Financial analyst Valliant Renegade explains why The Walt Disney Company CEO Bob Iger has sold over 825,000 shares of Disney stock in the last two years.
Bob Iger via New York Times Events YouTube
According to The Walt Disney Company’s Proxy statements over the past couple of years, Iger has sold 825,862 shares of Disney stock since 2022.
In the company’s 2022 Proxy Statement, Iger reportedly had 1,030,898 shares. However, in the 2024 Proxy Statement he only commands 205,036 shares. That’s a decline of just over 80%.
Financial analyst Valliant Renegade and tax expert Mexican Iron Man explain why he’s sold so much stock over the past two years.
Valliant Renegade initially reacted to Iger selling off so much stock saying, “First glance at this, I understand a lot of people’s guttural reaction is this is a panic mode for Iger. And it may be. That’s certainly a reasonable possibility given all of the machinations of The Walt Disney Company over the last couple of years.
Mexican Iron Man then explained, “Anytime you have an executive of any company, publicly traded, there’s a variety of reasons [why they would sell their stock]. One reason could be that they are on the way out the door. That’s usually the less common reason.”
Bob Iger attend the Guardians of the Galaxy Vol. 3 Premiere at the Dolby Theatre in Hollywood CA on Thursday, April 27, 2023.
(Photo: Alex J. Berliner/ABImages)
He continued, “The two more common reasons are because their executive compensation is tied, in the sense that they’re not getting actual cash on the W2, they’re actually getting stock, the value of which may show up on their W2 because that stock vests as part of a vesting stock option program. VSOPs is what they’re called, vesting stock option plans.”
“And so what often happens is that they have these option shares that are at say Price A, but when they vest out they’re available at say Price B and there’s that spread,” Mexican Iron Man explained. “So when those options come up on the schedule because there’s a clock going. Some companies go three years, some go six, some go five. Typically, they’re usually between two and five years and they’re tied to the contract the person has. So if they have an employment compensation contract for three years, they’re probably on a three year vesting schedule of four year vesting schedule if it’s four years. That’s just what’s most common. There are exceptions, but that’s most common.”
LOS ANGELES, CALIFORNIA – FEBRUARY 28: (L-R) The Walt Disney Company CEO Bob Iger, Showrunner/Executive Producer Jon Favreau, Pedro Pascal and Alan Bergman, Chairman of Disney Studios Content attends the Mandalorian special launch event at El Capitan Theatre in Hollywood, California on February 28, 2023. (Photo by Alberto E. Rodriguez/Getty Images for Disney)
Next, he shared, “So what happens then is that the stock matures in terms of that vesting schedule and so what’ll then happen is it triggers a taxable event, which then leads into the third most applicable reason why stock is sold. Is that stock will come into their personal portfolio through the designated broker of record. Any company that’s publicly traded that has any of these plans has an independent broker assigned. That could be Fidelity. That could be any number of companies.”
Valliant Renegade chimed in saying, “In the case of Disney it’s likely JP Morgan Chase.”
Mexican Iron Man continued, “What happens then is that this vesting of the stock creates a taxable event and so they will typically sell some stock. Now, they might sell some stock that’s recently vested or more likely what’s the case is they’ll sell some stock that they previously got that they were holding [that] hopefully has some appreciation so that after they use that money to pay the tax bill they still got some stock sticking around.”
He then shared a fourth option, “There’s other reasons, you know there could be a life-changing event. That’s the fourth and also least likely situation.” He provided an example of renovating a house and noted that Iger did do major renovations to his home recently.”
Bradley Cooper and Bob Iger attend the Guardians of the Galaxy Vol. 3 Premiere at the Dolby Theatre in Hollywood CA on Thursday, April 27, 2023.
(Photo: Alex J. Berliner/ABImages)
Valliant Renegade would also go in to detail about why Iger would liquidate his stock, “If Bob Iger’s compensation like many CEOs is largely tied to performance-based metrics with stock awards as is extraordinarily common with major Fortune 500 companies, S&P 500 companies. A lot of these CEOs will liquidate significant portions of the stock awards they get because, as in the case of Bob Iger, especially if you’re living in California, where you have the worst taxes in the world, virtually. He’s in a 37% federal tax bracket.”
He elaborated, “So if he gets $20 to $30 million of stock every year. He’s not getting cash. He’s getting $20 to $30 million in stock. The IRS, the tax man still comes knocking at the door. How do you pay those taxes? You can’t pay the IRS in shares of Disney. You typically have to liquidate to satisfy the tax bills. Not only for the federal government, but for the State of California.”
HOLLYWOOD, CALIFORNIA – APRIL 27: (L-R) The Walt Disney Company Chief Executive Officer Bob Iger and Chris Pratt attend the Guardians of the Galaxy Vol. 3 World Premiere at the Dolby Theatre in Hollywood, California on April 27, 2023. (Photo by Charley Gallay/Getty Images for Disney)
Later in the video, Valliant Renegade explained how this is common practice and reiterated that Iger has been doing this for years during his tenure as CEO of The Walt Disney Company.
He said, “The most common factor, folks, is that guys like Bob Iger get mostly paid in Disney shares. They have to pay taxes and for their two or three yachts like Bob Iger has, and all of his California parties with cash. You can’t pay for it in Disney stock.”
“And if Bob Iger had never done this before and if this was something new Bob Iger wouldn’t have sold off a million or two million or three million shares. He’d have been selling off 30 or 40 million shares. He’d have been selling off 10 times that much. But he’s done that over the course of time as common behavior each and every year,” Valliant Renegade explained.
LOS ANGELES, CALIFORNIA – FEBRUARY 28: (L-R) The Walt Disney Company CEO Bob Iger, Showrunner/Executive Producer Jon Favreau, Giancarlo Esposito, Amy Sedaris, Pedro Pascal, Emily Swallow, Katee Sackhoff, Executive Producer Rick Famuyiwa, Carl Weathers, Executive Producer Dave Filoni and Alan Bergman, Chairman of Disney Studios Content attend the Mandalorian special launch event at El Capitan Theatre in Hollywood, California on February 28, 2023. (Photo by Alberto E. Rodriguez/Getty Images for Disney)
What do you make of this explanation for why Bob Iger sold over 825,000 shares of Disney stock in the course of two years?
