rules for Incentive Stock
form required by the Company, together Options.
with payment of the aggregate exercise
price therefor and applicable withholding (a) Eligibility. An Incentive Stock
tax. Payment of the exercise price shall be Option may only be granted to an
made in the manner set forth in the Award Eligible Person who is considered an
Agreement, unless otherwise provided by employee for purposes of Treasury
the Committee: (i) in cash or by cash Regulation 1.421-7(h) with respect to
equivalent acceptable to the Committee, the Company or any Affiliate that quali-
(ii) by payment in shares of Common fies as a subsidiary corporation with
Stock that have been held by the Partic- respect to the Company for purposes
ipant for at least six months (or such of Section 424(f) of the Code.
period as the Committee may deem
appropriate, for accounting purposes or (b) Annual Limits. No Incentive Stock
otherwise) valued at the Fair Market Value Option shall be granted to a Participant
of such shares on the date of exercise, as a result of which the aggregate Fair
(iii) through an open-market, broker- Market Value (determined as of the
assisted sales transaction pursuant to Date of Grant) of the stock with respect
which the Company is promptly delivered to which incentive stock options under
the amount of proceeds necessary to sat- Section 422 of the Code are
isfy the exercise price, (iv) by a combina- exercisable for the first time in any
tion of the methods described above or calendar year under the Plan and any
(v) by such other method as may be other stock option plans of the Com-
approved by the Committee and set forth pany or any subsidiary or parent
in the Award Agreement. In addition to corporation, would exceed $100,000,
and at the time of payment of the exercise determined in accordance with Sec-
price, the Participant shall pay to the tion 422(d) of the Code. This limitation
Company the full amount of any and all shall be applied by taking stock
applicable income tax, employment tax options into account in the order in
and other amounts required to be withheld which granted.
in connection with such exercise, payable
under such of the methods described (c) Termination of Employment. An
above for the payment of the exercise Award of an Incentive Stock Option
price as may be approved by the Commit- may provide that such Stock Option
tee and set forth in the Award Agreement. may be exercised not later than 3
months following termination of
6.7 Limited Transferability of Nonqualified employment of the Participant with the
Stock Options. All Stock Options shall be Company and all Subsidiaries, or not
nontransferable except (i) upon the Partic- later than one year following a perma-
ipants death, in accordance with Sec- nent and total disability within the
tion 13.2 hereof or (ii) in the case of meaning of Section 22(e)(3) of the
Nonqualified Stock Options only, for the Code, as and to the extent determined
transfer of all or part of the Stock Option by the Committee to comply with the
to a Participants family member (as requirements of Section 422 of the
defined for purposes of the Form S-8 Code.
registration statement under the Securities
Act of 1933), as may be approved by the (d) Other Terms and Conditions; Non-
Committee in its discretion at the time of transferability. Any Incentive Stock
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The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
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The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
Participant shall have all rights of a share- may accelerate the vesting of a Stock Unit
holder with respect to the shares granted Award at any time. The requirements for
to the Participant under a Restricted Stock vesting of a Stock Unit Award may be
Award, including the right to vote the based on the continued Service of the
shares and receive all dividends and other Participant with the Company or an Affili-
distributions paid or made with respect ate for a specified time period (or periods),
thereto. The Committee may provide in an on the attainment of a specified perform-
Award Agreement for the payment of divi- ance goal (or goals) or on such other
dends and distributions to the Participant terms and conditions as approved by the
at such times as paid to shareholders Committee in its discretion. A Stock Unit
generally or at the times of vesting or Award may also be granted on a fully
other payment of the Restricted Stock vested basis, with a deferred payment
Award. date.
8.5 Section 83(b) Election. If a Partic- 9.3 Payment of Stock Unit Awards. A
ipant makes an election pursuant to Sec- Stock Unit Award shall become payable to
tion 83(b) of the Code with respect to a a Participant at the time or times
Restricted Stock Award, the Participant determined by the Committee and set
shall file, within 30 days following the Date forth in the Award Agreement, which may
of Grant, a copy of such election with the be upon or following the vesting of the
Company and with the Internal Revenue Award. Payment of a Stock Unit Award
Service, in accordance with the regu- may be made, at the discretion of the
lations under Section 83 of the Code. The Committee, in cash or in shares of Com-
Committee may provide in an Award mon Stock, or in a combination thereof,
Agreement that the Restricted Stock subject to applicable tax withholding
Award is conditioned upon the Partic- requirements. Any cash payment of a
ipants making or refraining from making Stock Unit Award shall be made based
an election with respect to the Award upon the Fair Market Value of the Com-
under Section 83(b) of the Code. mon Stock, determined on such date or
over such time period as determined by
9. Stock Unit Awards. the Committee.
9.1 Grant of Stock Unit Awards. A Stock 9.4 No Rights as Shareholder. The Partic-
Unit Award may be granted to any Eligible ipant shall not have any rights as a share-
Person selected by the Committee. The holder with respect to the shares subject
value of each stock unit under a Stock to a Stock Unit Award until such time as
Unit Award is equal to the Fair Market shares of Common Stock are delivered to
Value of the Common Stock on the appli- the Participant pursuant to the terms of
cable date or time period of determination, the Award Agreement.
as specified by the Committee. A Stock
Unit Award shall be subject to such 10. Stock Awards.
restrictions and conditions as the Commit-
tee shall determine. A Stock Unit Award 10.1 Grant of Stock Awards. A Stock
may be granted together with a dividend Award may be granted to any Eligible
equivalent right with respect to the shares Person selected by the Committee. A
of Common Stock subject to the Award, Stock Award may be granted for past
which may be accumulated and may be services, in lieu of bonus or other cash
deemed reinvested in additional stock compensation, as directors compensation
units, as determined by the Committee in or for any other valid purpose as
its discretion. determined by the Committee. A Stock
Award granted to an Eligible Person
9.2 Vesting of Stock Unit Awards. On the represents shares of Common Stock that
Date of Grant, the Committee shall in its are issued without restrictions on transfer
discretion determine any vesting require- and other incidents of ownership and free
ments with respect to a Stock Unit Award, of forfeiture conditions, except as other-
which shall be set forth in the Award wise provided in the Plan and the Award
Agreement, provided that the Committee Agreement. The Committee may, in
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The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
connection with any Stock Award, require Company or an Affiliate or (iii) has com-
the payment of a specified purchase price. mitted a material breach of any written
agreement with the Company or any
10.2 Rights as Shareholder. Subject to Affiliate with respect to confidentiality,
the foregoing provisions of this Section 10 noncompetition, nonsolicitation or sim-
and the applicable Award Agreement, ilar restrictive covenant. Subject to the
upon the issuance of the Common Stock first sentence of Section 11.1 hereof, in
under a Stock Award the Participant shall the event that a Participant is a party to
have all rights of a shareholder with an employment agreement with the
respect to the shares of Common Stock, Company or any Affiliate that defines a
including the right to vote the shares and termination on account of Cause (or a
receive all dividends and other dis- term having similar meaning), such defi-
tributions paid or made with respect nition shall apply as the definition of a
thereto. termination on account of Cause for
purposes hereof, but only to the extent
11. Change in Control. that such definition provides the Partic-
ipant with greater rights. A termination
11.1 Effect of Change in Control. Except on account of Cause shall be communi-
to the extent an Award Agreement pro- cated by written notice to the Partic-
vides for a different result (in which case ipant, and shall be deemed to occur on
the Award Agreement will govern and this the date such notice is delivered to the
Section 11 of the Plan shall not be Participant.
applicable), and except as may be limited
by the provisions of Section 11.3 hereof, (b) Change in Control. For purposes
notwithstanding anything elsewhere in the of this Section 11, a Change in Control
Plan or any rules adopted by the Commit- shall be deemed to have occurred upon:
tee pursuant to the Plan to the contrary, if
a Triggering Event shall occur within the (i) the occurrence of (A) an acquis-
12-month period beginning with a Change ition by any individual, entity or group
in Control of the Company, then, effective (within the meaning of Section 13(d)(3)
immediately prior to such Triggering or 14(d)(2) of the Exchange Act) (a
Event, (i) each outstanding Stock Option Person) of beneficial ownership
and Stock Appreciation Right, to the (within the meaning of Rule 13d-3
extent that it shall not otherwise have promulgated under the Exchange Act)
become vested and exercisable, shall of a percentage of the combined vot-
automatically become fully and immedi- ing power of the then outstanding vot-
ately vested and exercisable, without ing securities of the Company entitled
regard to any otherwise applicable vesting to vote generally in the election of
requirement, (ii) each Restricted Stock directors (the Company Voting
Award shall become fully and immediately Securities), but excluding (1) any
vested and all forfeiture and transfer acquisition directly from the Company
restrictions thereon shall lapse, and (other than an acquisition by virtue of
(iii) each outstanding Stock Unit Award the exercise of a conversion privilege
shall become immediately and fully vested of a security that was not acquired
and payable. directly from the Company), (2) any
acquisition by the Company or an
11.2 Definitions. Affiliate and (3) any acquisition by an
employee benefit plan (or related trust)
(a) Cause. For purposes of this Sec- sponsored or maintained by the
tion 11, the term Cause shall mean a Company or any Affiliate) (an
determination by the Committee that a Acquisition) that is thirty percent
Participant (i) has been convicted of, or (30%) or more of the Company Voting
entered a plea of nolo contendere to, a Securities; and (B) the termination of
crime that constitutes a felony under employment, within six (6) months fol-
Federal or state law, (ii) has engaged in lowing the Acquisition, of the individual
willful gross misconduct in the perform- who is the Chief Executive Officer of
ance of the Participants duties to the the Company immediately prior to the
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The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
Acquisition, for any reason other than (vii) the occurrence of any trans-
death, Disability, Cause, or voluntary action or event, or series of trans-
resignation (but excluding any termi- actions or events, designated by the
nation that constitutes a Constructive Board in a duly adopted resolution as
Termination or any resignation that representing a change in the effective
was requested by the Board or any control of the business and affairs of
such Person (or its employees or the Company, effective as of the date
representatives) that completes an specified in any such resolution.
Acquisition);
(c) Constructive Termination. For
(ii) at any time during a period of two
purposes of this Section 11, a
(2) consecutive years or less,
Constructive Termination shall mean a
individuals who at the beginning of
termination of employment by a Partic-
such period constitute the Board (and
ipant within sixty (60) days following the
any new directors whose election by
occurrence of any one or more of the
the Board or nomination for election by
following events without the Partic-
the Companys shareholders was
ipants written consent (i) any reduction
approved by a vote of at least two-
in position, title (for Vice Presidents or
thirds ( 2 3) of the directors then still in
above), overall responsibilities, level of
office who either were directors at the
authority, level of reporting (for Vice
beginning of the period or whose elec-
Presidents or above), base compensa-
tion or nomination for election was so
tion, annual incentive compensation
approved) cease for any reason
opportunity, aggregate employee bene-
(except for death, Disability or volun-
fits or (ii) a request that the Participants
tary retirement) to constitute a majority
location of employment be relocated by
thereof:
more than fifty (50) miles. Subject to the
(iii) an Acquisition that is fifty percent first sentence of Section 11.1 hereof, in
(50%) or more of the Company Voting the event that a Participant is a party to
Securities; an employment agreement with the
Company or any Affiliate (or a successor
(iv) the consummation of a merger, entity) that defines a termination on
consolidation, reorganization or similar account of Constructive Termination,
corporate transaction, whether or not Good Reason or Breach of Agree-
the Company is the surviving company ment (or a term having a similar
in such transaction, other than a meaning), such definition shall apply as
merger, consolidation, or reorganiza- the definition of Constructive Termi-
tion that would result in the Persons nation for purposes hereof in lieu of the
who are beneficial owners of the foregoing, but only to the extent that
Company Voting Securities out- such definition provides the Participant
standing immediately prior thereto with greater rights. A Constructive
continuing to beneficially own, directly Termination shall be communicated by
or indirectly, in substantially the same written notice to the Committee, and
proportions, at least fifty percent shall be deemed to occur on the date
(50%) of the combined voting power of such notice is delivered to the Commit-
the Company Voting Securities (or the tee, unless the circumstances giving rise
voting securities of the surviving entity) to the Constructive Termination are
outstanding immediately after such cured within five (5) days of such notice.
merger, consolidation or reorganiza-
tion; (d) Triggering Event. For purposes of
(v) the sale or other disposition of all this Section 11, a Triggering Event
or substantially all of the assets of the shall mean (i) the termination of Service
Company; of a Participant by the Company or an
Affiliate (or any successor thereof) other
(vi) the approval by the shareholders than on account of death, Disability or
of the Company of a complete liqui- Cause, (ii) the occurrence of a Con-
dation or dissolution of the Company; structive Termination or (iii) any failure by
or the Company (or a successor entity) to
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The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
entitled to any rights, payments or other under the Plan, which may be by delivery
benefits specified under an Award follow- of stock certificates, electronic account
ing the Participants death. During the life- entry into new or existing accounts or any
time of a Participant, an Award shall be other means as the Committee, in its dis-
exercised only by such Participant or such cretion, deems appropriate. The Commit-
Participants guardian or legal representa- tee may require that the stock certificates
tive. be held in escrow by the Company for any
shares of Common Stock or cause the
13.4 Deferrals of Payment. The Commit- shares to be legended in order to comply
tee may in its discretion permit a Partic- with the securities laws or other applicable
ipant to defer the receipt of payment of restrictions, or should the shares of
cash or delivery of shares of Common Common Stock be represented by book or
Stock that would otherwise be due to the electronic account entry rather than a cer-
Participant by virtue of the exercise of a tificate, the Committee may take such
right or the satisfaction of vesting or other steps to restrict transfer of the shares of
conditions with respect to an Award. If any Common Stock as the Committee consid-
such deferral is to be permitted by the ers necessary or advisable.
Committee, the Committee shall establish
rules and procedures relating to such 13.7 Securities Laws. No shares of
deferral in a manner intended to comply Common Stock will be issued or trans-
with the requirements of Section 409A of ferred pursuant to an Award unless and
the Code, including, without limitation, the until all then applicable requirements
time when an election to defer may be imposed by Federal and state securities
made, the time period of the deferral and and other laws, rules and regulations and
the events that would result in payment of by any regulatory agencies having juris-
the deferred amount, the interest or other diction, and by any exchanges upon which
earnings attributable to the deferral and the shares of Common Stock may be list-
the method of funding, if any, attributable ed, have been fully met. As a condition
to the deferred amount. precedent to the issuance of shares pur-
suant to the grant or exercise of an Award,
13.5 Employment or Service. Nothing in the Company may require the Participant
the Plan, in the grant of any Award or in to take any reasonable action to meet
any Award Agreement shall confer upon such requirements. The Committee may
any Eligible Person or any Participant any impose such conditions on any shares of
right to continue in the Service of the Common Stock issuable under the Plan as
Company or any of its Affiliates, or inter- it may deem advisable, including, without
fere in any way with the right of the limitation, restrictions under the Securities
Company or any of its Affiliates to termi- Act of 1933, as amended, under the
nate the employment or other service rela- requirements of any exchange upon which
tionship of an Eligible employee or a such shares of the same class are then
Participant for any reason at any time. listed, and under any blue sky or other
securities laws applicable to such shares.
13.6 Rights as Shareholder. A Partic- The Committee may also require the
ipant shall have no rights as a holder of Participant to represent and warrant at the
shares of Common Stock with respect to time of issuance or transfer that the shares
any unissued securities covered by an of Common Stock are being acquired only
Award until the date the Participant for investment purposes and without any
becomes the holder of record of such current intention to sell or distribute such
securities. Except as provided in Sec- shares.
tion 4.3 hereof, no adjustment or other
provision shall be made for dividends or 13.8 Tax Withholding. The Participant
other shareholder rights, except to the shall be responsible for payment of any
extent that the Award Agreement provides taxes or similar charges required by law to
for dividend payments or dividend equiv- be paid or withheld from an Award or an
alent rights. The Committee may amount paid in satisfaction of an Award.
determine in its discretion the manner of Any required withholdings shall be paid by
delivery of Common Stock to be issued the Participant on or prior to the payment
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The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
or other event that results in taxable 13.12 Severability. If any provision of the
income in respect of an Award. The Award Plan or any Award Agreement shall be
Agreement may specify the manner in determined to be illegal or unenforceable
which the withholding obligation shall be by any court of law in any jurisdiction, the
satisfied with respect to the particular type remaining provisions hereof and thereof
of Award. shall be severable and enforceable in
accordance with their terms, and all provi-
13.9 Unfunded Plan. The adoption of the sions shall remain enforceable in any other
Plan and any reservation of shares of jurisdiction.
Common Stock or cash amounts by the
Company to discharge its obligations 13.13 Foreign Jurisdictions. The Commit-
hereunder shall not be deemed to create a tee may adopt, amend and terminate such
trust or other funded arrangement. Except arrangements and grant such Awards, not
upon the issuance of Common Stock inconsistent with the intent of the Plan, as
pursuant to an Award, any rights of a Par- it may deem necessary or desirable to
ticipant under the Plan shall be those of a comply with any tax, securities, regulatory
general unsecured creditor of the Com- or other laws of other jurisdictions with
pany, and neither a Participant nor the respect to Awards that may be subject to
Participants permitted transferees or such laws. The terms and conditions of
estate shall have any other interest in any such Awards may vary from the terms and
assets of the Company by virtue of the conditions that would otherwise be
Plan. Notwithstanding the foregoing, the required by the Plan solely to the extent
Company shall have the right to implement the Committee deems necessary for such
or set aside funds in a grantor trust, sub- purpose. Moreover, the Board may
ject to the claims of the Companys cred- approve such supplements to or amend-
itors or otherwise, to discharge its ments, restatements or alternative ver-
obligations under the Plan. sions of the Plan, not inconsistent with the
intent of the Plan, as it may consider
necessary or appropriate for such pur-
13.10 Other Compensation and Benefit poses, without thereby affecting the terms
Plans. The adoption of the Plan shall not of the Plan as in effect for any other pur-
affect any other share incentive or other pose.
compensation plans in effect for the
Company or any Affiliate, nor shall the 13.14 Substitute Awards in Corporate
Plan preclude the Company from Transactions. Nothing contained in the
establishing any other forms of share Plan shall be construed to limit the right of
incentive or other compensation or benefit the Committee to grant Awards under the
program for employees of the Company or Plan in connection with the acquisition,
any Affiliate. The amount of any whether by purchase, merger, con-
compensation deemed to be received by a solidation or other corporate transaction,
Participant pursuant to an Award shall not of the business or assets of any corpo-
constitute includable compensation for ration or other entity. Without limiting the
purposes of determining the amount of foregoing, the Committee may grant
benefits to which a Participant is entitled Awards under the Plan to an employee or
under any other compensation or benefit director of another corporation who
plan or program of the Company or an becomes an Eligible Person by reason of
Affiliate, including, without limitation, any such corporate transaction in sub-
under any pension or severance benefits stitution for awards previously granted by
plan, except to the extent specifically such corporation or entity to such person.
provided by the terms of any such plan. The terms and conditions of the substitute
Awards may vary from the terms and
13.11 Plan Binding on Transferees. The conditions that would otherwise be
Plan shall be binding upon the Company, required by the Plan solely to the extent
its transferees and assigns, and the Partic- the Committee deems necessary for such
ipant, the Participants executor, admin- purpose.
istrator and permitted transferees and
beneficiaries.
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The Walt Disney Company Notice of 2007 Annual Meeting and Proxy Statement
13.15 Coordination with 2002 Executive 13.17 Governing Law. The Plan and all
Performance Plan. For purposes of rights hereunder shall be subject to and
Restricted Stock Awards, Stock Unit interpreted in accordance with the laws of
Awards and Stock Awards granted under the State of Delaware, without reference to
the Plan that are intended to qualify as the principles of conflicts of laws, and to
performance-based compensation applicable Federal securities laws.
under Section 162(m) of the Code, such
Awards shall be granted in accordance 14. Effective Date; Amendment and
with the provisions of the Companys 2002 Termination.
Executive Performance Plan (or any suc-
cessor plan) to the extent necessary to 14.1 Effective Date. The Plan as
satisfy the requirements of Section 162(m) amended and restated shall become
of the Code. effective immediately following its adop-
tion by the Board. The term of the Plan
13.16 Section 409A Compliance. To the shall be seven (7) years from the date of
extent applicable, it is intended that the the original adoption of the Plan (prior to
Plan and all Awards hereunder comply this amendment and restatement) by the
with the requirements of Section 409A of Board, subject to Section 14.3 hereof.
the Code, and the Plan and all Award
Agreements shall be interpreted and 14.2 Amendment. The Board may at any
applied by the Committee in a manner time and from time to time and in any
consistent with this intent in order to avoid respect, amend or modify the Plan. The
the imposition of any additional tax under Board may seek the approval of any
Section 409A of the Code. In the event amendment or modification by the
that any provision of the Plan or an Award Companys shareholders to the extent it
Agreement is determined by the Commit- deems necessary or advisable in its dis-
tee to not comply with the applicable cretion for purposes of compliance with
requirements of Section 409A of the Code, Section 162(m) or Section 422 of the
the Committee shall have the authority to Code, the listing requirements of the New
take such actions and to make such York Stock Exchange or other exchange
changes to the Plan or an Award Agree- or securities market or for any other pur-
ment as the Committee deems necessary pose. No amendment or modification of
to comply with such requirements, pro- the Plan shall adversely affect any Award
vided that no such action shall adversely theretofore granted without the consent of
affect any outstanding Award without the the Participant or the permitted transferee
consent of the affected Participant. Not- of the Award.
withstanding the foregoing or anything
elsewhere in the Plan or an Award Agree- 14.3 Termination. The Plan shall termi-
ment to the contrary, if a Participant is a nate on December 30, 2011, which is the
specified employee as defined in Sec- seventh anniversary of the date of its
tion 409A of the Code at the time of termi- adoption by the Board. The Board may, in
nation of Service with respect to an its discretion and at any earlier date,
Award, then solely to the extent necessary terminate the Plan. Notwithstanding the
to avoid the imposition of any additional foregoing, no termination of the Plan shall
tax under Section 409A of the Code, the adversely affect any Award theretofore
commencement of any payments or bene- granted without the consent of the Partic-
fits under the Award shall be deferred until ipant or the permitted transferee of the
the date that is six months following the Award.
Participants termination of Service (or
such other period as required to comply
with Section 409A).
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