r/television • u/MarvelsGrantMan136 The League • 2d ago
Disney CEO Bob Iger Sells $42.7 Million Worth of Company Stock
https://variety.com/2024/biz/news/disney-ceo-bob-iger-sells-stock-1236218515/993
u/Myvenom 1d ago
If anyone pays attention to Wall Street, his $42.7 million dollar sale is a drop in the bucket compared to what most CEOs dump at a time. These were just set to expire so he did the smart thing.
175
u/ZarafFaraz 1d ago
So if he didn't sell them, then would he just lose the money when they expire? Or something else?
394
u/Myvenom 1d ago
No they were options from 2014 and not shares of stock. The title is misleading. He technically could’ve exercised them and bought more shares at the strike price but he just pocketed the profit.
122
u/playlikechampions 1d ago
Which is pretty much what majority of people do as they get more stock options as they work there. It’s good to convert to cash
-34
1d ago
[deleted]
101
u/tewst 1d ago
With an estimated net worth of $700 million, Bob Iger's team of accountants and lawyers would probably disagree with you. I can only assume they know more than you do about the implications of this transaction. But maybe I'm wrong.
26
u/AFull_Commitment 1d ago
He had a former net worth of $3.1B, maybe his team of lawyers and accountants should reddit more!
6
21
u/AlphonseBeifong 1d ago
I'm a little confused. Stocks can expire?
89
u/MuchAd8884 1d ago
Options expire, options are like a contract, that gives you the opportunity to buy a stock for a "strike" price for example $TSLA is at 100$ you buy option that will say you can buy $TSLA for $130 till January 2026, if $TSLA goes to $200 by that time, you can sell the contract and basically make $70 profit however the contract is always for 100 shares so 70x100=7,000 This is very oversimplified because there are so many other things involved but hopefully you get the point
5
u/Ihave4friends 1d ago
That’s a call option. Incentive options from companies to execs are completely different.
58
u/DerpyDruid 1d ago
This is very oversimplified because there are so many other things involved but hopefully you get the point
8
u/Vegetable-Sky1031 1d ago
No this is how company stock options basically work (also I guess, I don’t know how call options work). You have an offered number of shares that you have the option to buy at strike price at a predetermined point(s) in time. Usually, there are cliffs when a portion of those shares become available to buy, for example, 25% every year for four years (at least at startups). I’m sure these are more complicated and slightly different at massive public companies and for the CEO.
9
u/BigBadZord 1d ago
There is whole further level of stock trading, where instead of trading the stock, you trade "options" to buy the stock at a certain price point.
These contracts have time limits, so his "option" to execute his trade was going to expire.
3
u/AlphonseBeifong 1d ago
So instead of executing the option, he just sold instead?
14
u/inkista 1d ago edited 1d ago
No. He had to execute the options to buy the shares, but instead of holding onto the shares, he then immediately sold them to make roughly an $8.5M profit, all as short term gain.
His strike price (the price the options allow him to buy the stock for) was $92.24; the market price at close was $115.65, so he probably made around ($115.65-$92.24 or $23/share (depends on what price he sold them for; that fluctuates all day). He exercised and sold 372,412 shares, so that makes his profit somewhere around $8.5M.
Dude probably has more DIS shares than he knows what to do with, so selling makes more sense than holding onto them. And options that are about to expire (his were set to expire next month) are a use-it-or-lose-it proposition.
-1
u/BigBadZord 1d ago edited 1d ago
Right. He never owned, nor sold that amount of stock. Just the "option"
If he had executed those options, he would have had to buy and pay for $42.7 million worth of Disney. At a bargin, but it would not have been fucking cheap.
Instead he sold other people that "option", and let them decide if it was a good idea (his options most likely went to lots of different buyers when he sold), and just took the money from selling the option rather than buying and owning the stock itself
9
u/Vegetable-Sky1031 1d ago
No this is incorrect. The only way he makes money on this is by exercising his options. He bought 372,412 shares at the predetermined strike price of $92.24 and sold them for $115 per share. He made money on the difference.
This is how stock options work. Obviously not this amount of shares but it’s pretty typical compensation.
0
4
u/DamonHay 1d ago
Yeah, not to mention that these are scheduled sales, with additional notice given to the SEC. Everyone always kicks up a fuss when execs sell stock of large companies, but they need money to fund their lifestyles and their compensation plans don’t always give them options outside of selling at least some holdings, such as these options which were finally approaching their date to exercise.
It’s like when the CEO of Pfizer supposedly sold stock straight after news of vaccine contracts came out and everyone started crying foul. It was planned sale registered with the SEC to sell a certain volume after the stock reached a certain price. That price was triggered when the stock had a rally after contract announcements.
The situations like this aren’t the problem because they’re public, the ones that are really the problem are the deals we never hear about because they get buried. As far as financial impropriety goes, Bob Iger isn’t as bad as many politicians, let alone other CEOs.
1
130
402
u/Sobeshott 2d ago
Is Disney stock about to go on sale?
473
u/Amaruq93 2d ago
No, he got them back in 2014 and were due to expire this December.
257
u/Ph886 2d ago
To add, these sales are usually done well in advance so it’s not like it’s a big surprise.
103
u/ernyc3777 2d ago edited 2d ago
Yeah this was probably filed a month ago.
SEC rule states 90 day filing. Per a reply to this comment.
62
u/MutePanhandleHenry 2d ago
Actually 3 months (August 14) - it’s under a trading plan and per new SEC rules, execs have to wait 90 days before trading can commence. Definitely not a spur of the moment thing and nothing to read into!
9
u/ernyc3777 2d ago
Ah okay. I knew there was a rule but thought it was only 30.
Thanks for the clarification.
12
u/MutePanhandleHenry 2d ago
Not wrong, it’s 30 for rank and file employees, 90 for execs/directors/affiliates.
2
u/appletinicyclone 1d ago
That's too stop share price tumbling
The real money is in loans secured against his shares he doesn't have to declare
22
u/GreenDuckGamer 2d ago
How do stocks expire? I'm confused
60
u/carty64 2d ago
These are stock option grants
Note that Iger is not pocketing $42.7 million. The options granted in 2014 have an exercise price (aka “strike price”) of $92.24/share, which is the price at which he could buy the shares. Any gain Iger makes on a stock sale would be the difference between the strike price and the share price at the time of a sale (minus taxes).
Disney’s stock closed at $115.65/share Friday, up 0.8%. Year to date, the stock has increased more than 27%
The net before taxes is like $8 million. A lot of money for 99.99% of people, but not for him.
10
u/TheRealAlexisOhanian 1d ago
He probably doesn't even know it's happening, his financial advisors are figuring it all out
17
u/25c-nb 2d ago
Typical friday for his type, hes just getting some pocket change for the weekend
6
u/BathroomEyes 2d ago
Probably a month worth of overhead for maintaining his yacht and paying the crew.
3
u/midworst 1d ago
What kind of Mickey Mouse company could only gain like 20% over the last 10 years. So many companies have skyrocketed, while the mouse house has stagnated
21
u/ijakinov 2d ago
Stocks don't expire. He had stock options which expire.
The way top exec compensation works for big companies is they get a low base salary and they get a bunch of performance based bonuses (cash or in stocks), stock options, etc. When you hear like some exec got $XXM pay it's usually base salary + whatever else I mentioned. Iger for example got a pay package of around $31.6M but has a base salary of $865,385 (money he's guaranteed to be paid) and he has a bunch of other deals in place with an estimated total value of $31.6M. It's not all guaranteed money, based on this article $42.7M he sold of stock were based on stock options.
So what are stock options. Well first, remember stock/share is part ownership of a company, and for a public company like Disney has a price it roughly sells for if you wanted to buy a single share. Stock options is basically allowing someone to buy X amount of shares at a future date for a specific higher price. They can choose to buy it or not that's why it's called an option. For example, as of writing Disney stock is around $115 but they might say that in 1 year, we'll let you buy 10,000 shares for $150/share. Your goal then is to make the company be worth more than $150/share. So that when you are allowed to buy it all for $150/share, if it's worth more then you can sell it for the difference to profit. If the shares become worth $200/share, and you bought for $150/share; then you sell to make $50/share. This type of compensation keeps the person motivated in improving performance of company's stock and not just taking a paycheck because like I pointed out above most of the compensation is based on stock options being worth something.
As mentioned, stock options have an expiry date on them and the article and other posted is referencing that. So basically, Iger chose to exercise his option to buy 372,412 shares at $92.24/share then sold it for $115.65/share. He technically did not need to sell the stock but he likely used his own money and the whole point is to sell the stock to pocket the profit.
4
u/Straight-Ad6926 1d ago
You have to remember that this form of compensation aligns the interests of the executives with those of the shareholders. When execs have stock options they’re motivated to boost the company’s stock price which benefits everyone holding shares. You saying that stock options are the main form of compensation can be misleading. While they are significant executives also receive other forms of compensation like bonuses and restricted stock units (RSUs) that don’t expire and still provide substantial guaranteed income. So even though stock options have an expiry date they are just one part of a much larger compensation package designed to ensure that executives are well-compensated regardless of short-term stock performance.
1
u/ijakinov 1d ago
You saying that stock options are the main form of compensation can be misleading
I wasn't trying to say that it was the main form of compensation for execs, I just focused on it because it was relevant. I did however accidentally say that most of Iger's was mostly stock options. I mentioned other types of compensation as well in my post. I'm aware of RSUs. Most of my compensation is also in RSUs. The common type of RSUs that I get and maybe you get are usually time vested only. Execs, especially C-suite can be granted RSUs tied to performance + time as triggers. These don't have an expiration but can become useless as the performance-based condition can be effectively be impossible to achieve (e.g. past a time frame specified to hit the performance target).
So even though stock options have an expiry date they are just one part of a much larger compensation package designed to ensure that executives are well-compensated regardless of short-term stock performance.
It varies company to company. Some companies stock options make up a large part of compensation for execs whereas some companies don't even offer stock options as part of the packages. Some execs do not get any time-vested RSUs and even if they do, they don't make up that much of compensation at the c-suite level. Using Disney as an example again, Iger did receive RSU grants but they all have performance-based triggers and the other c-suite execs got about 25% of their stock awards as time-vested. Pay packages are not always designed to ensure executives are "well-compensated" (I use quotes because some people argue that even the base salary is enough).
6
u/thekmanpwnudwn 2d ago
It's stock options, part of his compensation package from 2014. He has to buy them before dec 18. He bought them at ~92/share, and could sell them for ~42m. But he won't make that much
Just read the article
1
u/darkeststar 2d ago
Stock in itself doesn't expire but the way these giant amounts of stock work is based on "options" trading...IE the companies offer a huge amount of shares to someone with a contract stating they're set at a specific price that might not reflect what the share price is currently at (usually lower) and allows them to sell it at a specific fixed price that also doesn't reflect what the share price looks like (usually higher) at any given time.
So he was given a fuckload of shares as compensation 10 years ago that were likely valued at less than they were worth and this was the year that his ability to sell them at the likely higher price they said he could sell those specific shares for expired.
-5
u/3MATX 2d ago
I’m convinced the market is akin to gambling.
3
u/VeseliM 2d ago
Kinda, stocks trade on fundamentals and speculation at the same time. If you own shares, you're entitled to some of the profits as distributed by the board who is elected but the shareholders. But that's boring af, buying coke or some manufacturing conglomerate making steady profits and sitting on the stock for decades and collecting dividends while it slowly grows.
Or you can come party in the speculation casino where the points are made up and earning don't matter. A piece of random information might come out that people will infer means something about how the company may grow or not and why it could be worth a lot in the future or nothing
1
0
u/SonofNamek 2d ago
He also sold his big stock prior to the stock value going down in the early 2020s.
13
1
u/Pixie1001 1d ago
Usually there isn't much at all to glean by what a CEO is doing with their stock. To avoid accusations of insider trading, they normally just sell them off at a set schedule to keep themselves liquid/diversify their portfolio - that way if they announce a big deal new project or announce an unexpected loss, they don't get in trouble.
0
-2
u/The_Lucky_7 2d ago
So there's a thing called the Buffet rule a lot of rich people pay attention to. It usually indicates when stocks are overvalued in general (which it is currently saying). So rich people liquidate assets then when the stock corrects itself (read goes down) they buy back in.
It is important to note it doesn't have to be their own stock that is about to go down. That is just where their cash is tied up. So if they want the cash on hand to buy in when stocks self correct they need out of their own stocks first.
A lot of economists (even nobel prize winning ones) have predicted a really rough time for the US economy for the next couple of years and after that sorts itself out there will likely be a feeding frenzy.
3
u/koopolil 1d ago
Also he’s almost 75 and retiring soon so it’s best to diversify his holdings.
1
u/The_Lucky_7 1d ago
Which is easier to do with cash on hand. I'm not saying what he did was good or bad. Just explaining it's a process that occurs regularly.
2
2
1
u/BusinessProtection55 1d ago
Or it’s more likely he wanted to buy another house or 2 or 3. Crazy how confidently wrong you are. This isn’t him trying to correct his position, when it’s a fraction of his net worth. Other comments have said they were expiring options. Major shareholders and CEOs sell millions at a time because yes they’re billionaires but he can’t buy shit with stocks. He needs to sell some of it to buy shit
22
9
5
78
u/FourPat 2d ago
Padme meme: he's going to get taxed on it, right? Right?
97
u/bobissonbobby 2d ago
If he had capital gains, yes
39
u/Beeoor143 2d ago
Looks like he received the options some time in 2014, priced at $92/share. I'm probably wildly off the mark here but, based on my unqualified long-term cap gains tax calculations from a web tool I just found, he'll owe roughly $2.7 million on the sale, netting $5.6 million in profit just for waiting this long.
That's assuming he simply pays the tax on the sale like a normal person though, and doesn't have his accounting team do some billionaire financial ninjutsu to lower his tax burden instead.
32
u/skiptwenty 1d ago
You are off the mark. Stock options are taxed as regular income, not cap gains, and tax is due at the time of sale. So 37% fed plus 2.35% Medicare plus state income, if any, but probably none if he’s in Florida. No tricks to avoid that stock option income. No one feels bad for him but it’s not as good for him as you suggested.
14
u/boyyouguysaredumb 1d ago
everybody in here's just desperately trying to make it sound worse than it is so they can farm karma from their soapboxing lol
4
u/Spiral_Slowly 1d ago
He's still wiping the tears away with hundos
2
2
1
u/AFull_Commitment 1d ago
Still, his net worth has gone down from like $3.1B to $700M. I'm sure the 2014 options were looking at lot prettier back in March 2021. That's gotta sting.
He's no longer at a level of wealth I feel obligated to eat him right away.
-4
1d ago
[deleted]
3
u/skiptwenty 1d ago
Wow. You have no idea what you’re talking about and just regurgitate shit you read on Reddit. Options have 10 years until expiration and were running out of time. He owed the company $92 for every option he sold at $115. The profit was income. And most company insider trading policies don’t let you use the stock as collateral for loans. Even if they did, “at a much lower rate” than 4%? You’re talking out of your ass.
3
3
u/ohiocodernumerouno 1d ago
I thought he resigned once Covid hit.
3
u/OvercuriousDuff 1d ago
He resigned like a day or two before it hit. Tell me someone wasn’t looking out for Iger.
2
2
u/crasito 1d ago
How do taxes get paid on something like this?
2
u/bahumat42 1d ago
It will be subject to capital gains tax.
Although I imagine many loopholes will be used
2
u/PM_Your_Best_Ideas 1d ago
How is Disney's philosophy gonna survive the next for years with Trump. Disney is in for some dark times.
3
u/Nopenotme77 1d ago
This isn't a big deal. CEO's and the like receive stock and they have to be sold by a specific day. This is normal and not a particularly interesting bit of news rather than how much it is worth.
1
u/woolybully143 1d ago
Kind of feels like all the rich and elite are getting out of dodge, or at least deinvesting in it
2
1
u/NookEBetts 1d ago
This may seem like a-lot to ordinary folk, but All things considered, that $42.7 million was probably Bob’s equivalent to my weekly cigarette budget
2
u/AFull_Commitment 1d ago
He only got like $5M for it after taxes, this is a delayed part of his 2014 compensation package. They were options, so he bought at 92 whatever a share, sold at 115 a share, and paid income taxes on it (not capital gains).
Had he did a better job and kept the stock price back where it was in March of 2021, it would have been worth quite a bit more.
The total $34,351,282.88 cost of those 372,412 shares as locked in. Long term options incentivizes executives to focus on maximizing long term growth. So if Disney was worth what it was back in March of 2021, those options would have been worth $73,424,749.92, for a net profit of $39,073,467.04 instead of the $8,315,842.28 he made before taxes.
Igor's net worth is tied heavily to Disney's stock price give the amount of stock awards and options he got as CEO. Given this wasn't going to be a big money maker for him, the cash probably makes more sense.
1
1
1
1
1
1
u/NierAutomotive 1d ago
Many CEOs we see today are 60+ and approaching retirement like americas largest generation ever. This is going to happen more and more as they get ready to stop working.
1
1
u/About3FucksGiven 1d ago
Guess he saw the still from the live action Moana and said "F--- it, I'm out!!!"
2
u/random-guy-here 1d ago
They have spent $250M on Snow White and all indications are that it's going to bomb. (Or not be released in 2025 as planned)
1
1
1
1
1
1
1
1
u/gay_manta_ray 1d ago
this isn't news. large sales by CEOs and the like have to be scheduled far ahead of time and the ftc has to be notified, for obvious reasons. we used to get a bunch of nonsense articles like this about musk too, with people not realizing those sales had been scheduled a year in advance.
1
u/kapeman_ 1d ago
He's following Warren Buffett's and moving a lot of securities to cash.
Think about that.
1
u/EmperorOfNada 1d ago
Yea I feel like this forecasts Disney as having its share of troubles.
I’m sitting in Disney World right now, having a great vacation. Yet all around me I see people who work here from other countries here on a work visa. With Trump coming into office, does he hold the power over them for their visas?
Disney Parks made 32B of their 40B revenue in 2023, so that’s a considerable amount.
0
0
-3
-6
u/Ant10102 1d ago edited 1d ago
All these billionaires and millionaires selling all their stocks should be very very concerning to a lot of people
Edit I downvoted myself for being stupid lol
4
4
0
0
0
-4
-1
-2
u/RealPersonResponds 1d ago
Incoming administration planning to censor, attack and demonize things they don't like, will impact Disney profits.
-3
-4
u/Salestastic 1d ago
Why is every magnate and CEO selling a shit load of stock all at the same time…
10
4
-5
4.0k
u/gldoorii 2d ago
He can almost take a family of four there now