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DIS » Topics » Deductibility of Compensation

This excerpt taken from the DIS DEF 14A filed Jan 22, 2010.

Deductibility of Compensation

Awards to executive officers under the Management Incentive Bonus Program and the long-term incentive program include a test specifically designed to ensure that the awards are fully deductible under Section 162(m). As required by Section 162(m), the criterion established must not be certain of being achieved at the time it is set. The regulations under Section 162(m) specifically indicate that a test based on profitability is not assured of being attained. Accordingly, our bonus program and equity award program both use a test based on adjusted net income, which means net income adjusted, as appropriate, to exclude the following items or variances: change in accounting principles; acquisitions; dispositions of a business; asset impairments; restructuring charges; extraordinary, unusual or

infrequent items; and extraordinary litigation costs and insurance recoveries. For the one- and two-year periods ending at the end of fiscal 2009, the adjusted net income targets were $2.3 billion and $5.8 billion, respectively, and the Company achieved adjusted net income of $3.4 billion and $7.9 billion, respectively. In fiscal 2009, net income was adjusted to exclude the impact of a gain on the sale of HBO Latin America ($71 million), restructuring and impairment charges ($310 million) and an accounting gain related to the merger of Lifetime into A&E Television Networks ($141 million). In fiscal 2008, net income was adjusted to exclude the impact of an accounting gain related to the acquisition of the Disney Stores North America ($11 million), a gain on the sale of movies.com ($9 million) and a bad debt charge for a receivable from Lehman Brothers ($57 million).


 

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Table of Contents

The Walt Disney Company Notice of 2010 Annual Meeting and Proxy Statement

 

This excerpt taken from the DIS DEF 14A filed Jan 16, 2009.

Deductibility of Compensation

Awards to executive officers under the Management Incentive Bonus Program and the long-term incentive program include a test for awards to executive officers specifically designed to ensure that the awards are fully deductible under Section 162(m). As required by Section 162(m), the criterion established must not be certain of being achieved at the time it is set. The regulations under Section 162(m) specifically indicate that a test based on profitability is not assured of being attained. Accordingly, our bonus program and

equity award program both use a test based on adjusted net income, which means net income adjusted, as appropriate, to exclude the following items or variances: change in accounting principles; acquisitions; dispositions of a business; asset impairments; restructuring charges; extraordinary, unusual or infrequent items; and extraordinary litigation costs and insurance recoveries. For the one and two-year periods ending at the end of fiscal 2008, the adjusted net income targets were $3.0 billion and $4.6 billion respectively, and the Company achieved adjusted net income of $4.5 billion and $8.5 billion, respectively. In fiscal 2008, net income was adjusted to exclude the impact of an accounting gain related to the acquisition of the Disney Stores North America ($11 million), a gain on the sale of movies.com ($9 million) and a bad debt charge for a receivable from Lehman Brothers ($57 million). In fiscal 2007, net income was adjusted to exclude the impact of a gain on sale of E! Entertainment ($487 million), a gain on sale of Us Weekly ($170 million), income from the discontinued operations of the ABC Radio business ($13 million) and an equity-based compensation plan modification charge ($30 million).


 

This excerpt taken from the DIS DEF 14A filed Jan 11, 2008.

Deductibility of Compensation

Awards to executive officers under the Management Incentive Bonus Program and the long-term incentive program include a test for awards to executive officers specifically designed to ensure that the awards are fully deductible under Section 162(m). As required by Section 162(m), the criterion established must not be certain of being achieved at the time it is set. The regulations under Section 162(m) specifically indicate that a test based on profitability is not assured of being attained. Accordingly, our bonus program and equity award program both use a test based on adjusted net income, which means net income adjusted, as appropriate, to exclude the following items or variances: change in accounting principles; acquisitions; dispositions of a business; asset impairments; restructuring charges; extraordinary, unusual or infrequent items; and litigation costs and insurance recoveries. For the one and two-year periods ending in 2007, the adjusted net income targets were $2.4 billion and $4.0 billion respectively, and the Company achieved adjusted net income of $4.0 billion and $7.3 billion, respectively.

EXCERPTS ON THIS PAGE:

DEF 14A
Jan 22, 2010
DEF 14A
Jan 16, 2009
DEF 14A
Jan 11, 2008

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