January 28, 2011 Dear Fellow Shareholder, · 2019-09-29 · January 28, 2011 Dear Fellow Shareholder, I am pleased to invite you to our 2011 Annual Meeting of shareholders, which

January 28, 2011

Dear Fellow Shareholder,

I am pleased to invite you to our 2011 Annual Meeting of shareholders, which will be held onWednesday, March 23, 2011, at 10 a.m. at the Rose Wagner Performing Arts Center in Salt LakeCity, Utah.

At the meeting, we will be electing 13 members of our Board of Directors. We will also be consider-ing ratification of the selection of PricewaterhouseCoopers LLP as our independent registeredpublic accountants, adoption of a new stock incentive plan, an advisory vote on executivecompensation, an advisory vote on the frequency of votes on executive compensation and up toone shareholder proposal.

You may vote your shares using the Internet or the telephone by following the instructionson page 77 of the proxy statement. Of course, you may also vote by returning a proxy card or vot-ing instruction form if you received a paper copy of this proxy statement.

If you wish to attend the meeting in person, you will need to request an admission ticket inadvance. You can request a ticket by following the instructions set forth on page 78 of the proxystatement. If you cannot attend the meeting, you can still listen to the meeting, which will bewebcast and available on our Investor Relations website.

Thank you very much for your continued interest in The Walt Disney Company.

Sincerely,

Robert A. IgerPresident and Chief Executive Officer

The Walt Disney Company Notice of 2011 Annual Meeting and Proxy Statement500 South Buena Vista StreetBurbank, California 91521January 28, 2011

Notice of Meeting

The 2011 Annual Meeting of shareholders of The Walt Disney Company will be held at theRose Wagner Performing Arts Center, 138 West Broadway, Salt Lake City, Utah onWednesday, March 23, 2011, beginning at 10:00 a.m. The items of business are:

1. Election of the 13 nominees named in the proxy statement as Directors, each for a term ofone year.

2. Ratification of the appointment of PricewaterhouseCoopers LLP as the Company’sindependent registered public accountants for fiscal 2011.

3. Adoption of the Company’s 2011 Stock Incentive Plan.

4. Consideration of an advisory vote on executive compensation.

5. Consideration of an advisory vote on the frequency of votes on executive compensation.

6. Consideration of one shareholder proposal, if presented at the meeting.

Shareholders of record of Disney common stock (NYSE: DIS) at the close of business onJanuary 24, 2011, are entitled to vote at the meeting and any postponements or adjourn-ments of the meeting. A list of these shareholders is available at the offices of the Companyin Burbank, California.

Alan N. BravermanSenior Executive Vice President, General Counsel

and Secretary

Important Notice Regarding the Availability ofProxy Materials for the Shareholder

Meeting to be Held on March 23, 2011The proxy statement and annual report to shareholders and the means to vote by Internet areavailable at www.ProxyVote.com.

Your Vote is ImportantPlease vote as promptly as possibleby using the Internet or telephone or

by signing, dating and returning the Proxy Cardmailed to those who receive paper copies of this proxy statement

If you plan to attend the meeting, you must request an admission ticket in advancefollowing the instructions set forth on page 78 of this proxy statement. Tickets will beissued to registered and beneficial owners and to one guest accompanying eachregistered or beneficial owner.

Requests for admission tickets will be processed in the order in which they are received andmust be requested no later than March 18, 2011. Please note that seating is limited andrequests for tickets will be accepted on a first-come, first-served basis. On the day of themeeting, each shareholder will be required to present a valid picture identification such as adriver’s license or passport with their admission ticket. Seating will begin at 9:00 a.m. and themeeting will begin at 10:00 a.m. Cameras (including cell phones with photographiccapabilities), recording devices and other electronic devices will not be permitted at themeeting.

The Walt Disney Company Notice of 2011 Annual Meeting and Proxy Statement

Table of Contents

1 Introduction

1 Corporate Governance and BoardMatters

1 Corporate Governance Guidelines andCode of Ethics

1 Chairman of the Board

2 Committees

4 The Board’s Role in Risk Oversight

4 Director Independence

5 Director Selection Process

8 Board Compensation

12 Certain Relationships and RelatedPerson Transactions

13 Shareholder Communications

14 Executive Compensation

14 Compensation Committee Report

14 Compensation Discussion and Analysis

33 Compensation Tables

54 Audit-Related Matters

54 Audit Committee Report

55 Policy for Approval of Audit andPermitted Non-audit Services

55 Auditor Fees and Services

56 Items to Be Voted On

56 Election of Directors

63 Ratification of Appointment ofIndependent Registered PublicAccountants

63 Approval of the 2011 Incentive Plan

73 Advisory Vote on ExecutiveCompensation

74 Advisory Vote on Frequency of Votes onExecutive Compensation

74 Shareholder Proposal

77 Other Matters

77 Information About Voting and theMeeting

77 Shares Outstanding

77 Voting

78 Attendance at the Meeting

79 Other Information

79 Stock Ownership

80 Section 16(a) Beneficial OwnershipReporting Compliance

80 Electronic Availability of ProxyStatement and Annual Report

80 Reduce Duplicate Mailings

81 Proxy Solicitation Costs

Annex

A-1 2011 Stock Incentive Plan

The Walt Disney Company Notice of 2011 Annual Meeting and Proxy Statement500 South Buena Vista StreetBurbank, California 91521January 28, 2011

IntroductionThis proxy statement contains informationrelating to the annual meeting of share-holders of The Walt Disney Company to beheld on Wednesday, March 23, 2011,beginning at 10:00 a.m. local time, at theRose Wagner Performing Arts Center, 138West Broadway, Salt Lake City, Utah. Onor about January 28, 2011, we began mail-ing a notice containing instructions onhow to access this proxy statement andour annual report online and we beganmailing a full set of the proxy materials toshareholders who had previouslyrequested delivery of the materials inpaper copy. For information on how tovote your shares, see the instructionsincluded on the proxy card or instructionform and under “Information About Votingand the Meeting” on page 77.

Corporate Governance andBoard MattersThere are currently 13 members of theBoard of Directors:

Susan E. ArnoldJohn E. BrysonJohn S. ChenJudith L. EstrinRobert A. IgerSteven P. JobsFred H. Langhammer

Aylwin B. LewisMonica C. LozanoRobert W. MatschullatJohn E. Pepper, Jr.Sheryl K. SandbergOrin C. Smith

The Board met eight times during fiscal2010. Each Director other than Mr. Jobsattended at least 75% of all of the meet-ings of the Board and Committees onwhich he or she served. As was the caselast year, Mr. Jobs’ ability to attend Boardmeetings was influenced by healthconsiderations. All but one of our Direc-tors attended the Company’s 2010 annualshareholders meeting. Under the Compa-ny’s Corporate Governance Guidelines,each Director is expected to dedicatesufficient time, energy and attention toensure the diligent performance of his orher duties, including by attending annualand special meetings of the shareholdersof the Company, the Board and Commit-tees of which he or she is a member.

Corporate Governance Guidelinesand Code of Ethics

The Board of Directors has adopted Corpo-rate Governance Guidelines, which setforth a flexible framework within which theBoard, assisted by its Committees, directsthe affairs of the Company. The Guidelinesaddress, among other things, thecomposition and functions of the Board ofDirectors, director independence, stockownership by and compensation of Direc-tors, management succession and review,Board Committees and selection of newDirectors.

The Company has Standards of BusinessConduct, which are applicable to allemployees of the Company, including theprincipal executive officer, the principalfinancial officer and the principal account-ing officer. The Board has a separate Codeof Business Conduct and Ethics for Direc-tors, which contains provisions specificallyapplicable to Directors.

The Corporate Governance Guidelines, theStandards of Business Conduct and theCode of Business Conduct and Ethics forDirectors are available on the Company’sInvestor Relations website under the“Corporate Governance” heading atwww.disney.com/investors and in print toany shareholder who requests them fromthe Company’s Secretary. If the Companyamends or waives the Code of BusinessConduct and Ethics for Directors, or theStandards of Business Conduct withrespect to the chief executive officer,principal financial officer or principalaccounting officer, it will post the amend-ment or waiver at the same location on itswebsite.

Chairman of the Board

John Pepper became non-executive Chair-man of the Board effective January 1, 2007.The Chairman of the Board organizesBoard activities to enable the Board toeffectively provide guidance to and over-sight and accountability of management.

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To fulfill that role, the Chairman, amongother things: creates and maintains aneffective working relationship with theChief Executive Officer and other mem-bers of management and with the othermembers of the Board; provides the ChiefExecutive Officer ongoing direction as toBoard needs, interests and opinions; andassures that the Board agenda isappropriately directed to the matters ofgreatest importance to the Company. Incarrying out his responsibilities, theChairman preserves the distinctionbetween management and oversight,maintaining the responsibility of manage-ment to develop corporate strategy andthe responsibility of the Board to reviewand express its views on corporate strat-egy. The functions of the Chairmaninclude:

• Presiding over all meetings of the Boardof Directors and shareholders, includingregular executive sessions ofnon-management Directors of the Board;

• Establishing the annual agenda of theBoard and agendas of each meeting inconsultation with the chief executiveofficer;

• Advising Committee chairs, in con-sultation with the chief executive officer,on meeting schedules, agenda andinformation needs for the Board commit-tees;

• Defining the subject matter, quality,quantity and timeliness of the flow ofinformation between management andthe Board and overseeing the dis-tribution of that information;

• Coordinating periodic review of manage-ment’s strategic plan for the Company;

• Leading the Board review of the succes-sion plan for the chief executive officerand other key members of senior man-agement;

• Coordinating the annual performancereview of the chief executive officer andother key senior managers;

• Consulting with Committee Chairs aboutthe retention of advisors and experts;

• Acting as the principal liaison betweenthe independent directors and the chiefexecutive officer on sensitive issues;

• Working with the Governance and Nomi-nating Committee to develop and main-tain the agreed-on definitions of the roleof the Board and the organization, proc-esses and governance guidelinesnecessary to carry it out;

• After consulting with other Boardmembers and the chief executive officer,making recommendations to the Gover-nance and Nominating Committee as tothe membership of various Board Com-mittees and Committee Chairs;

• Working with management on effectivecommunication with shareholders,including being available for consultationand direct communication upon thereasonable request of major share-holders;

• Encouraging active participation by eachmember of the Board; and

• Performing such other duties and serv-ices as the Board may require.

The Company’s Corporate GovernanceGuidelines specify that the Chairman of theBoard will be an independent Director. TheBoard believes that this structure isappropriate in light of the current mix ofBoard members and the functioning of theBoard at this time. If the Board determinesthat a different structure would betterserve the best interests of the share-holders, the Board will disclose in theCompany’s proxy statement the reasonsfor a different arrangement and appoint anindependent director as lead director withduties and responsibilities detailed in theCorporate Governance Guidelines.

Committees

The Board of Directors has four standingcommittees: Audit, Governance andNominating, Compensation and Executive.Information regarding these committees isprovided below. The charters of the Audit,Governance and Nominating andCompensation Committees are availableon the Company’s Investor Relationswebsite under the “Corporate Gover-nance” heading at www.disney.com/investors and in print to any shareholderwho requests them from the Company’sSecretary.

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The members of the Audit Committee are:

Monica C. LozanoRobert W. MatschullatJohn E. Pepper, Jr.Orin C. Smith (Chair)

The functions of the Audit Committee aredescribed below under the heading “AuditCommittee Report.” The Audit Committeemet nine times during fiscal 2010. All ofthe members of the Audit Committee areindependent within the meaning of SECregulations, the listing standards of theNew York Stock Exchange and theCompany’s Corporate Governance Guide-lines. The Board has determined thatMr. Smith, the chair of the Committee, andMr. Matschullat and Mr. Pepper are quali-fied as audit committee financial expertswithin the meaning of SEC regulations,and that they have accounting and relatedfinancial management expertise within themeaning of the listing standards of theNew York Stock Exchange, and thatMs. Lozano is financially literate within themeaning of the listing standards of theNew York Stock Exchange.

The members of the Governance andNominating Committee are:

Judith L. EstrinAylwin B. Lewis (Chair)Robert W. MatschullatJohn E. Pepper, Jr.Sheryl K. Sandberg

The Governance and Nominating Commit-tee is responsible for developing andimplementing policies and practices relat-ing to corporate governance, includingreviewing and monitoring implementationof the Company’s Corporate GovernanceGuidelines. In addition, the Committeeassists the Board in developing criteria foropen Board positions, reviews back-ground information on potential candi-dates and makes recommendations to theBoard regarding such candidates. TheCommittee also reviews and approvestransactions between the Company andDirectors, officers, 5% stockholders andtheir affiliates under the Company’sRelated Person Transaction ApprovalPolicy, supervises the Board’s annual

review of Director independence and theBoard’s annual self-evaluation, makesrecommendations to the Board withrespect to compensation of non-executivemembers of the Board of Directors(starting in fiscal 2011), makes recom-mendations to the Board with respect toCommittee assignments and oversees theBoard’s director education practices. TheCommittee met five times during fiscal2010. All of the members of the Gover-nance and Nominating Committee areindependent within the meaning of the list-ing standards of the New York StockExchange and the Company’s CorporateGovernance Guidelines.

The members of the CompensationCommittee are:

Susan E. ArnoldJohn S. ChenFred H. Langhammer (Chair)Aylwin B. LewisJohn E. Pepper, Jr.

The Compensation Committee is respon-sible for reviewing and approving corporategoals and objectives relevant to the com-pensation of the Company’s chief execu-tive officer, evaluating the performance ofthe chief executive officer and, either as acommittee or together with the otherindependent members of the Board,determining and approving the compensa-tion level for the chief executive officer. TheCommittee is also responsible for makingrecommendations to the Board regardingthe compensation of other executive offi-cers and certain compensation plans, andthe Board has also delegated to the Com-mittee the responsibility for approvingthese arrangements. Additional informationon the roles and responsibilities of theCompensation Committee is providedunder the heading “Compensation Dis-cussion and Analysis,” below. In fiscal 2010,the Compensation Committee met tentimes and acted once by unanimous writ-ten consent. All of the members of theCommittee are independent within themeaning of the listing standards of theNew York Stock Exchange and theCompany’s Corporate Governance Guide-lines.

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The members of the Executive Committeeare:

Robert A. IgerJohn E. Pepper, Jr. (Chair)

The Executive Committee serves primarilyas a means for taking action requiringBoard approval between regularly sched-uled meetings of the Board. The ExecutiveCommittee is authorized to act for the fullBoard on matters other than thosespecifically reserved by Delaware law tothe Board. In practice, the Committee’sactions are generally limited to matterssuch as the authorization of transactionsincluding corporate credit facilities andborrowings. In fiscal 2010, the ExecutiveCommittee held no meetings.

The Board’s Role in Risk Oversight

As noted in the Company’s CorporateGovernance Guidelines the Board, actingdirectly or through Committees, isresponsible for “assessing major risk fac-tors relating to the Company and its per-formance” and “reviewing measures toaddress and mitigate such risks.” In dis-charging this responsibility, the Board,either directly or through its committees,assesses both the risks that inhere in thekey economic and market assumptionsthat underpin the Company’s businessplans and growth strategies and sig-nificant operational risks related to theconduct of the Company’s day-to-dayoperations.

Risks that relate to the market and eco-nomic assumptions that underpin eachbusiness unit’s growth plans are specifi-cally addressed in connection with theBoard’s annual review of the Company’sfive-year plan. The Board also has theopportunity to address such risks at eachBoard meeting in connection with its regu-lar review of significant business andfinancial developments. The Boardreviews risks arising out of specific sig-nificant transactions when these trans-actions are presented to the Board forreview or approval.

Significant operational risks that relate toon-going business operations are the

subject of regularly scheduled reports toeither the full Board or one of its Commit-tees. The Board has established a processto determine on an annual basis whetherthese reports appropriately cover the sig-nificant risks that the Company may thenbe facing.

Each of the Board’s committee’saddresses risks that fall within thecommittee’s areas of responsibility. Forexample, the Audit Committee reviewsannually the audit plan of managementaudit, the international labor standardscompliance program, the Company’sinformation technology risks and miti-gation strategies, the tax function, treas-ury operations (including insurance) andthe ethical standards program. In addition,the Audit Committee receives regularreports from: corporate controllership andthe outside auditor on financial reportingmatters; management audit about sig-nificant findings; and the general counselregarding legal and regulatory risks. TheAudit Committee reserves time at eachmeeting for private sessions with the chieffinancial officer, general counsel, head ofmanagement audit and outside auditors.The Compensation Committee addressesrisks arising out of the Company’s execu-tive compensation programs as describedat page 23, below.

The Chairman of the Board promotes effec-tive communication and consideration ofmatters presenting significant risks to theCompany through his role in setting theBoard’s agenda, advising committeechairs and communicating betweenindependent directors and the chiefexecutive officer, though the Boardbelieves that in appropriate circumstancesan independent lead director could alsofulfill this role.

Director Independence

The provisions of the Company’s Corpo-rate Governance Guidelines regardingDirector independence meet and in someareas exceed the listing standards of theNew York Stock Exchange. These provi-sions are included in the Company’sCorporate Governance Guidelines, whichare available on the Company’s Investor

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Relations website under the “CorporateGovernance” heading at www.disney.com/investors.

Pursuant to the Guidelines, the Boardundertook its annual review of Directorindependence in December 2010. Duringthis review, the Board considered trans-actions and relationships between eachDirector or any member of his or herimmediate family and the Company and itssubsidiaries and affiliates. The Board alsoconsidered whether there were any trans-actions or relationships between Directorsor any member of their immediate family(or any entity of which a Director or animmediate family member is an executiveofficer, general partner or significantequity holder) and members of theCompany’s senior management or theiraffiliates. As provided in the Guidelines,the purpose of this review was todetermine whether any such relationshipsor transactions existed that were incon-sistent with a determination that the Direc-tor is independent.

As a result of this review, the Board affir-matively determined that all of the Direc-tors nominated for election at the annualmeeting are independent of the Companyand its management under the standardsset forth in the Corporate GovernanceGuidelines, with the exception of RobertIger, John Bryson and Steven Jobs.Mr. Iger is considered an inside Directorbecause of his employment as a seniorexecutive of the Company. The Boarddetermined that Mr. Bryson is not anindependent Director as a result of pastrelationships between the Company, Life-time Entertainment Television andMr. Bryson’s wife. Until the end of fiscalyear 2009, Lifetime was a joint venture thatwas 50% owned by the Company. Late infiscal year 2009, Lifetime was merged intoA&E Television Networks, a joint venturethat is 42% owned by the Company.Ms. Bryson was an executive officer ofLifetime until 2008 and a consultant toLifetime through April 2009. In addition,Lifetime acquired programming from andsold advertising time to Company sub-sidiaries while Ms. Bryson was affiliatedwith Lifetime in an aggregate amount thatexceeded 2% of Lifetime’s total revenuesduring the applicable fiscal years.

Although the relationship between theCompany, Lifetime and Ms. Bryson maynot mandate disqualification fromindependence under the Company’sGuidelines, the Board determined that therelationship was sufficient to deemMr. Bryson non-independent at this time.Mr. Jobs is considered a non-independentoutside director because, during fiscal2006, the Company acquired Pixar, ofwhich Mr. Jobs was chairman and chiefexecutive officer and the beneficial ownerof 50.6% of the issued and outstandingequity.

In determining the independence of eachDirector, the Board considered the follow-ing relationships, which it determined wereimmaterial to the Directors’ independence.The Board considered that the Companyand its subsidiaries in the ordinary courseof business have, during the last threeyears, sold products and services to and/or purchased products and services fromcompanies at which some of our Directorsor their immediate family members wereofficers or employees during fiscal 2010.In each case, the amount paid to orreceived from these companies in each ofthe last three years did not approach the2% of total revenue threshold in the Guide-lines. The Board also considered employ-ment relationships with immediate familymembers of Directors that involved com-pensation of less than the threshold of$120,000 in the Company’s Guidelines.The Board determined that none of therelationships it considered impaired theindependence of the Directors.

Director Selection Process

Working closely with the full Board, theGovernance and Nominating Committeedevelops criteria for open Board positions,taking into account such factors as itdeems appropriate, which may include:the current composition of the Board; therange of talents, experiences and skillsthat would best complement those alreadyrepresented on the Board; the balance ofmanagement and independent Directors;and the need for financial or other speci-alized expertise. Applying these criteria,the Committee considers candidates forBoard membership suggested by itsmembers and other Board members, as

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well as management and shareholders.The Committee retains a third-partyexecutive search firm to identify andreview candidates upon request of theCommittee from time to time.

Once the Committee has identified aprospective nominee—including pro-spective nominees recommended byshareholders—it makes an initial determi-nation as to whether to conduct a fullevaluation. In making this determination,the Committee takes into account theinformation provided to the Committeewith the recommendation of the candi-date, as well as the Committee’s ownknowledge and information obtainedthrough inquiries to third parties to theextent the Committee deems appropriate.The preliminary determination is basedprimarily on the need for additional Boardmembers and the likelihood that the pro-spective nominee can satisfy the criteriathat the Committee has established. If theCommittee determines, in consultationwith the Chairman of the Board and otherDirectors as appropriate, that additionalconsideration is warranted, it may requestthe third-party search firm to gather addi-tional information about the prospectivenominee’s background and experienceand to report its findings to the Commit-tee. The Committee then evaluates theprospective nominee against the specificcriteria that it has established for the posi-tion, as well as the standards and qual-ifications set out in the Company’sCorporate Governance Guidelines, includ-ing:

• the ability of the prospective nominee torepresent the interests of the share-holders of the Company;

• the prospective nominee’s standards ofintegrity, commitment and independenceof thought and judgment;

• the prospective nominee’s ability todedicate sufficient time, energy andattention to the diligent performance ofhis or her duties, including the pro-spective nominee’s service on otherpublic company boards, as specificallyset out in the Company’s CorporateGovernance Guidelines;

• the extent to which the prospectivenominee contributes to the range of

talent, skill and expertise appropriate forthe Board;

• the extent to which the prospectivenominee helps the Board reflect thediversity of the Company’s shareholders,employees, customers and guests andthe communities in which it operates;and

• the willingness of the prospective nomi-nee to meet the minimum equity interestholding guideline set out in the Compa-ny’s Corporate Governance Guidelines.

If the Committee decides, on the basis ofits preliminary review, to proceed withfurther consideration, members of theCommittee, as well as other members ofthe Board as appropriate, interview thenominee. After completing this evaluationand interview, the Committee makes arecommendation to the full Board, whichmakes the final determination whether tonominate or appoint the new Director afterconsidering the Committee’s report.

In selecting nominees for Director, theBoard seeks to achieve a mix of memberswho together bring experience andpersonal backgrounds relevant to theCompany’s strategic priorities and thescope and complexity of the Company’sbusiness. In light of the Company’s cur-rent priorities, the Board seeks experiencerelevant to managing the creation of high-quality branded entertainment productsand services, addressing the impact ofrapidly changing technology and expand-ing business outside of the United States.The Board also seeks experience in large,diversified enterprises and demonstratedability to manage complex issues thatinvolve a balance of risk and reward andseeks directors who have expertise inspecific areas such as consumer and cul-tural trends, business innovation, growthstrategies and financial oversight. Thebackground information on current nomi-nees beginning on page 57 sets out howeach of the current nominees contributesto the mix of experience and qualificationsthe Board seeks.

In making its recommendations withrespect to the nomination for re-electionof existing Directors at the annual share-holders meeting, the Committee assesses

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the composition of the Board at the timeand considers the extent to which theBoard continues to reflect the criteria setforth above.

A shareholder who wishes to recommenda prospective nominee for the Boardshould notify the Company’s Secretary orany member of the Governance andNominating Committee in writing with

whatever supporting material the share-holder considers appropriate. The Gover-nance and Nominating Committee will alsoconsider whether to nominate any personnominated by a shareholder pursuant tothe provisions of the Company’s Bylawsrelating to shareholder nominations asdescribed in “Shareholder Communica-tions” below.

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Board Compensation

Under the Company’s Corporate Gover-nance Guidelines, non-employee Directorcompensation is determined annually bythe Board of Directors acting upon therecommendation of the CompensationCommittee. Directors who are alsoemployees of the Company receive noadditional compensation for service as aDirector. During Fiscal 2010, annualcompensation for non-employee Directorswas as follows:

Annual Board retainer $ 80,000

Annual committee retainer1 $ 10,000

Annual committee chair retainer2 $ 15,000

Annual deferred stock unit grant $ 84,000

Annual retainer for Board Chairman3 $500,000

Annual stock option grant4 $ 56,000

1 Per committee.2 This is in addition to the annual committee

retainer the Director receives for serving on thecommittee.

3 In lieu of all other Director compensation exceptthe annual stock option grant. Paid in shares ofCompany common stock.

4 Grant was made on March 1 for a number ofoptions with a fair value on the date of grantequal to the amount shown.

Effective October 1, 2010, the Board elimi-nated the annual stock option grant,increased the annual deferred stock unit

grant by $56,000 and provided for a$56,000 annual deferred stock grant to theBoard Chairman.

At Mr. Jobs’ request, the Board hasexcluded Mr. Jobs from receivingcompensation as a Director.

The Company does not provide retirementbenefits to any non-employee Directorswho served during fiscal 2010.

Unless the Board exempts a Director,each Director is required to retain at alltimes stock representing no less than 50%of the after-tax value of exercised optionsand shares received upon distribution ofdeferred stock units until he or she leavesthe Board. Effective October 1, 2010, theCompany’s Corporate Governance Guide-lines also encourage Directors to own, oracquire within three years of first becom-ing a Director, shares of common stock ofthe Company (including stock unitsreceived as Director compensation) havinga market value of at least three times theamount of the annual Board retainer forthe Director.

The following table identifies the compen-sation earned during fiscal 2010 by eachperson who is currently a non-employeeDirector. Information regarding theamounts in each column follows the table.

DIRECTOR COMPENSATION FOR FISCAL 2010

FeesEarnedor Paid

inCash

StockAwards

OptionAwards

All OtherCompensation Total

Susan E. Arnold $ 90,000 $ 82,949 $56,006 $ 7,476 $236,431

John E. Bryson 80,000 82,949 56,006 311 219,266

John S. Chen 90,000 82,949 56,006 816 229,771

Judith L. Estrin 90,000 82,949 56,006 7,461 236,416

Steven P. Jobs — — — — —

Fred H. Langhammer 105,000 82,949 56,006 5,829 249,784

Aylwin B. Lewis 115,000 82,949 56,006 54 254,009

Monica C. Lozano 90,000 82,949 56,006 17,956 246,911

Robert W. Matschullat 100,000 82,949 56,006 11,270 250,225

John E. Pepper, Jr. (Chairman) — 493,747 56,006 11,853 561,606

Sheryl K. Sandberg 50,250 45,449 — — 95,699

Orin C. Smith 105,000 82,949 56,006 74 244,029

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Fees Earned or Paid in Cash. The annualBoard retainer and annual committee andcommittee-chair retainers are payable incash at the end of each quarter. TheCompany’s Amended and Restated 1997Non-Employee Directors Stock andDeferred Compensation Plan allowsnon-employee Directors to elect each yearto receive all or part of their retainers inDisney stock or to defer all or part of thiscompensation until after their service as aDirector ends. Directors who elect toreceive stock instead of cash but who donot defer their compensation are creditedeach quarter with a dollar amount equal tofees earned that quarter and receiveshares after the end of each calendar yearbased on the average of the fair marketvalue of shares of the Company’s commonstock at the end of each quarter. Directorswho elect to defer their compensation mayalso elect to receive cash or stock. Direc-tors who elect to receive deferredcompensation in cash receive a crediteach quarter, and the balance in theirdeferred cash account earns interest at anannual rate equal to the Moody’s AverageCorporate (Industrial) Bond Yield, adjustedquarterly. For fiscal 2010, the averageinterest rate was 5.62%. Interest earnedon deferred amounts is included in the “AllOther Compensation” column. Directorswho elect to receive deferred compensa-tion in stock receive stock units each

quarter and shares of stock are distributedwith respect to these units after their serv-ice as a Director ends.

This column sets forth amounts payable incash on a current basis, whether paidcurrently or deferred by the Director to bepaid in cash or shares after their serviceends. None of the Directors elected toreceive stock on a current basis for fiscal2010. This column does not include feespaid for service as Chairman of the Board,as those fees are required to be paid inthe form of shares of stock distributed tothe Chairman after the end of the calendaryear in which they were earned and aretherefore included in the “Stock Awards”column.

The following table identifies for eachDirector the dollar amount included in the“Fees Earned or Paid in Cash” columnreceived in cash, the dollar amountdeferred to be paid in cash, and thenumber and dollar value of stock unitsreceived as deferred compensation. Thenumber of units awarded is equal to thedollar amount of fees accruing each quar-ter divided by the average over the last tentrading days of the quarter of the averageof the high and low trading price forshares of Company common stock oneach day in the ten-day period.

FORM OF RECEIPT OF DIRECTOR FEES FOR FISCAL 2010

Deferred Fees

FeesPaid

Currentlyin Cash

To bePaid in

Cash

To be Paid inStock

Numberof Units

Value ofUnits

Susan E. Arnold — $45,000 1,341 $ 45,000

John E. Bryson — — 2,385 80,000

John S. Chen $ 45,000 — 1,341 45,000

Judith L. Estrin 90,000 — — —

Steven P. Jobs — — — —

Fred H. Langhammer 78,750 — 815 26,250

Aylwin B. Lewis 57,500 — 1,714 57,500

Monica C. Lozano 45,000 — 1,341 45,000

Robert W. Matschullat — — 2,981 100,000

John E. Pepper, Jr. — — — —

Sheryl K. Sandberg 25,125 — 742 25,125

Orin C. Smith 105,000 — — —

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Stock Awards. This column sets forth thegrant date fair market value of awards forservice in fiscal 2010 with respect to:

• the annual deferred stock unit grant; and

• for the Chairman of the Board, sharesawarded with respect to the annualretainer.

The grant date fair market value is equal tothe market value of the Company’scommon stock on the date of the awardtimes the number of shares underlying theunits.

The number of shares awarded to eachDirector was calculated by dividing theamount payable with respect to a quarterby the average over the last ten tradingdays of the quarter of the average of thehigh and low trading price on each day.The following table identifies the numberof stock units awarded to each Directorduring fiscal 2010.

DIRECTOR STOCK UNIT AWARDS FOR FISCAL 2010

StockUnits

Awarded

Susan E. Arnold 2,504

John E. Bryson 2,504

John S. Chen 2,504

Judith L. Estrin 2,504

Steven P. Jobs —

Fred H. Langhammer 2,504

Aylwin B. Lewis 2,504

Monica C. Lozano 2,504

Robert W. Matschullat 2,504

John E. Pepper, Jr. 14,904

Sheryl K. Sandberg 1,386

Orin C. Smith 2,504

One fourth of the annual deferred stockunit grant and annual retainer is awardedat the end of each quarter. Shares withrespect to annual deferred stock unitgrants are distributed to the Director onthe second anniversary of the award date,whether or not the Director is still a Direc-tor on the date of distribution. Shares withrespect to the annual retainer for theChairman of the Board are distributedafter the end of the calendar year in whichthey are earned.

At the end of any quarter in which divi-dends are distributed to shareholders,Directors receive additional stock unitswith a value (based on the average of thehigh and low trading prices of Disneystock averaged over the last ten tradingdays of the quarter) equal to the amount ofdividends they would have received on allstock units held by them at the end of theprior quarter. Shares with respect to theseadditional units are distributed when theunderlying units are distributed. Unitsawarded in respect of dividends areincluded in the fair value of the stock unitswhen the units are initially awarded andtherefore are not included in the tablesabove, but they are included in the totalunits held at the end of the fiscal year inthe following table.

The following table sets forth all stockunits held by each Director as of the endof fiscal 2010. All stock units are fullyvested when granted, but shares are dis-tributed with respect to the units only lat-er, as described above. Stock units in thistable are included in the share ownershiptable on page 79 except to the extent theymay have been distributed as shares andsold prior to January 24, 2011.

DIRECTOR STOCK UNIT HOLDINGS ATTHE END OF FISCAL 2010

StockUnits



John S. Chen 16,319


Steven P. Jobs —






Sheryl K. Sandberg 2,128

Orin C. Smith 6,305

Option Awards. This column sets forththe grant date fair value with respect tooptions awarded to Directors in fiscal2010. The fair value of the options on thedate of their award is calculated using the

10


binomial model. The assumptions used inestimating the fair value of options are setforth in footnote 13 to the Company’sAudited Financial Statements for fiscalyear 2010.

Each Director identified in the table abovereceived an option for 6,143 shares onMarch 1, 2010, except for Mr. Jobs, whodoes not receive director compensation,and Ms. Sandberg, who was not a Directoron March 1, 2010. The exercise price ofthe options granted in fiscal 2010 is $31.47(the average of the high and low pricesreported on the New York Stock Exchangeon the date of grant; the closing price onthat date was $31.54). The options vest inequal installments over four years andhave a ten-year term. If a Director ends hisor her service by reason of mandatoryretirement pursuant to the Board’s retire-ment or tenure policy or permanent dis-ability, the options continue to vest inaccordance with their original schedule. Ifservice ends by reason of death, theoptions vest immediately. In any of theforegoing cases, the options remainexercisable for five years following termi-nation or until the original expiration dateof the option, whichever is sooner. In allother cases, options cease to vest upontermination and all vested options must beexercised within three months of termi-nation.

The following table sets forth theaggregate number of stock options out-standing for each Director at the end offiscal 2010.

DIRECTOR OPTION HOLDINGS ATTHE END OF FISCAL 2010

Number ofShares

UnderlyingOptions

Held



John S. Chen 46,503


Steven P. Jobs —






Sheryl K. Sandberg —

Orin C. Smith 34,503

All Other Compensation. To encourageDirectors to experience the Company’sproducts, services and entertainmentofferings personally, the Board hasadopted a policy, that, subject to avail-ability, entitles each non-employee Direc-tor (and his or her spouse, children andgrandchildren) to use Company products,attend Company entertainment offeringsand visit Company properties (includingstaying at resorts, visiting theme parksand participating in cruises) at theCompany’s expense, up to a maximum of$15,000 in fair market value per calendaryear plus reimbursement of associated taxliabilities. In addition, the Companyreimburses Directors for the travelexpenses of or provides transportation onCompany aircraft for immediate familymembers of Directors if the family mem-bers are specifically invited to attendevents for appropriate business purposesand allows family members (includingdomestic partners) to accompany Direc-tors traveling on company aircraft forbusiness purposes on a space-availablebasis. The value of these benefits is notincluded in the table as permitted by SECrules because the aggregate incremental

11


cost to the Company of providing thebenefits did not exceed $10,000 for anyDirector. The reimbursement of associatedtax liabilities is included in the tableabove, which was less than $10,000 foreach Director other than Mr. Matschullatand Mr. Pepper, for whom the reimburse-ment was $11,270 and $11,853,respectively. The column also includesinterest earned on deferred cash compen-sation, which was less than $10,000 foreach Director except for Ms. Lozano, forwhom interest earned totaled $17,491.

Certain Relationships and RelatedPerson Transactions

The Board of Directors has adopted a writ-ten policy for review of transactionsinvolving more than $120,000 in any fiscalyear in which the Company is a participantand in which any Director, executive offi-cer, holder of more than 5% of our out-standing shares or any immediate familymember of any of these persons has adirect or indirect material interest. Direc-tors, 5% shareholders and executive offi-cers are required to inform the Companyof any such transaction promptly afterthey become aware of it, and the Com-pany collects information from Directorsand executive officers about their affili-ations and affiliations of their familymembers so the Company can search itsrecords for any such transactions. Trans-actions are presented to the Governanceand Nominating Committee of the Board(or to the Chairman of the Committee if theCommittee delegates this responsibility)for approval before they are entered intoor, if this is not possible, for ratificationafter the transaction has been enteredinto. The Committee approves or ratifies atransaction if it determines that the trans-action is consistent with the best interestsof the Company, including whether thetransaction impairs independence of aDirector. The policy does not requirereview of the following transactions:

• Employment of executive officersapproved by the Compensation Commit-tee;

• Compensation of Directors approved bythe Board;

• Transactions in which all shareholdersreceive benefits proportional to theirshareholdings;

• Ordinary banking transactions identifiedin the policy;

• Any transaction contemplated by theCompany’s Certificate of Incorporation,Bylaws or Board action where the inter-est of the Director, executive officer, 5%shareholder or family member is dis-closed to the Board prior to such action;

• Commercial transactions in the ordinarycourse of business with entities affiliatedwith Directors, executive officers, 5%shareholders or their family members ifthe aggregate amount involved during afiscal year is less than the greater of(a) $1,000,000 and (b) 2% of the Compa-ny’s or other entity’s gross revenues andthe related person’s interest in thetransaction is based solely on his or herposition with the entity;

• Charitable contributions to entitieswhere a Director is an executive officerof the entity if the amount is less thanthe lesser of $200,000 and 2% of theentity’s annual contributions; and

• Transactions with entities where theDirector, executive officer, 5% share-holder or immediate family member’ssole interest is as a non-executive officeremployee of, volunteer with, or directoror trustee of the entity.

During fiscal year 2010, Fidelity Manage-ment Trust Company (FMTC) served astrustee of the Company’s 401(k) plan andthe Company paid FMTC approximately$294,315 in fees for this and ancillary serv-ices. Additionally, entities affiliated withFMTC benefit from fees incurred by planparticipants on balances invested inmutual funds through the plan. FMTC andits affiliated entities are subsidiaries ofFMR LLC, which was the beneficial ownerof more than 5% of the Company’s out-standing shares during fiscal year 2010.This relationship has been in place sincebefore FMR LLC was the beneficial ownerof more than 5% of the Company’s out-standing shares, and the ongoingrelationship was reviewed and approved

12


by the Governance and NominatingCommittee under the Related PersonTransaction Approval Policy in December2010.

Shareholder Communications

Generally. Shareholders may communi-cate with the Company through its Share-holder Services Department by writing to500 South Buena Vista Street, MC 9722,Burbank, California 91521, by callingShareholder Services at (818) 553-7200, orby sending an e-mail [email protected] information about contactingthe Company is available on the Compa-ny’s investor relations website(www.disney.com/investors) under “MyShareholder Account.”

Shareholders and other persons interestedin communicating directly with the Chair-man of the Board or with the non-management Directors as a group may doso by writing to the Chairman of theBoard, The Walt Disney Company, 500South Buena Vista Street, Burbank, Cal-ifornia 91521-1030. Under a processapproved by the Governance andNominating Committee of the Board forhandling letters received by the Companyand addressed to non-managementmembers of the Board, the office of theSecretary of the Company reviews all suchcorrespondence and forwards to Boardmembers a summary and/or copies of anysuch correspondence that, in the opinionof the Secretary, deals with the functionsof the Board or Committees thereof or thathe otherwise determines requires theirattention. Directors may at any time reviewa log of all correspondence received bythe Company that is addressed to mem-bers of the Board and request copies ofany such correspondence. Concerns relat-

ing to accounting, internal controls orauditing matters are immediately broughtto the attention of the Company’s internalaudit department and handled in accord-ance with procedures established by theAudit Committee with respect to suchmatters.

Shareholder Proposals for Inclusion in2012 Proxy Statement. To be eligible forinclusion in the proxy statement for our2012 annual meeting, shareholder pro-posals must be received by the Compa-ny’s Secretary no later than the close ofbusiness on September 30, 2011. Pro-posals should be sent to the Secretary,The Walt Disney Company, 500 SouthBuena Vista Street, Burbank, California91521-1030 and follow the proceduresrequired by SEC Rule 14a-8.

Shareholder Director Nominations andOther Shareholder Proposals for Pre-sentation at the 2012 Annual Meet-ing. Under our bylaws, written notice ofshareholder nominations to the Board ofDirectors and any other business pro-posed by a shareholder that is not to beincluded in the proxy statement must bedelivered to the Company’s Secretary notless than 90 nor more than 120 days priorto the first anniversary of the precedingyear’s annual meeting. Accordingly, anyshareholder who wishes to have a nomi-nation or other business considered at the2012 annual meeting must deliver a writtennotice (containing the information speci-fied in our bylaws regarding the share-holder and the proposed action) to theCompany’s Secretary betweenNovember 23, 2011 and December 23,2011. SEC rules permit management tovote proxies in its discretion with respectto such matters if we advise shareholdershow management intends to vote.

13


Executive Compensation

Compensation Committee Report

The Compensation Committee has:

(1) reviewed and discussed theCompensation Discussion andAnalysis included in this proxystatement with management; and

(2) based on the review anddiscussion referred to inparagraph (1) above,recommended to the Board ofDirectors that the CompensationDiscussion and Analysis beincluded in the Company’s proxystatement relating to the 2011annual meeting of shareholders.

Members of the Compensation Committee

Susan E. ArnoldJohn S. ChenFred H. Langhammer (Chair)Aylwin B. LewisJohn E. Pepper, Jr.

Compensation Discussion andAnalysis

Overview

Disney’s executive compensation programis designed to align the interests of seniormanagement with shareholders by tying asignificant portion of their compensationto the Company’s performance as meas-ured by a variety of factors during thefiscal year in question, including financialreturns, stock price performance andefforts to position the Company for long-term success.

Under the program, the portion of compen-sation guaranteed to the Company’snamed executives at the beginning of any

fiscal year represents only a fraction of thetotal potential compensation. In the caseof Mr. Iger, only about 10% of the value ofhis target annual compensation this fiscalyear (excluding benefits and perquisites)was assured at the beginning of the yearin the form of his base salary. The value ofthe remaining 90% of Mr. Iger’s targetannual compensation, includingperformance-based bonus, stock awardsand options, is linked directly to theCompany’s performance. Although thepercentages differ modestly for the othernamed executive officers and benefits andperquisites received during the year canincrease the percentage of fixed compen-sation somewhat, more than 80% of allannual compensation awarded to theother two named executive officers whohave held their same position throughoutrecent years was tied to the Company’sperformance.

In making decisions on performance-based compensation in fiscal 2010, theCompensation Committee considered theCompany’s financial performance in theface of ongoing challenges of a recoveringUS and global economy and theimportance of the Company continuing toinvest in opportunities for future growth. Inthe face of these conditions, the Commit-tee viewed the Company’s 14% growth inearnings per share, excluding the impactof items that affected comparabilitybetween the years,1 and a 5% growth inrevenues as exceptional performance forthe year. This performance for the yearwas reflected in the Company’s totalshareholder return, which increased23.9%, compared to the total shareholderreturn for the S&P 500, which increased14.1%.

Taking into account these circumstances,and driven primarily by the application ofthe financial performance measuresdescribed on page 29 in determiningperformance-based bonuses, total annualcash compensation increased for the

1 Earnings per share for the current year included restructuring and impairment charges, gains on the sales of investments in twotelevision services in Europe, a gain on the sale of the Power Rangers property, and an accounting gain related to the acquisitionof The Disney Store Japan, which collectively had a net adverse impact of $0.04. Earnings per share for the prior year includedrestructuring and impairment charges, a non-cash gain in connection with the merger of Lifetime Entertainment Services(Lifetime) and A&E Television Networks (A&E) and a gain on the sale of investments in two pay television services in Latin Amer-ica, which collectively had a net adverse impact of $0.06.

14


named executive officers this year com-pared to last year. We provide informationon all six named executive officers in theSummary Compensation Table on page 33,but for comparability purposes, in discus-sing aggregate compensation for theprevious three years, we only consider theinformation provided below for the threeofficers who held their current positionsfor all three years. For these three officers,total annual cash compensation (as setforth in the table below) was in theaggregate, 35.2% higher than in fiscal2009, primarily due to an increase inperformance-based bonuses. The grantdate fair value of equity awards to thesethree officers increased by an aggregate

of 18%, driven primarily by the Commit-tee’s determination to reward Mr. Iger forexcellent management of the Company ina difficult economic environment and toreward Mr. Mayer for the critical role heplayed in completion of the acquisition ofMarvel. In addition, Mr. Bravermanreceived a special equity award pursuantto his employment agreement as a resultof his assuming responsibility over gov-ernmental affairs at the beginning of thecalendar year.

Overall, total annual compensation forthese three named executive officers,including the grant date fair value of equityawards, increased by 27.7% in fiscal 2010.

The following table sets forth the compensation received for the last three fiscal years by thethree named executive officers who held their current positions in each of fiscal 2008, 2009and 2010. It provides, for each of these years: (a) cash compensation comprised of salary,benefits and perquisites and the annual performance-based bonus; (b) the grant-date fairvalue of regular annual equity awards during the fiscal year; (c) total annual compensationcomprised of fixed compensation, performance-based bonus and the grant-date fair value ofregular annual equity awards; and (d) grant-date fair value of any special equity awardsreceived during the fiscal year. The amounts in the table differ from those in the SummaryCompensation Table on page 33 in that this table does not include named executive officerswho did not hold the same position throughout fiscal 2010 that they held in prior years and inthat it does not include the change in pension value included in the Summary CompensationTable. This table is not a substitute for the Summary Compensation Table and is intended toprovide additional information that the Company believes is useful in analyzing compensationdecisions made with respect to the three fiscal years covered.

Annual Compensation and Other Equity Awards

Year

Annual Compensation

Cash Compensation

AnnualEquity

Awards

TotalAnnual

Compensation

SpecialEquity

AwardsFixed

Compensation

Performance-BasedBonus Total

PercentChange

Robert A. Iger 2010 $2,798,433 $13,460,000 $16,258,433 >>35.0%

-28.0%

$11,759,051 $28,017,484 —2009 2,780,063 9,260,000 12,040,063 9,538,408 21,578,471 —2008 2,773,090 13,945,493 16,718,583 9,335,949 26,054,532 $25,018,048

Alan N. Braverman 2010 $1,190,049 $ 3,030,000 $ 4,220,049 >>32.3%

-22.2%

$ 2,351,856 $ 6,571,905 $ 1,556,0002009 1,154,919 2,035,000 3,189,919 2,331,653 5,521,572 3,035,5002008 1,100,534 3,000,000 4,100,534 1,867,193 5,967,727 —

Kevin A. Mayer 2010 $ 736,987 $ 1,590,000 $ 2,326,987 >>42.5%

-3.4%

$ 1,817,356 $ 4,144,343 —2009 733,158 900,000 1,633,158 1,600,370 3,233,528 —2008 665,398 1,025,000 1,690,398 980,278 2,670,676 —

Total for three officers 2010 $4,725,469 $18,080,000 $22,805,469 >>35.2%

-25.1%

$15,928,263 $38,733,732 $ 1,556,0002009 4,668,140 12,195,000 16,863,140 13,470,431 30,333,571 3,035,5002008 4,539,022 17,970,493 22,509,515 12,183,420 34,692,935 25,018,048

15


Compensation Objectives and ProgramDesign

The Company’s executive compensationprogram seeks to promote the creation oflong-term shareholder value by:

• tying a substantial portion of executives’total compensation to financial perform-ance measures that align with long-termshareholder value and leadership actionsthat are expected to position the Com-pany for long-term success; and

• attracting and retaining high-caliberexecutives in a competitive market fortalent.

We use five different types of compensa-tion in pursuing these objectives:

• a base salary;

• a variable, annual, performance-basedbonus;

• periodic grants of long-term, equity-based compensation such as stockoptions, restricted stock units andperformance-based restricted stockunits;

• retirement plans and agreements andarrangements regarding compensationupon termination of employment; and

• benefits and perquisites.

This section discusses how we havedesigned our compensation program toaddress these objectives.

• “Roles and Responsibilities” addressesthe process used to make compensationdecisions for executive officers.

• “Compensation Mix” addresses how webalance fixed and performance-basedcompensation to achieve our objectives.

• “Performance-Based Compensation”addresses the specific design elementsof the Company’s performance-basedbonus and equity compensation pro-grams that are designed to aligncompensation with the creation of long-term shareholder value.

• “Fixed Compensation” addresses basesalary, benefits and perquisites andretirement plans.

• “Competitive Considerations” addresseshow we evaluate the competitive marketfor talent and use that evaluation indesigning compensation packages.

• “Other considerations” addresses the useof employment agreements and taxdeductibility of executive compensation.

Specific compensation decisions relatingto fiscal 2010 are discussed in the sectiontitled “Fiscal 2010 Decisions.”

Roles and Responsibilities

The Compensation Committee determinesthe compensation, including related termsof employment agreements for those whohave them, for each of the named execu-tive officers.

The Committee also conducts reviews ofthe Company’s general executivecompensation policies and strategies andoversees and evaluates the Company’soverall compensation structure and pro-grams. The Committee’s responsibilitiesinclude:

• reviewing and approving corporate goalsand objectives relevant to compensationof the chief executive officer and otherexecutive officers, and evaluating per-formance in light of those goals andobjectives;

• determining compensation for executiveofficers and other senior officers;

• evaluating and approving all grants ofequity-based compensation to executiveofficers and other senior officers;

• recommending to the Board compensa-tion policies for non-employee directors(through fiscal 2010; this responsibilitywas transferred to the Governance andNominating Committee starting fiscal2011); and

• reviewing performance-based andequity-based incentive plans for thechief executive officer and other execu-tive officers and reviewing any otherbenefit programs presented to theCommittee by the chief executive officer.

16


In carrying out these responsibilities, theCommittee: reviews the Company’s gen-eral executive compensation policies;determines salaries and bonuses for andequity awards to the named executiveofficers and such other officers as itdetermines appropriate; reviews benefitprograms for the named executive offi-cers; reviews and approves (or recom-mends approval to the Board where itdeems appropriate) all incentive,performance-based and equity-basedplans and any other benefit plans sub-mitted to it by the chief executive officer;and reviews and approves all employmentcontracts with named executive officersand such other officers as it deemsappropriate.

The Compensation Committee determinesthe compensation of the chief executiveofficer without management input, but isassisted in this determination by itsindependent compensation consultant(described below) and reviews itsdetermination with the Board of Directors(without members of management pres-ent) prior to its final determination.

In making determinations regardingcompensation for other named executiveofficers, the Committee considers therecommendations of the chief executiveofficer and the input received from itsindependent compensation consultant.The chief executive officer recommendscompensation, including the compensa-tion provisions of employment agreementsfor those who have them, for namedexecutive officers other than himself andall other officers whose compensation isdetermined by the Compensation Commit-tee. In making this recommendation, thechief executive officer evaluates the per-formance of the executives, considers theexecutive’s responsibilities andcompensation in relation to other officersof the Company, and considers publiclyavailable information regarding the com-petitive market for talent and informationprovided to him by the Company andinformation provided to the Committee bythe Committee’s independent consultant.As with the chief executive officer’scompensation, the Committee advises thefull Board of its deliberations prior tomaking a final determination of annual

bonus and equity incentive awards fornamed executive officers and considerswhatever input is provided by the fullBoard in making its final determination.

Management also provides data, analysisand recommendations for the Commit-tee’s consideration regarding the Compa-ny’s executive compensation programsand policies, preparing materials for theinformation of and review by the Compen-sation Committee. Management alsoadministers those programs and policiesconsistent with the direction of the Com-mittee. Management provides an ongoingreview of the effectiveness of thecompensation programs, including com-petitiveness and alignment with theCompany’s objectives, and recommendschanges, if necessary to promoteachievement of all program objectives.

The Committee meets regularly outside ofthe presence of management to discusscompensation decisions and matters relat-ing to the design of compensation pro-grams.

The Committee has retained the firm ofPay Governance LLC as its compensationconsultant to assist in the continualdevelopment and evaluation ofcompensation policies and the Commit-tee’s determinations of compensationawards. The Committee’s consultantattends Compensation Committee meet-ings, meets with the Committee withoutmanagement present and provides third-party data, advice and expertise on pro-posed executive compensation andexecutive compensation plan designs. Atthe direction of the Committee, the con-sultant reviews briefing materials preparedby management and outside advisers tomanagement and advises the Committeeon the matters included in the materials,including the consistency of proposalswith the Committee’s compensationphilosophy and comparisons to programsat other companies. At the request of theCommittee, the consultant also preparesits own analysis of compensation matters,including positioning of programs in thecompetitive market and the design ofplans consistent with Committee’s com-pensation philosophy. The Committeeconsiders these analyses as one factor in

17


making decisions with respect to compen-sation matters along with information andanalyses it receives from management andits own judgment and experience. Inparticular, with respect to positioning ofprograms in the competitive market, theCommittee considers the analyses in thecontext of the factors discussed under“Competitive Considerations,” below.

In October 2008, the CompensationCommittee adopted a policy requiring itsconsultant to be independent of Companymanagement. The policy provides that aconsultant will be considered independentif: the firm does not receive from theCompany fees for services or productsprovided to the Company in any fiscal yearthat exceed 1% of the firm’s annual grossrevenues; the individual that advises theCommittee does not participate directly orby collaboration with others in the firm inthe provision of any services or productsto the Company without the approval ofthe chair of the Compensation Committeeunless the related fees are, in theaggregate, less than $100,000; the con-sultant does not provide any products orservices to any executive officer of theCompany; and the Committeepre-approves any specific engagement ofthe firm if the estimated cost of theengagement exceeds $500,000. TheCommittee performs an annual assess-ment of the consultant’s independence todetermine whether the consultant isindependent. The Committee completedthis assessment in December 2010 andconfirmed that its consultant isindependent under the policy.

All of the Services provided by Pay Gover-nance LLC during fiscal 2010 were to theCommittee to provide advice or recom-mendations on the amount or form ofexecutive and director compensation, andPay Governance LLC did not provide anyadditional services to the Company duringfiscal year 2010. Prior to February 1, 2010,the Committee’s independent consultantwas Towers Watson, and Towers Watson(and its predecessor firms, Towers Perrinand Watson Wyatt) provided additionalservices to the Company. Prior to Febru-ary 1, 2010, Towers Watson and its

predecessor firms received fees of$164,227 to provide advice or recom-mendations on the amount or form ofexecutive and director compensation andfees of $185,230 for additional services tothe Company. Towers Watson also pro-vided services to the Company afterFebruary 1, 2010, and received fees forsuch services of $1,183,516 for servicesprovided from February 1, 2010 throughthe end of the Company’s fiscal year.Management of the Company made thedecision to engage Towers Watson and itspredecessors for the additional services,and the Compensation Committee wasaware of the relationship with Towers Per-rin as a result of its review of theindependence of Towers Perrin prior to itsmerger with Watson Wyatt, though theCommittee was not asked to specificallyapprove the engagement.

Compensation Mix

The Committee believes that a substantialportion of the total compensation of seniorexecutives should be variable and tied toperformance in order to align compensa-tion with measures that correlate withcreation of long-term shareholder value.This should offer an opportunity for gain inthe event of successful performance,matched with the prospect of reducedcompensation in the absence of success.The Committee also believes thatcompensation for more senior executiveofficers, including the named executiveofficers, should be more heavily weightedtoward variable elements of compensationthan is the case for less senior officersbecause the performance of these officersis more likely to have a strong and directimpact in achieving strategic and financialgoals that are most likely to affect share-holder value.

At the same time, the Committee believesthat the Company must attract and retainhigh-caliber executives, and thereforemust offer a mixture of fixed and at-riskcompensation, and that the levels and mixof these types of compensation must beattractive in light of the competitive marketfor senior executive talent.

18


The following charts show the percentage of total annual compensation (constituting cashcompensation and benefits plus the grant-date fair value of regular annual equity awards)awarded to Mr. Iger and to the other two named executive officers who have served in theircurrent positions during the last three years that is performance-based (performance-basedbonus and equity awards) versus fixed (salary and all other compensation) based on amountsshown in the Annual Compensation and Other Equity Awards table, above:

16.5% 19.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2009 20082010

Perc

ent o

f Tot

al C

ompe

nsat

ion

for Y

ear

Fiscal Year

Mr. Iger

Fixed (Salary)

Variable (Bonus)48.0%

Variable (Equity)42.0%

Fixed (Salary)



Fixed (Salary)10.6%



12.9%10.0%16.5% 19.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2009 20082010

Perc

ent o

f Tot

al C

ompe

nsat

ion

for Y

ear

Fiscal Year

Other Named Executive Officers

Fixed (Salary)



Fixed (Salary)



Fixed (Salary)20.4%



21.6%18.0%

The amounts shown for equity compensa-tion above reflect the grant-date fair valueof equity awards, but the actual value ofthese awards will depend directly on theperformance of the Company’s stock priceover the period during which restrictedunits vest and options can be exercisedand, with respect to performance-basedstock units, whether the performance testsfor vesting of these units are met. Thevalue realized by an executive for optionsand performance-based restricted stockunit awards could be as little as zero,which would occur with respect to optionsif the Company’s stock price were lessthan the exercise price of options andwould occur with respect to performance-based restricted stock units if none of theperformance tests were met (includingtests to assure deductibility under Sec-tion 162(m) of the Internal Revenue Code).

Performance-based Compensation

The Company ties compensation to theachievement of performance that alignswith long-term shareholder value through:• an annual performance-based bonus

determined using performance measuresdesigned to correlate closely with thecreation of long-term shareholder value;and

• equity-based compensation whoserealizable value varies directly with the

market price of the Company’s commonstock and a portion of which (for seniorexecutives) is subject to performancetests based on the Company’s stockprice and earnings per share in additionto a test to assure deductibility underSection 162(m).

Annual Performance-based Bonus. TheCompany’s annual performance-basedbonus compensates individuals based onthe achievement of specific annual finan-cial and other objectives that the Commit-tee believes correlate closely with growthof long-term shareholder value. The proc-ess for determining the amount of thisbonus for named executive officersinvolves four basic steps:

(1) Setting a target bonus. Early in thefiscal year, the Committee approves atarget bonus amount for each namedexecutive officer based on a percent-age of the named executive officer’sfiscal year end salary. The target bonustakes into account all factors that theCommittee deems relevant, includingminimums set in the employmentagreement where applicable, therecommendation of the chief executiveofficer (except with respect to his ownbonus), the nature and responsibility ofthe position and competitive marketconditions.

19


(2) Setting Company financial performanceranges. Early each fiscal year, theCompensation Committee receivesrecommended financial performancemeasures and ranges from seniormanagement, reviews them with seniormanagement and the Committee’scompensation consultant, and thensets performance measures andranges and reports their determinationto the full Board.

(3) Setting other performanceobjectives. The Committee believesthat the bulk of the bonus should bebased on objective measures of finan-cial performance, but believes thatmore subjective elements are alsoimportant in recognizing achievementand motivating officers. Therefore, atthe same time it sets Company-widefinancial performance ranges, theCommittee also approves other per-formance objectives for the Company.These objectives are based on therecommendations of the chief execu-tive officer and the Committee’s dis-cussion with him regarding corporateobjectives. These objectives allow theCommittee to play a more proactiverole in identifying performanceobjectives beyond purely financialmeasures.

(4) Measuring performance and preliminarybonus determination. After the end ofthe fiscal year, the Committee reviewsthe Company’s actual performanceagainst each of the financial perform-ance ranges established at the outsetof the year. In determining the extent towhich the financial performance rangesare met for a given period, the Commit-tee exercises its judgment whether toreflect or exclude the impact ofchanges in accounting principles andextraordinary, unusual or infrequentlyoccurring events.

To make its preliminary bonusdetermination, the Committee multi-plies an amount equal to 70% of thetarget bonus by a factor reflectingactual performance compared to thefinancial performance ranges set at thebeginning of the year. The factorranges from a minimum of zero to amaximum of 200% for each executiveofficer.

The Committee then multiplies theremaining 30% of the target bonusamount by a factor to reflect theCommittee’s assessment of perform-ance against the other performanceobjectives set at the outset of the yearas well as the named executive offic-er’s overall contribution to the Compa-ny’s success. This factor may rangefrom 0% to a maximum that, whencombined with the award based onfinancial performance factors, will,except in special circumstances suchas unusual challenges or extraordinarysuccesses, result in a bonus that doesnot exceed 200% of the target bonus.In arriving at this factor, the Committeeconsiders the recommendation of thechief executive officer in cases otherthan his own bonus, and the Commit-tee may consider the nature andimpact of events that resulted inadjustments to the financial perform-ance targets as described above.

All bonus awards for named executiveofficers are also subject to a test specifi-cally designed to assure that the awardsare eligible for deductibility under Sec-tion 162(m), which is in addition to theperformance measures described above.

The Committee has the discretion, inappropriate circumstances, to award abonus less than the amount determined bythe steps set out above, including dis-cretion to award no bonus at all.

Equity-based Compensation. TheCompany’s long-term incentive programprovides for the award of restricted stockunits and stock options to participatingemployees including the named executiveofficers. The program is designed to pro-vide incentives to create and maintainshareholder value over a multi-year periodby making annual awards whose valuedepends on and is directly related to sus-tained changes in the market price of theCompany’s shares. For the named execu-tive officers, each annual award is typicallyin the form of a mix of stock options andrestricted stock units as follows:

• stock options with an exercise price notless than the market price on the date ofgrant (40% of the grant-date fair value ofthe award);

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• restricted stock units whose vesting isconditioned on the satisfaction of per-formance conditions in addition to a testto ensure that the compensation isdeductible pursuant to Internal RevenueCode Section 162(m) (30% of the grant-date fair value of the award); and

• restricted stock units whose vesting isnot subject to performance conditionsother than the test to ensure that thecompensation is deductible pursuant toInternal Revenue Code Section 162(m)(30% of the grant-date fair value of theaward).

Participants receive value from stockoptions only if and to the extent the mar-ket price of the Company’s common stockwhen a participant exercises an awardexceeds the market price on the date ofgrant. Participants realize value onrestricted stock units subject to perform-ance tests only if and to the extent that thetests described below are met. The valueparticipants receive on restricted stockunits (whether or not subject to perform-ance tests) varies directly with the marketprice of the Company’s common stock atthe time the units vest.

The Committee has weighted the awardsslightly more toward restricted stock unitsbecause these awards reflect bothincreases and decreases in stock pricefrom the grant-date market price and thustie compensation more closely to changesin shareholder value at all levels comparedto options, whose intrinsic value changeswith shareholder value only when themarket price of shares is above theexercise price. In addition, the weightingtoward restricted stock units allows theCommittee to deliver equivalent value withuse of fewer authorized shares. TheCommittee may in the future adjust thismix of award types or approve differentaward types, such as restricted stock, aspart of the overall long-term incentiveaward. Awards made in connection with anew, extended or expanded employmentrelationship may involve a different mix ofrestricted stock units and options depend-ing on the Compensation Committee’sassessment of the total compensationpackage being offered.

Stock options are generally scheduled tovest over four years after the awards aremade and generally remain exercisable forseven years (for awards made in 2005through 2009) or ten years (for all otherawards) after the date of the award.Restricted stock units without perform-ance tests (other than the test to ensurethat the compensation is deductible pur-suant to Internal Revenue Code Sec-tion 162(m)) awarded in fiscal 2010 vest25% per year beginning on the first anni-versary of the award date. Restrictedstock units with performance testsawarded after 2009 vest three years afteraward. Restricted stock units withperformance tests awarded before 2010vested 50% in two years and 50% in fouryears; units that did not vest after twoyears because performance tests were notthen met could vest after four years if theperformance tests were met at that time.Options and restricted stock unitsawarded after December 2009 (andawarded at least one year beforeretirement), subject to the attainment ofany applicable performance conditions,continue to vest for three years afterretirement (and options remain exercisableuntil the earlier of three years after retire-ment and the original expiration date) ifthe participant was age 60 or greater andhad at least ten years of service at thedate of retirement, except that this doesnot apply for certain employees outsidethe United States.

The Committee adjusts performance testsfor restricted stock units from time to timein response to changes in the competitiveenvironment and to ensure that the pro-gram meets the objective of providingclear incentives tied to the creation oflong-term shareholder value. Units subjectto a performance test awarded in 2010 willbe eligible for vesting three years after theaward date. The number of units that vestis based on a target number of units anddepends on the level of performance, withthe number of units vesting ranging from0% of the target to 150% of the target.Units will vest on the vesting date(assuming continued employment orextension of vesting as described in thepreceding paragraph and satisfaction ofthe Section 162(m) test applicable toawards to executive officers) if (a) the

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Company’s three-year total shareholderreturn (TSR in the table below) equals orexceeds the total three-year shareholderreturn of 25% of the companies in theS&P500 (based on market prices for thelast 20 trading days of the period endingone month prior to the third anniversary ofthe award) or (b) the Company’s growth inearnings per share from continuing oper-

ations (EPS in the table below) for the12 quarters reported on or before onemonth prior to the third anniversary equalsor exceeds the growth in earnings pershare from continuing operations of 50%of the companies in the S&P500 over thesame period. The number of units thatvest will be determined according to thefollowing schedule:

First Performance Test Second Performance Test (if applicable)Percent of Target

Units Vesting*

TSR below 25th percentile EPS below 50th percentile 0%EPS 50th percentile or higher 50%

TSR equal to 25th percentile to 50th percentile EPS below 50th percentile 50% to 100%EPS 50th percentile or higher 75% to 100%

TSR equal to 50th percentile to 75th percentile Not applicable 100% to 150%

TSR 75th percentile and above Not applicable 150%

* The percent of units vesting varies within ranges in a linear manner from the low end of the range to the high end of the rangebased on the Company’s TSR percentile.

EPS for the Company will be adjusted asthe Committee deems appropriate in itssole discretion (i) to exclude the effect ofextraordinary, unusual and/or nonrecurringitems and (ii) to reflect such other factorsas the Committee deems appropriate tofairly reflect earnings per share growth.Adjustments to the diluted EPS from con-tinuing operations of S&P 500 companieswill not normally be made.

Units that were awarded prior to 2010 hadperformance tests and other vestingprovisions as described in our proxystatements for the years in which theawards were issued.

The Committee may impose different vest-ing conditions on awards of restrictedstock units other than the annual award.Restricted stock units awarded uponcommencement of employment orexecution of a new employment agree-ment are generally subject to the Sec-tion 162(m) test and are generally notsubject to any additional performancetest, although restricted stock unitsawarded to Mr. Iger in connection with theexecution of his employment agreement in2005, all of which have now vested, weresubject to a total shareholder return testbased on total shareholder return from thedate the agreement was originally enteredinto through the applicable vesting dates.

Equity awards are made by the Compensa-tion Committee only on dates theCompensation Committee meets.Compensation Committee meetings arenormally scheduled well in advance andare not scheduled with an eye toannouncements of material informationregarding the Company. The Committeemay make an award with an effective datein the future contingent on commence-ment of employment, execution of a newemployment agreement or some othersubsequent event.

The Committee will not grant stockoptions with exercise prices below the fairmarket value of the Company’s stock onthe date of grant. The Company definesfair market value as the average of thehigh and low stock prices on the date ofgrant, which may be higher or lower thanthe closing price on that day. The Commit-tee believes that the average of high andlow prices is a better representation of thefair market value on the date of grant andtends to be less volatile than the closingprice. The Committee will not reduce theexercise price of stock options (except inconnection with adjustments to reflectrecapitalizations, stock or extraordinarydividends, stock splits, mergers, spin-offsand similar events permitted by the rele-vant plan) without shareholder approval.

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Risk Management Considerations. TheCommittee believes that the Company’sperformance-based bonus and equityprograms create incentives to create long-term shareholder value. Several elementsof the program are designed to promotethe creation of long-term value andthereby discourage behavior that leads toexcessive risk:

• The financial metrics used to determinethe amount of an executive’s bonus aremeasures the Committee believes drivelong-term shareholder value. Thesemeasures are operating income, returnon invested capital, after-tax free cashflow and earnings per share. The Com-mittee attempts to set ranges for thesemeasures that encourage success with-out encouraging excessive risk taking toachieve short-term results. In addition,the overall bonus is not expected toexceed two times the target amount, nomatter how much financial performanceexceeds the ranges established at thebeginning of the year.

• The measures used to determinewhether performance-based stock unitsvest are based on one to four years ofperformance for awards granted before2010, with all subsequent awards basedon three years of performance. TheCommittee believes that the longer per-formance periods encourage executivesto attain sustained performance overseveral periods, rather than performancein a single period.

• Stock options become exercisable overa four-year period and remainexercisable for up to ten years (sevenyears for options issued from 2005 to2009) from the date of grant, encourag-ing executives to look to long-termappreciation in equity values.

• Named executive officers are required toacquire over time and hold as long asthey are executive officers of the Com-pany shares (including restricted stockunits) having a value of at least threetimes their base salary amounts, or fivetimes in the case of the chief executiveofficer. To the extent these levels havenot been reached, these officers arerequired to retain ownership of sharesrepresenting at least 75% of the after-taxgain (100% in the case of the chief

executive officer) realized on exercise ofoptions for a minimum 12 months.

• If the Company is required to restate itsfinancial results due to material non-compliance with financial reportingrequirements under the securities lawsas a result of misconduct by an execu-tive officer, applicable law permits theCompany to recover incentivecompensation from that executive officer(including profits realized from the saleof Company securities). In such a sit-uation, the Board of Directors wouldexercise its business judgment todetermine what action it believes isappropriate. Action may include recov-ery or cancellation of any bonus orincentive payments made to an execu-tive on the basis of having met orexceeded performance targets during aperiod of fraudulent activity or a materialmisstatement of financial results if theBoard determines that such recovery orcancellation is appropriate due to inten-tional misconduct by the executive offi-cer that resulted in performance targetsbeing achieved that would not havebeen achieved absent such misconduct.

Each of these elements of the compensa-tion program other than the shareretention requirements apply to all of thesenior executives of the Company, and allbut the share retention requirements andperformance tests for equity awards applyto all participants in the program.

With the assistance of its independentconsultant, the Committee has reviewedthe Company’s policies and practices forits employees and determined that therisks arising from those policies andpractices are not reasonably likely to havea material adverse effect on the Company.

Fixed Compensation

Two elements of compensation for execu-tive officers are not performance-based:base salary and benefits and perquisites,including pension benefits. These ele-ments are discussed below.

Base Salary. Base salary provides fixedcompensation to an individual that reflectshis or her job responsibilities, experience,value to the Company, and demonstratedperformance.

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Salaries or minimum salaries for Mr. Iger,Mr. Rasulo, Mr. Braverman, Mr. Mayer,Ms. Parker and Mr. Staggs, aredetermined in their employment agree-ments. These salaries or minimum salariesand the amount of any increase overminimums are determined by theCompensation Committee based on itssubjective evaluation of a variety of fac-tors, including:

• the nature and responsibility of the posi-tion;

• the impact, contribution, expertise andexperience of the individual executive;

• competitive market information regard-ing salaries to the extent available andrelevant;

• the importance of retaining the individualalong with the competitiveness of themarket for the individual executive’stalent and services; and

• the recommendations of the presidentand chief executive officer (except in thecase of his own compensation).

Where not specified by contract, salariesare generally reviewed annually.

Benefits and Perquisites. Employmentagreements with Mr. Iger, Mr. Rasulo,Mr. Braverman, Mr. Mayer, Ms. Parker andMr. Staggs provide that each is entitled toparticipate in employee benefits and per-quisites generally made available to seniorexecutives of the Company. Thus namedexecutive officers receive benefits theCompany provides to its salaried employ-ees, including health care coverage, lifeand disability insurance protection,reimbursement of certain educationalexpenses and access to favorably pricedgroup insurance coverage. The Companyprovides these benefits to help alleviatethe financial costs and loss of income aris-ing from illness, disability or death, toencourage ongoing education injob-related areas and to allow employeesto take advantage of reduced insurancerates available for group policies.

In addition to the benefits provided tosalaried employees generally, executiveofficers receive benefits and perquisitesthat are substantially the same as those

offered to other officers of the Company ator above the level of vice president,including: the option of receiving anautomobile supplied by the Company(including insurance, maintenance andfuel) or a monthly payment in lieu of theautomobile benefit; relocation assistance;eligibility for reimbursement of up to $450for health club membership or exerciseequipment and reimbursement of up to$1,500 for an annual physical exam; com-plimentary access to the Company’stheme parks and some resort facilities anddiscounts on Company merchandise andresort facilities; and personal use of tick-ets acquired by the Company for businessentertainment when they become avail-able because no business use has beenarranged. In addition to the benefits andperquisites provided to other employeesat or above the vice president level,executive officers may be eligible toreceive basic financial planning services,enhanced excess liability coverage,increased relocation assistance, and anincreased automobile benefit. Of thenamed executive officers only Mr. Iger,Mr. Braverman and Mr. Staggs remainentitled to the Family Income AssurancePlan, as that program is being phased outand is available only to those whose cur-rent employment agreements provide theright to this benefit. The Company paysthe cost of security services and equip-ment for the president and chief executiveofficer in an amount that the Boardbelieves is reasonable in light of his secu-rity needs and, in the interest of security,requires the chief executive officer to usecorporate aircraft for personal travel.Other senior executive officers are alsopermitted at times to use corporate air-craft for personal travel at the discretion ofthe chief executive officer.

Retirement Plans. The Company main-tains defined benefit and defined con-tribution retirement programs for itssalaried employees in which the Compa-ny’s named executive officers participate.These programs aim to recruit and retaintalent by helping provide financial securityinto retirement and rewarding and motivat-ing tenure.

In addition to the Company’s tax-qualifieddefined benefit plans, the Company main-

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tains non-qualified defined benefit plans inwhich the named executive officers partic-ipate. All tax-qualified defined benefitplans have a maximum compensation limitand a maximum annual benefit, which limitthe benefit to participants whosecompensation exceeds these limits. Inorder to provide retirement benefitscommensurate with salary levels, thenon-qualified plans provide benefits to keysalaried employees, including the namedexecutive officers, using the same formulafor calculating benefits as is used underthe tax-qualified plans but on compensa-tion in excess of the compensation limi-tations and maximum benefit accruals fortax-qualified plans. Additional informationregarding the terms of retirement pro-grams for named executive officers isincluded in “Compensation Tables — Pen-sion Benefits” beginning on page 44.

Competitive Considerations

In designing the Company’s compensationprogram, the Committee seeks to offercompensation that responds to the com-petitive market for executive talent in sucha way that the Company can attractexecutives of the highest caliber. We con-sider the competitive landscape indetermining the mix of compensationelements, the level of compensation andother specific terms of compensationpackages, and we seek to promote attrac-tion and retention of executives by offeringthe opportunity for compensation that iscompetitively desirable in the event ofsuccessful performance.

The Company is a complex organizationthat operates and recruits talent acrossdiverse industries and markets andnecessarily must make each compensa-tion decision in the context of the partic-ular situation, including the characteristicsof the business or businesses in which theindividual operates and the individual’sspecific roles, responsibilities, qual-ifications and experience. The Companytakes into account information about thecompetitive market for executive talent,but because of the complex mix of busi-nesses in which the Company is engaged,

the Company believes that strict bench-marking against selected groups ofcompanies does not provide a meaningfulbasis for establishing compensation.Therefore, the Committee does notattempt to maintain a specific target per-centile with respect to a specific list ofbenchmark companies in determiningcompensation for named executive offi-cers. Rather, the Committee reviewsinformation regarding competitive con-ditions from a variety of sources in makingcompensation decisions. These sourcesinclude broad public company indexessuch as Fortune 100 companies, the fourU.S. public companies that are major,complex, diversified and publicly-heldentertainment companies (CBS Corp.,News Corp., Time Warner and Viacom),and a group of companies proposed bymanagement, which the Committeebelieves are relevant to its determinationsin a number of respects, including size,complexity, diversity and global presence.The Committee periodically revises thisgroup, which, at the beginning of fiscal2010, consisted of the following 29companies:

• Accenture • IBM• Amazon.com • Johnson & Johnson• Apple • Kimberly-Clark• AT&T • Microsoft• CBS • News Corp.• Cisco Systems • Oracle• Colgate Palmolive • Pepsico• Comcast • Procter & Gamble• Dell • SAP• DirectTV • Texas Instruments• Emerson Electric • Time Warner Cable• EMC • Time Warner• Google • Verizon Communications• Hewlett-Packard • Viacom• Intel

By the end of the fiscal year, this list wasrevised to add Coca Cola (because it isdeemed to be a comparably-sized busi-ness whose consumer-oriented focus wasdetermined to be similar to that of theCompany) and to delete Emerson Electricand SAP (because their revenues are sig-nificantly below the median revenue of thegroup and their consumer focus isindirect).

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Other Considerations

Employment Agreements. The Committeeenters into employment agreements withsenior officers when it determines that anemployment agreement is desirable for theCompany to obtain a measure of assur-ance as to the executive’s continuedemployment in light of prevailing marketcompetition for the particular position heldby the executive officer, or where theCommittee determines that an employ-ment agreement is necessary and appro-priate to attract an executive in light ofmarket conditions, the prior experience ofthe executive or practices at the Companywith respect to other similarly situatedemployees. With respect to the namedexecutive officers, the Company hasentered into employment agreements withMr. Iger (for a term through January 31,2013), Mr. Rasulo (for a term throughJanuary 31, 2015), Mr. Braverman (for aterm through September 30, 2013),Mr. Mayer (for a term through Sep-tember 30, 2012), Ms. Parker (for a termthrough August 31, 2012) and Mr. Staggs(for a term through March 31, 2013).

Employment agreements with executiveofficers provide executive officers withcertain benefits upon termination of theiremployment in various circumstances, asdescribed under “Compensation Tables —Payments and Rights on Termination,”beginning on page 46. The terminationprovisions define the rights of the execu-tives and the Company in various termi-nation scenarios and serve a variety ofpurposes including providing benefits tothe executive and his or her family in theevent of the death or disability of theexecutive, defining when an executive canbe terminated with cause and receive nofurther compensation, and clearly definingrights in the event of a termination in othercircumstances.

The agreements specifically define bene-fits that are provided in the event of termi-nation following a change in control, whichare intended to motivate executive officersto remain with the Company despite theuncertainty and dislocation that arises inthe context of change in control situationsand to ensure that opportunities forchange in control are evaluated in light of

shareholders’ long-term interests ratherthan any loss of prospective compensa-tion the executive may suffer as a result ofthe change in control.

The termination provisions are alsodesigned to align executives’ interestswith long-term shareholder growth byproviding that, in those circumstances inwhich bonus payments are made andequity awards vest after termination, thepayments and awards are (except in thecase of vesting of restricted stock unitsfollowing termination due to death ordisability) subject to the same perform-ance measures (other than the test toassure deductibility under Section 162(m))as apply if there is no termination.

Other material terms of the employmentagreements with Mr. Iger, Mr. Rasulo,Mr. Braverman, Mr. Mayer, Ms. Parker andMr. Staggs are described under “FixedCompensation” above and “Fiscal 2010Decisions” below.

Tax deductibility. Section 162(m) of theInternal Revenue Code generally disallowsa tax deduction to public corporations forcompensation over $1,000,000 paid forany fiscal year to the corporation’s chiefexecutive officer and up to three otherexecutive officers whose compensationmust be included in this proxy statementbecause they are the most highlycompensated executive officers. However,the statute exempts qualifyingperformance-based compensation fromthe deduction limit if certain requirementsare met. The Committee has structuredawards to executive officers under theCompany’s annual performance-basedbonus program and equity awards pro-gram to qualify for this exemption. How-ever, the Committee believes thatshareholder interests are best served if theCommittee’s discretion and flexibility inawarding compensation is not restricted,even though some compensation awardsmay result in non-deductible compensa-tion expenses. Therefore, the Committeehas approved salaries for executive offi-cers that were not fully deductiblebecause of Section 162(m) at the time ofapproval and retains the right to authorizepayments or take other actions that canresult in the payment of compensationthat is not deductible for income tax pur-poses.

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Fiscal 2010 Decisions

The following is a discussion of specificdecisions made by the CompensationCommittee in fiscal year 2010 or withrespect to fiscal year 2010 compensationfor the named executive officers.

Employment Agreements

During the fiscal year, the CompensationCommittee approved the terms of a newemployment agreement for Mr. Rasulo inconnection with his becoming SeniorExecutive Vice President and Chief Finan-cial Officer, and approved an amendmentto Mr. Staggs’ employment agreement inconnection with his becoming Chairman,Walt Disney Parks and Resorts Worldwide.The material terms for Mr. Rasulo’s andMr. Staggs’ employment agreements aredescribed under “Other Considerations —Employment Agreements” and “FixedCompensation” above and “CompensationTables — Payments and Rights onTermination,” beginning on page 46. OnMr. Iger’s recommendation, the Commit-tee determined that the terms ofMr. Rasulo’s new employment agreementshould be substantially similar to theterms of Mr. Staggs’ employment agree-ment when he served as Senior ExecutiveVice President and Chief Financial Officer,except that:

• the amount of reimbursement for excisetaxes on compensation received ontermination following a change in controlin Mr. Rasulo’s agreement is limited to$2,000,000, which was the amount in hisprior employment agreement, rather thanthe $4,000,000 in Mr. Staggs’ agreement;and

• consistent with the Committee’s determi-nation in fiscal 2009 to phase out theFamily Income Assistance Plan,Mr. Rasulo’s agreement provides that heis not entitled to this benefit.

The amendment to Mr. Staggs’ employ-ment agreement retained the substantiveterms of his employment agreement, butmade the following changes to conformthe agreement to his new position:changed his duties to those of Chairman,Walt Disney Parks and Resorts Worldwide;

assigned the employment relationship toWalt Disney Parks and Resorts Worldwide;and provided that Mr. Staggs’ bonusopportunity for fiscal 2011 and thereafterand equity awards and perquisites afterthe date of the amendment would becomparable to those offered the mostsenior officers of subsidiaries of The WaltDisney Company rather than those offeredto executive officers of The Walt DisneyCompany.

Consistent with past practice, the Commit-tee has reviewed the practice of providingcompensation for certain executives whoare subject to excise taxes on compensa-tion received on termination following achange in control. During fiscal 2009, theCommittee determined that it wouldestablish a cap on this reimbursement inconnection with any renegotiation ofmaterial terms of, or renewal or replace-ment of, employment agreements with anyexecutive officer. In light of additionalfeedback from the Company’s shareholderbase and considering evolving marketpractices, the Compensation Committee,subsequent to the end of fiscal 2010,adopted a policy that it will not, withoutshareholder approval, include reimburse-ment for excise taxes payable by anexecutive upon termination following achange in control in any future agreementswith executive officers or in any materialamendments or extensions of existingagreements.

Base Salary

Employment agreements with Mr. Iger,Mr. Rasulo, Mr. Braverman, Mr. Mayer,Ms. Parker and Mr. Staggs provide for abase salary as follows:

• Mr. Iger’s employment agreement pro-vides for Mr. Iger to receive an annualsalary of at least $2,000,000.

• Mr. Rasulo’s employment agreementprovides for an annual salary of$1,400,000 for the first year of theagreement, effective January 1, 2010,and provides for the Company to set anannual salary for subsequent years in itssole discretion as long as the amount isat least $1,400,000.

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• Mr. Braverman’s employment agreementprovides for an annual salary of$1,100,000 for the first year of theagreement, effective October 1, 2008,and provides for the Company to set anannual salary for subsequent years in itssole discretion as long as the amount isat least $1,100,000. Based on Mr. Iger’srecommendation, Mr. Braverman’s per-formance during the preceding year andthe fact that Mr. Braverman did notreceive an increase in salary in 2009, theCommittee in fiscal 2010 approved anincrease in Mr. Braverman’s salary to$1,150,000 effective February 1, 2010.

• Mr. Mayer’s employment agreementprovides for an annual salary of $700,000for the first year of the agreement, effec-tive October 1, 2008, and provides forthe Company to set an annual salary ofno less than that amount for subsequentyears in its sole discretion. Based onMr. Iger’s recommendation, Mr. Mayer’sperformance during the preceding yearand the fact that Mr. Mayer did notreceive an increase in salary in 2009, theCommittee in fiscal 2010 approved anincrease in Mr. Mayer’s salary to$725,000 effective February 1, 2010.

• Ms. Parker’s employment agreementprovides for an annual salary of $550,000for the first year of the agreement, effec-tive September 1, 2009 and provides forthe Company to set an annual salary forsubsequent years in its sole discretionas long as the amount is at least$550,000. Based on Mr. Iger’s recom-mendation and Ms. Parker’s perform-ance during the preceding year, theCommittee in fiscal 2010 approved anincrease in Ms. Parker’s salary to$625,000 effective September 1, 2010.

• Mr. Staggs’s employment agreementprovides for an annual salary of$1,250,000 from April 1, 2008 throughMarch 31, 2009, $1,325,000 throughMarch 31, 2010, $1,400,000 throughMarch 31, 2011, $1,450,000 throughMarch 31, 2012 and $1,500,000 throughMarch 31, 2013. In light of the adverseeconomic environment facing theCompany’s businesses and efforts toreduce costs in response to these con-ditions, Mr. Staggs volunteered to deferthe increase in his base salary scheduled

in his employment agreement for April 1,2009 until February 2010. As scheduled,his salary increased to $1,400,000 effec-tive April 1, 2010.

Annual Performance Bonuses forNamed Executive Officers

The Committee approved one change inthe performance bonus program designduring fiscal 2010. The program had pre-viously provided that the maximum per-formance factor applied to the 70%portion of the annual award based onfinancial performance would be 200% forthe President and Chief Executive Officer,the Senior Executive Vice President andChief Financial Officer and the SeniorExecutive Vice President and GeneralCounsel and 150% for other executiveofficers. Based on its experience in apply-ing the terms of the program, the Commit-tee determined that the maximum factorshould be consistent among all executiveofficers, and therefore standardized themaximum financial performance factor at200% for all named executive officers.

The Committee approved the followingtarget bonuses for the named executiveofficers for fiscal 2010:

Named Executive Officer Target Bonus

Robert A. Iger $10,000,000James A. Rasulo 200% of fiscal year-end salaryAlan N. Braverman 200% of fiscal year-end salaryKevin A. Mayer 125% of fiscal year-end salaryM. Jayne Parker 100% of fiscal year-end salaryThomas O. Staggs 200% of fiscal year-end salary

For each named executive officer, thetargets were equal to the minimumamount set forth in their respectiveemployment agreements.

In January 2010, the Committee alsoselected four financial performance meas-ures to be used in making the determi-nation with respect to the 70% portion ofthe target bonus based on financial per-formance measures. The Committeeselected operating income, return oninvested capital, after-tax free cash flowand earnings per share and establishedthe performance ranges and weightings

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shown in the table on the following page.The performance measures and relativeweightings were the same as were used infiscal 2009. The Committee selected theperformance ranges based on recom-mendations of the chief executive officerand after reviewing the Company’s annualoperating plan for fiscal 2010 and thelong-term strategic plan. The Committeedetermined that performance below thethreshold level of each range representedperformance at a level that, in light ofplanned business operations andexpected conditions for the year, repre-sented marginal performance and that themaximum of each range representedexceptional performance in light of theseconditions and expectations. In light ofcontinuing economic uncertainty, theCommittee established ranges that werenarrower than those established for fiscal2009 but broader than in years prior to2009.

At the same time, the Committee alsoapproved other Company-wide perform-ance factors to be used in making thedetermination with respect to the 30%portion of the target bonus for each of thenamed executive officers. The Committeeapproved the following factors based onthe recommendation of Mr. Iger and thestrategic objectives of the Company:

• Foster quality, creativity and innovationto differentiate our content, productsand experiences

• Prudently invest for growth with a focuson consumer-facing, brand and sharebuilding initiatives across global markets

• Invest in our people including anemphasis on diversity, leadership andsuccession planning

• Successfully integrate the Marvel busi-nesses and franchises.

The bonuses awarded to the named executive officers were determined as follows:

• Performance for the fiscal year on the four financial performance measures was comparedto the performance range for each of the measures established by the Committee at thebeginning of the fiscal year. A performance factor was calculated for each of the four finan-cial performance measures, with the performance factor equal to zero if the bottom of theperformance range was not achieved and the factor increasing from 35% to 200% from thebottom of the performance range to the top of performance range. The resulting perform-ance factor for each financial performance measure was multiplied by the weight shownbelow to arrive at a weighted multiple, and the four weighted multiples were added to arriveat an aggregate financial performance multiple, as shown below.

PerformanceRange

AdjustedActual Fiscal

Year 2010Performance

Performance Measure(dollars in millions except per

share amounts)

ResultingPerformance

Factor WeightWeighted

Multiple

Operating income $4,063-$8,803 $7,556 139% .250 34.7%Return on invested capital* 4.6%-9.6% 8.5% 147% .250 36.8%After-tax free cash flow** $1,191-$5,658 $4,059 140% .214 30.1%Earnings per share $1.07-$2.31 $2.06 153% .286 43.6%Aggregate Financial Performance Goal Multiple*** 145.1%

* “Return on invested capital” is aggregate segment operating income less corporate and unallocated shared expenses andincome tax expense, divided by average net assets (including gross goodwill) invested in operations, all on an equity basis (i.e.,including Euro Disney and Hong Kong Disneyland on a basis that reflects our actual ownership percentage rather than on aconsolidated basis).

** “After-tax free cash flow” is cash provided by operations less investments in parks, resorts and other properties, all on an equitybasis (i.e., including Euro Disney and Hong Kong Disneyland on a basis that reflects our actual ownership percentage rather thanon a consolidated basis).

*** Total may not equal the sum of the column due to rounding.

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In comparing actual performance for fiscalyear 2010 to the performance ranges, theCommittee adjusted the ranges to reflectthe acquisition of Marvel and excluded theimpacts of the following items in determin-ing the adjusted actual performance:restructuring and impairment charges;gains on the sale of businesses; and again recorded in connection with theacquisition of Disney Store Japan. Theamounts included in the table abovereflect these adjustments.

• The Committee then evaluated eachofficer’s performance against the otherperformance objectives established inJanuary 2010 as set forth above. Withrespect to performance by each execu-tive officer, the Committee determined(in the case of Mr. Iger) and concurredwith Mr. Iger’s conclusions (with respectto the other executive officers) that:

• Mr. Iger led the Company’s emergencefrom the extraordinary difficulteconomic environment of the prioryear, delivering robust financial growthduring this fiscal year while continuingto positio n the Company for growthover the long-term. Results for the yearwere driven substantially by executionon one of Mr. Iger’s strategic priorities– the creation of quality creative prod-uct – through creative successesincluding record ratings for DisneyChannel, ESPN and ABC Family andthe release of two films – Alice inWonderland and Toy Story 3 – thatachieved over $1 billion in worldwidebox office. Mr. Iger continued to stressinnovation by implementing a newapproach to managing the Company’spresence on social networks. Mr. Igertook substantial steps to continuedevelopment of management leader-ship through implementation of new,and management of recent changes in,senior executive positions.

• Mr. Rasulo successfully transitionedinto his new role as Chief FinancialOfficer, quickly assuming the new role,earning respect internally andexternally and bringing a fresh per-spective to the position. His accom-plishments included leading an overallefficiency review, implementingchanges in corporate structure and

instigating efforts to enhance careerplanning at the corporate level withincreased emphasis on cross-segmentand cross-function review in fillingopen positions. He also led significantaspects of the integration of Marvel.

• Mr. Braverman continued to provideoutstanding leadership of the legalfunction and assumed newresponsibilities for government rela-tions. His accomplishments included:actions that led to the realization ofsavings in the legal function andreducing costs from budgeted levels;selecting new leadership for US-basedgovernment relations activities and forChina-based government relations;and developing a long- term globalpolicy strategy and recruiting leader-ship for that function. In addition,Mr. Braverman played a significant rolein the integration of Marvel and suc-cessfully implemented the Company’sdiversity initiative in filling openings inthe legal department.

• Mr. Mayer brought an innovativeapproach to the corporate strategy anddevelopment function, identifyingacquisitions such as Playdom thatbring important capabilities and qualitycontent to the Company. He success-fully pursued cost mitigation effortsand completed significant transactionsduring the year without use of outsideadvisors. Mr. Mayer also contributedextraordinary efforts in leading thetransaction for the successful sale ofMiramax during the fiscal year.

• Ms. Parker rapidly made a substantialcontribution in her new role as ChiefHuman Resources Officer bringing astrategic mind-set and collaborativestyle that resulted in immediateimprovements to the efficiency of thehuman resources function across theenterprise. Her accomplishments dur-ing the year included: the firstenterprise-wide employee survey;leadership of an enterprise-wide rede-sign of the talent planning and succes-sion process; streamlining of therecruiting process across the Com-pany; and establishment of aCompany-wide diversity roadmap.

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• Mr. Staggs assumed theresponsibilities in his new role asChairman, Walt Disney Parks andResorts Worldwide extremely well,gaining the respect of his new team,quickly learning the business and pro-viding strong leadership. He effectively

managed the business through theongoing economic recovery and is leading implementation of investments inupgrading and expansion of park andresort facilities in Florida, California,Hawaii and China and in new cruiseships.

In light of the factors described above and (except in the case of Mr. Iger), Mr. Iger’srecommendations, the Committee established the individual performance factors set forthbelow for each of the named executive officers. In particular, the factor established forMr. Mayer reflected his extraordinary effort in connection with the sale of the Miramax filmbusiness, for which the majority of the work was completed during the fiscal year.

• The Committee then calculated final fiscal year 2010 bonuses for the named executive offi-cers as follows, rounding to the nearest $10,000:

BONUS CALCULATION FOR FISCAL 2010

TargetBonus

Company PerformanceAmount

Individual PerformanceAmount Calculated

BonusAmount

(Rounded)70% ofTarget Multiple Subtotal

30% ofTarget Multiple Subtotal

Robert A. Iger $10,000,000 $7,000,000 145.1% $10,158,279 $3,000,000 110% $3,300,000 $13,460,000

James A. Rasulo 2,800,000 1,960,000 145.1% 2,844,318 840,000 102% 856,800 3,700,000

Alan N. Braverman 2,300,000 1,610,000 145.1% 2,336,404 690,000 100% 690,000 3,030,000

Kevin A. Mayer 906,250 634,375 145.1% 920,594 271,875 245% 666,094 1,590,000

M. Jayne Parker 625,000 437,500 145.1% 634,892 187,500 113% 211,875 850,000

Thomas O. Staggs 2,800,000 1,960,000 145.1% 2,844,318 840,000 102% 856,800 3,700,000

Long-Term Incentive Compensation

The Committee made regular annualequity awards to the named executiveofficers in January 2010. Consistent withthe equity award policies described under“Performance-Based Compensation —Equity-Based Compensation” above, theCommittee awarded restricted stock unitsand options, with 30% of the grant-datefair value of the award in the form ofrestricted stock units subject to perform-ance vesting conditions in addition to theSection 162(m) test, 30% in the form ofrestricted stock units subject only to theSection 162(m) test and 40% in the form ofoptions. Awards made to Mr. Staggs werenot subject to the Section 162(m) test. Thenumber of options and units awarded wasdetermined by valuing stock unit awardsat an amount equal to the dollar amount ofthe award allocated to stock units by themarket price on the date of grant withouttaking into account any valuation adjust-ments related to achievement of perform-ance tests. On this basis, the value of theaward to Mr. Iger was $11,000,000. Thevalue of the awards to Mr. Rasulo,

Mr. Braverman and Mr. Staggs were equalto $4,200,000, $2,200,000 and $4,200,000,respectively, which were equal to theminimum provided in their respectiveemployment agreements. The values ofthe award to Mr. Mayer and Ms. Parker,neither of whom have contractually agreedminimums, were $1,700,000 and$1,200,000, respectively. In addition,Mr. Braverman assumed responsibility forgovernmental affairs at the beginning ofthe calendar year and he thereforereceived an award of 50,000 restrictedstock units in January 2010, as providedby the terms of his employment agree-ment, which required the award of theseunits upon his assuming a significantincrease in his responsibilities. The num-ber of restricted stock units and options isreflected in the Fiscal 2010 Grants of PlanBased Awards table on page 36 below.

In determining the annual grants ofrestricted stock units and options for eachexecutive officer, the Committee consid-ered the minimums required by employ-ment agreements, where applicable, andthe Company’s overall long-term incentiveguidelines for all executives, which

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attempt to balance, in the context of thecompetitive market for executive talent,the benefits of incentive compensationtied to performance of the Company’sstock with the dilutive effect of equitycompensation awards. The Committeealso considered Mr. Iger’s recom-mendations, except in the case ofMr. Iger’s own agreement and award. Indetermining the size of the equity awardfor Mr. Iger, the Committee chose a valuein excess of the minimum required by hiscontract to reward Mr. Iger’s excellentmanagement of the Company in a difficulteconomic environment.

Benefits and Perquisites

The Committee did not make any changesin the Company’s policies with respect tobenefits and perquisites during fiscal year2010.

Deductibility of Compensation

Awards to executive officers under theManagement Incentive Bonus Programand the long-term incentive programinclude a test specifically designed toensure that the awards are fully deductibleunder Section 162(m). As required by Sec-

tion 162(m), the criterion established mustnot be certain of being achieved at thetime it is set. The regulations under Sec-tion 162(m) specifically indicate that a testbased on profitability is not assured ofbeing attained. Accordingly, our bonusprogram and equity award program bothuse a test based on adjusted net income,which means net income adjusted, asappropriate, to exclude the following itemsor variances: change in accounting princi-ples; acquisitions; dispositions of a busi-ness; asset impairments; restructuringcharges; extraordinary, unusual orinfrequent items; and extraordinary liti-gation costs and insurance recoveries. Forthe one-year period ending at the end offiscal 2010, the adjusted net income targetwas $2.03 billion, and the Company ach-ieved adjusted net income of $4.04 billion.Net income was adjusted by reducing itfor the amount of gains on the sale ofbusinesses ($75 million) and the amount ofa gain recorded in connection with theacquisition of The Disney Store Japan ($21million) and by increasing it to reflectrestructuring and impairment charges($169 million). Therefore, bonuses earnedin fiscal 2010 and restricted stock unitsvesting in fiscal 2010 are deductible underSection 162(m).

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Compensation Tables

The following table provides information concerning total compensation earned in fiscal2008, fiscal 2009 and fiscal 2010 by the chief executive officer, the chief financial officer andthe three other persons serving as executive officers at the end of fiscal 2010 who were themost highly compensated executive officers of the Company in fiscal 2010. In addition, wehave included information for fiscal 2010 with respect to Thomas O. Staggs, who was SeniorExecutive Vice President and Chief Financial Officer through December 31, 2009, after whichhe became Chairman, Walt Disney Parks and Resorts, Worldwide. These six officers arereferred to as the named executive officers in this proxy statement. Information regarding theamounts in each column follows the table.

SUMMARY COMPENSATION TABLE

Name and Principal Position Year Salary1Stock

AwardsOption

Awards

Non-EquityIncentive PlanCompensation

Change inPension Value

andNonqualified

DeferredCompensation

EarningsAll Other

Compensation Total

Robert A. Iger 2010 $2,000,000 $7,359,0602 $ 4,399,991 $13,460,000 $1,600,4804 $798,433 $29,617,964President and Chief ExecutiveOfficer

2009 2,038,462 5,940,006 3,598,402 9,260,000 2,343,1434 741,601 23,921,6142008 2,000,000 5,904,000 28,449,9973 13,945,493 156,761 773,090 51,229,341

James A. Rasulo 2010 1,350,769 2,809,8392 1,680,005 3,700,000 963,9534 30,556 10,535,122Senior Executive Vice Presidentand Chief Financial Officer

Alan N. Braverman 2010 1,133,654 3,027,8542,5 880,002 3,030,000 640,1054 56,395 8,768,010Senior Executive VicePresident, General Counsel andSecretary

2009 1,120,769 4,487,5395 879,614 2,035,000 815,4394 34,150 9,372,511

2008 1,032,885 1,180,800 686,393 3,000,000 277,071 67,649 6,244,798

Kevin A. Mayer 2010 716,827 1,137,3572 679,999 1,590,000 249,8214 20,160 4,394,164Executive Vice President,Corporate Strategy and,Business Development

2009 713,269 996,633 603,737 900,000 257,1004 19,889 3,490,6282008 646,442 619,920 360,358 1,025,000 52,824 18,956 2,723,500

M. Jayne Parker 2010 556,634 802,8612 480,005 850,000 300,7744 27,501 3,017,775Executive Vice President andChief Human Resources Officer

Thomas O. Staggs6 2010 1,338,558 2,809,8392 1,680,005 3,700,000 632,5294 48,539 10,209,470Chairman, Walt Disney Parksand Resorts, Worldwide

2009 1,274,038 2,623,517 1,589,294 2,450,000 717,7974 43,786 8,698,4322008 1,187,019 9,151,2007 1,029,586 4,100,000 47,617 78,097 15,593,519

1 The amounts reflect compensation for 53 weeks in fiscal year 2009 compared to 52 weeks in fiscal 2010 and fiscal 2008 due tothe timing of fiscal period end.

2 Stock awards for fiscal 2010 include awards subject to performance conditions that were valued based on the probability thatperformance targets will be achieved. Assuming the highest level of performance conditions are achieved, the grant date stockaward values for fiscal 2010 would be $8,250,068, $3,150,044, $3,206,060, $1,275,064, $900,068 and $3,150,044 for Mr. Iger,Mr. Rasulo, Mr. Braverman, Mr. Mayer, Ms. Parker and Mr. Staggs, respectively.

3 The amount recorded for fiscal 2008 includes $25,018,048, relating to an award of options to purchase 3,000,000 shares at anexercise price of $29.51 per share and scheduled to vest through 2013, which was awarded to Mr. Iger in fiscal 2008 as aninducement to enter into an extended employment agreement.

4 As described more fully under “Change in Pension Value and Nonqualified Deferred Compensation Earnings” below, the change inthis amount from fiscal 2008 to fiscal 2009, and from fiscal 2009 to fiscal 2010, is driven largely by changes in the discount rateapplied to calculate the present value of future pension payments.

5 The amount recorded for fiscal 2010 includes $1,556,000 relating to an award of 50,000 restricted stock units scheduled to vestthrough 2014 awarded to Mr. Braverman in fiscal 2010 as provided in an employment agreement entered into in fiscal 2009 andupon Mr. Braverman’s assumption of new duties in fiscal 2010. The amount recorded for fiscal 2009 includes $3,035,500 relatingto an award of 100,000 restricted stock units scheduled to vest through 2012 awarded to Mr. Braverman in fiscal 2009 as aninducement to enter into the employment agreement.

6 Mr. Staggs is included in the table because he was Senior Executive Vice President and Chief Financial Officer during the fiscalyear.

7 The amount recorded for fiscal 2008 includes $7,380,000 relating to an award of 250,000 restricted stock units scheduled to vestin 2013 awarded to Mr. Staggs in fiscal 2008 as an inducement to enter into a new employment agreement.

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Salary. This column sets forth salaryearned during each fiscal year, none ofwhich was deferred.

Stock Awards. This column sets forth thegrant date fair value of grants during eachfiscal year of restricted stock unitsawarded as part of the Company’s long-term incentive compensation program.The grant date fair value of all restrictedstock unit awards is equal to the numberof units awarded times the average of thehigh and low trading price of the Compa-ny’s common stock on the grant datesubject to valuation adjustments forrestricted stock units that have perform-ance vesting conditions other than the testto assure deductibility under Sec-tion 162(m). The valuation adjustments aredetermined using a Monte Carlo simu-lation that determines the probability thatthe performance targets will be achieved.The grant date fair value of restrictedstock units awarded during fiscal 2010 isalso included in the Grants of Plan BasedAwards table on page 36.

Option Awards. This column sets forththe grant date fair value of grants duringeach fiscal year of options awarded to thenamed executive officers. The grant-datefair values of options were calculatedusing the binomial model. The assump-tions used in estimating the fair value ofoptions are set forth in footnote 13 to theCompany’s Audited Financial Statementsfor fiscal year 2010. The grant date fairvalue of options awarded during fiscal2010 is also included in the Grants of PlanBased Awards table on page 36.

Non-Equity Incentive Plan Compensa-tion. This column sets forth the amountof compensation earned by the namedexecutive officers under the Company’sManagement Incentive Bonus programduring each fiscal year. A description ofthe Company’s annual performance-basedbonus program is included in the dis-cussion of “Performance Based Compensa-tion” in the “Compensation Objectives andProgram Design” section, and the determi-nation of performance-based bonuses forfiscal 2010 is described in the discussionof “Annual Performance Bonus for NamedExecutive Officers” in the “Fiscal 2010Decisions” section, of the Compensation

Discussion and Analysis, beginning onpage 14.

Change in Pension Value and NonqualifiedDeferred Compensation Earnings. Thiscolumn reflects the aggregate change in theactuarial present value of each namedexecutive officer’s accumulated benefitunder all defined benefit plans, includingsupplemental plans, during each fiscal yearreported. The amounts recorded in thiscolumn vary with a number of factors,including the discount rate applied todetermine the value of future paymentstreams. As a result of a reduction inprevailing interest rates in the credit marketsduring late 2008 and 2009, the discount rateused pursuant to pension accounting rulesto calculate the present value of futurepayments decreased from 7.00% for fiscal2008 to 5.75% for fiscal 2009, driving thesubstantial increases in the present value offuture payments reported for fiscal 2009.The discount rate continued to decrease to5.25% for fiscal 2010 contributing to a fur-ther increase in the present value of futurepayments. The increase in pension valueresulting from the change in the discountrate does not result in any increase in thebenefits payable to participants under theplan. None of the named executive officershad earnings on deferred compensationother than Mr. Iger, whose earnings ondeferred compensation, which are disclosedbelow under “Deferred Compensation,” werenot above market rates and therefore arenot included in this column.

All Other Compensation. This column setsforth compensation that is not included inother columns, including:

• the incremental cost to the Company ofperquisites and other personal benefits;

• the amount of Company contributions toemployee savings plans; and

• the dollar value of insurance premiumspaid by the Company with respect toexcess liability insurance for the namedexecutive officers.

In accordance with SEC interpretations ofits rules, the table includes the incrementalcost of some items that are provided toexecutives for business purposes butwhich may not be considered integrallyrelated to the executive’s duties.

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The following table identifies the incremental cost of each perquisite or personal benefit thatexceeded the greater of $25,000 or 10% of the total amount of perquisites and personalbenefits for a named executive officer in fiscal 2010.

FISCAL 2010 PERQUISITES AND PERSONAL BENEFITS

Personal AirTravel Security Other Total

Robert A. Iger $192,284 $562,034 $38,390 $792,708James A. Rasulo — — 24,859 24,859Alan N. Braverman — — 50,670 50,670Kevin A. Mayer — — 14,997 14,997M. Jayne Parker — — 22,212 22,212Thomas O. Staggs — — 42,727 42,727

The incremental cost of the items speci-fied above was determined as follows:

• Personal air travel: the actual cateringcosts, landing and ramp fees, fuel costsand lodging costs incurred by flight crewplus a per hour charge based on theaverage hourly maintenance costs forthe aircraft during the year for flights thatwere purely personal in nature, and a prorata portion of catering costs wherepersonal guests accompanied execu-tives on flights that were business innature. Where a personal flight coincidedwith repositioning of aircraft following abusiness flight, only incremental costs ofthe flight compared to an immediaterepositioning of the aircraft are included.

• Security: actual costs incurred by theCompany for providing security equip-ment and services.

The column labeled “Other” in the tableabove includes the incremental cost to theCompany of the vehicle benefit, personalair travel where the cost to the Companyfor personal air travel is less than $25,000,reimbursement of up to $450 for healthclub membership or exercise equipment,reimbursement of up to $1,500 for anannual physical exam and reimbursementof expenses for financial consulting.Executives also are entitled to the otherbenefits described in the CompensationDiscussion and Analysis under the dis-cussion of “Fixed Compensation” in the“Compensation Objectives and ProgramDesign” section, which either involved noincremental cost to the Company or areoffered through programs that are avail-able to substantially all of the Company’ssalaried employees.

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Grants of Plan Based Awards

The following table provides information concerning the range of awards available to namedexecutive officers under the Company’s management incentive bonus program for fiscal 2010and information concerning option and restricted stock unit awards made to named executiveofficers during fiscal 2010. Additional information regarding the amounts in each column fol-lows the table.

FISCAL 2010 GRANTS OF PLAN BASED AWARDS

Estimated FuturePayouts Under Non-Equity

Incentive Plan Awards

Estimated Future PayoutsUnder Equity

Incentive Plan Awards

All OtherStock

Awards:Number ofShares ofStock or

Units

All OtherOption

Awards:Number ofSecurities

UnderlyingOptions

Exerciseor BasePrice ofOption

Awards

GrantDate

ClosingPrice ofShares

UnderlyingOptions

GrantDate FairValue of

Stock andOption

AwardsGrantDate Threshold Target Maximum Threshold Target Maximum

Robert A. Iger 1/13/10 465,578 $31.12 $31.29 $4,399,991

1/13/10 106,042 212,084 265,105 7,359,0601

$3,500,000 $10,000,000 $20,000,000

James A. Rasulo 1/13/10 177,767 31.12 31.29 1,680,005

1/13/10 40,489 80,978 101,223 2,809,8391

$ 980,000 $ 2,800,000 $ 5,600,000

Alan N. Braverman 1/13/10 50,0002 1,556,000

1/13/10 93,116 31.12 31.29 880,002

1/13/10 21,209 42,418 53,023 1,471,8541

$ 805,000 $ 2,300,000 $ 4,600,000

Kevin A. Mayer 1/13/10 71,953 31.12 31.29 679,999

1/13/10 16,389 32,778 40,973 1,137,3571

$ 317,188 $ 906,250 $ 1,812,500

M. Jayne Parker 1/13/10 50,791 31.12 31.29 480,005

1/13/10 11,569 23,138 28,923 802,8611

$ 218,750 $ 625,000 $ 1,250,000

Thomas O. Staggs 1/13/10 40,489 1,260,018

1/13/10 177,767 31.12 31.29 1,680,005

1/13/10 0 40,489 60,734 1,549,8221

$ 980,000 $ 2,800,000 $ 5,600,000

1 Stock awards for fiscal 2010 include awards subject to performance conditions that were valued based on the probability thatperformance targets will be achieved. Assuming the highest level of performance conditions are achieved, the grant date stockaward values for fiscal 2010 would be $8,250,068, $3,150,044, $1,650,060, $1,275,064, $900,068 and $1,890,027 for Mr. Iger,Mr. Rasulo, Mr. Braverman, Mr. Mayer, Ms. Parker and Mr. Staggs, respectively.

2 Restricted stock units scheduled to vest through 2014 pursuant to the terms of Mr. Braverman’s 2008 employment agreementupon assumption of new duties under the agreement.

Grant date. The Compensation Committeeawarded the annual grant of stock optionsand restricted stock units for fiscal 2010 onJanuary 13, 2010. The CompensationCommittee approved awards under theManagement Incentive Bonus Program onDecember 16, 2010.

Estimated Future Payouts Under Non-equityIncentive Plan Awards. As described in theCompensation Discussion and Analysis, theCompensation Committee sets targetbonuses at the beginning of the fiscal yearunder the Company’s ManagementIncentive Bonus Program and theAmended and Restated 2002 Executive

Performance Plan, and bonuses for namedexecutive officers will, except in specialcircumstances such as unusual challengesor extraordinary successes, range from35% to 200% of the target amount basedon financial performance factors and otherperformance factors for the fiscal year, butthe bonus may be zero if performancefactors (including the Section 162(m) test)fall below threshold amounts or less thanthe calculated amounts if the Committeeotherwise decides to reduce the bonus. Asaddressed in the discussion of Fiscal 2010Decisions in the Compensation Discussionand Analysis, the employment agreementsof Mr. Iger, Mr. Rasulo, Mr. Braverman,

36


Mr. Mayer, Ms. Parker and Mr. Staggs seta minimum target bonus. This columnshows the range of bonus amounts foreach named executive officer from thethreshold to the maximum based on thetarget set at the beginning of the fiscalyear. The actual amounts awarded forfiscal 2010 are set forth in the SummaryCompensation Table in the Non-EquityIncentive Plan Compensation column.

Estimated Future Payouts Under EquityIncentive Plan Awards. This column setsforth the number of restricted stock unitsawarded to the named executive officersduring fiscal 2010 that are subject to per-formance tests as described below and/orto the test to assure eligibility fordeduction under Section 162(m). Theseinclude:

• units awarded to each of the namedexecutive officers as part of the annualgrant in January 2010, 50% of which aresubject to the performance testsdescribed in the Compensation Dis-cussion and Analysis under the heading“Performance-based Compensation —Equity-based Compensation” and all ofwhich (other than those awarded toMr. Staggs) are subject to the test toassure eligibility under Section 162(m);and

• units awarded to Mr. Braverman inJanuary 2010 in connection with hisassuming additional responsibilities asprovided for in his employment agree-ment entered into October 1, 2008(which are subject to the test to assureeligibility under Section 162(m)).

Vesting dates for all restricted stock unitsheld as of the end of fiscal year 2010 aredescribed under “Outstanding EquityAwards,” below.

In each of the cases described above(assuming the Section 162(m) test is met,where applicable):

• If the total shareholder return test isbelow the 25th percentile and the earn-ings per share test is below the 50th

percentile, the named executive officerwill be entitled to receive on the appli-cable vesting date

a number of shares equal to that setforth in the “threshold” column, plus anyshares received as dividend equivalentsprior to vesting, comprised of only thoseshares that are subject only to the Sec-tion 162(m) test. In this circumstance,none of the shares that are subject toadditional performance tests will vest.

• If the total shareholder return equals orexceeds the 25th percentile or earningsper share equals or exceeds the 50th

percentile, the named executive officerwill receive a number of shares equal to(a) those shares that are subject to onlythe Section 162(m) test; plus (b) thepercentage of shares that are subject toadditional performance tests as set forthin the table set forth on page 22 ( plus, ineach case, any shares received as divi-dend equivalents prior to vesting). Forexample, the total number of sharesvesting would equal the number in the“target” column if, on the measurementdate, the total shareholder return test ismet at the 50th percentile, and at thenumber in the “maximum” column if thetotal shareholder return equals orexceeds the 75th percentile.

(When dividends are distributed to stock-holders, dividend equivalents are creditedin an amount equal to the dollar amount ofdividends on the number of units held onthe dividend record date divided by thefair market value of the Company’s sharesof common stock on the dividend dis-tribution date.) If the Section 162(m) test isnot met on any measurement date, theexecutive would receive no shares on theapplicable vesting date.

All Other Stock Awards: Number of Sharesof Stock or Units. This column sets forththe number of restricted stock unitsawarded to the named executive officersduring fiscal 2010 that are not subject toany performance tests (including the testto assure eligibility for deduction underSection 162(m)).

All Other Option Awards: Number of Secu-rities Underlying Options. This columnsets forth options awarded to the namedexecutive officers as part of the annualgrant in January 2010. Vesting dates for

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these options are described under“Outstanding Equity Awards,” below. Theoptions are scheduled to expire ten yearsafter the date of grant.

Exercise or Base Price of Option Awards;Grant Date Closing Price of Shares Under-lying Options. These columns set forththe exercise price for each option grantand the closing price of the Company’scommon stock on the date of grant. Theexercise price is equal to the average ofthe high and low trading price on the grantdate, which may be higher or lower thanthe closing price on the grant date.

Grant Date Fair Value of Stock and OptionAwards. This column sets forth the grant

date fair value of stock and option awardscalculated in accordance with applicableaccounting requirements. The grant datefair value of all restricted stock unitawards and options is determined asdescribed on page 34, above.

Outstanding Equity Awards

The following table provides informationconcerning unexercised options andunvested restricted stock unit awards heldby the named executive officers of theCompany as of October 2, 2010.Information regarding the amounts in thecolumns follows the table.

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OUTSTANDING EQUITY AWARDS AT END OF FISCAL 2010

Option Awards Stock Awards

Equity Incentive PlanAwards

GrantDate

Number of SecuritiesUnderlying

Unexercised Options OptionExercise

Price

OptionExpiration

Date

Number ofShares or

Units ofStock That

HaveNot Vested

MarketValue of

Shares orUnits of

Stock ThatHave

Not Vested

Numberof

UnearnedUnitsThat

Have NotVested

MarketValue of

UnearnedUnitsThat

Have NotVestedExercisable Unexercisable

Robert A. Iger 06/27/05 274,241 — $25.81 06/27/12 — — — —10/02/05 — — — — — — 107,479(A) 3,583,34601/09/06 411,000 — 24.87 01/09/13 — — — —01/10/07 283,333 94,445(B) 34.27 01/10/14 — — 100,154(C) 3,339,14301/09/08 210,526 210,527(D) 29.90 01/09/15 — — — —01/30/08 — — — — — — 102,828(E) 3,428,28601/31/08 1,000,000 2,000,000(F) 29.51 01/31/15 — — — —01/14/09 120,000 360,000(G) 20.81 01/14/16 — — 252,999(H) 8,434,98301/13/10 — 465,578(I) 31.12 01/13/20 — — 265,105(J) 8,838,601

James A. Rasulo 02/05/01 100,000 — $30.23 02/05/11 — — — —01/22/04 150,000 — 24.64 01/22/14 — — — —01/03/05 80,000 — 28.04 01/03/12 — — — —06/27/05 20,000 — 25.81 06/27/12 — — — —01/09/06 110,000 — 24.87 01/09/13 — — — —01/10/07 74,250 24,750(B) 34.27 01/10/14 13,124(K) 437,543 13,124(K) 437,54301/09/08 52,632 52,632(D) 29.90 01/09/15 12,997(L) 433,334 — —01/30/08 — — — — — — 12,853(M) 428,51901/14/09 28,000 84,000(G) 20.81 01/14/16 25,355(N) 845,332 33,680(N) 1,122,88701/13/10 — 177,767(I) 31.12 01/13/20 — — 101,223(J) 3,374,758

Alan N. Braverman 02/05/01 80,000 — $30.23 02/05/11 — — — —01/28/02 197,500 — 22.20 01/28/12 — — — —01/24/03 84,000 — 17.14 01/24/13 — — — —03/19/03 60,000 — 16.70 03/19/13 — — — —01/22/04 150,000 — 24.64 01/22/14 — — — —01/03/05 60,000 — 28.04 01/03/12 — — — —01/09/06 87,000 — 24.87 01/09/13 — — — —01/10/07 69,000 23,000(B) 34.27 01/10/14 6,565(O) 218, 876 24,391(C) 813,19701/09/08 42,106 42,106(D) 29.90 01/09/15 — — — —01/30/08 — — — — — — 20,566(E) 685,67010/02/08 — — — — — — 102,828(P) 3,428,28401/14/09 29,334 88,001(G) 20.81 01/14/16 — — 61,846(H) 2,061,93701/13/10 — — — — — — 50,000(Q) 1,667,00001/13/10 — 93,116(I) 31.12 01/13/20 — — 53,023(J) 1,767,770

Kevin A. Mayer 06/27/05 30,000 — $25.81 06/27/12 — — — —01/09/06 40,000 — 24.87 01/09/13 — — — —01/10/07 33,000 11,000(B) 34.27 01/10/14 — — 11,665(C) 388,89701/09/08 22,105 22,106(D) 29.90 01/09/15 — — — —01/30/08 — — — — — — 10,796(E) 359,93901/14/09 20,133 60,401(G) 20.81 01/14/16 — — 42,449(H) 1,415,27401/13/10 — 71,953(I) 31.12 01/13/20 — — 40,973(J) 1,366,023

M. Jayne Parker 02/05/01 2,882 — $30.23 02/05/11 — — — —01/28/02 8,000 — 22.20 01/28/12 — — — —01/22/04 7,200 — 24.64 01/22/14 — — — —01/03/05 4,800 — 28.04 01/03/12 — — — —01/09/06 6,400 — 24.87 01/09/13 — — — —01/10/07 4,500 1,500(B) 34.27 01/10/14 1,447(R) 48,228 — —01/09/08 3,790 3,790(D) 29.90 01/09/15 894(L) 29,800 — —01/30/08 — — — — — — 884(M) 29,47301/14/09 4,286 12,857(G) 20.81 01/14/16 2,673(N) 89,112 3,550(N) 118,35101/13/10 — 50,791(I) 31.12 01/13/20 — — 28,923(J) 964,276

Thomas O. Staggs 06/27/05 125,367 — $25.81 06/27/12 — — — —01/09/06 154,000 — 24.87 01/09/13 — — — —01/10/07 90,000 30,000(B) 34.27 01/10/14 12,348(O) 411,686 31,814(C) 1,060,68301/09/08 63,158 63,158(D) 29.90 01/09/15 — — — —01/30/08 — — — — — — 30,848(E) 1,028,47201/30/08 — — — — — — 257,070(S) 8,570,70901/14/09 53,000 159,000(G) 20.81 01/14/16 — — 111,743(H) 3,725,49601/13/10 — 177,767(I) 31.12 01/13/20 40,489(T) 1,349,903 60,734(T) 2,024,855

39


Number of Securities UnderlyingUnexercised Options: Exercisable andUnexercisable. These columns report, foreach officer and for each grant made tothe officer, the number of shares ofcommon stock that can be acquired uponexercise of outstanding options. The vest-ing schedule for each grant withunexercisable options is shown under“Vesting Schedule,” below with optionsidentified by the letter following the num-ber of shares underlying options that areunexercisable. Vesting of options held bynamed executive officers may be accel-erated in the circumstances describedunder “Payments and Rights onTermination,” below.

Number; Market Value of Shares or Units ofStock That Have Not Vested. Thesecolumns report the number and marketvalue, respectively, of shares underlyingeach grant of restricted stock units toeach officer that is not subject to perform-ance vesting conditions nor the test toassure eligibility for deduction pursuant toSection 162(m). The number of sharesincludes dividend equivalent units thathave accrued for dividends payablethrough October 2, 2010. The market valueis equal to the number of shares under-lying the units times the closing marketprice of the Company’s common stock onFriday, October 1, 2010, the last tradingday of the Company’s fiscal year. Thevesting schedule for each grant is shownbelow, with grants identified by the letterfollowing the number of shares underlyingthe grant. Vesting of restricted stock unitsheld by named executive officers may beaccelerated in the circumstancesdescribed under “Payments and Rights onTermination,” below.

Number; Market Value of Unearned UnitsThat Have Not Vested. These columnsreport the maximum number and marketvalue, respectively, of shares underlyingeach grant of restricted stock units toeach officer that is subject to performancevesting conditions and/or the test toassure eligibility for deduction pursuant toSection 162(m). The number of sharesincludes dividend equivalent units thathave accrued for dividends payablethrough October 2, 2010 and includesunits awarded to compensate for the dilu-

tive effect of the Company’s spin-off of theABC Radio business. The market value isequal to the number of shares underlyingthe units times the closing market price ofthe Company’s common stock on Friday,October 1, 2010, the last trading day of theCompany’s fiscal year. The vestingschedule and performance tests and/orthe test to assure eligibility under Sec-tion 162(m) are shown “Vesting Schedule,”below.

Vesting Schedule. The options reportedabove that are not yet exercisable andrestricted stock units that have not yetvested are scheduled to becomeexercisable and vest as set forth below.

(A) Restricted stock units grantedOctober 2, 2005 subject toperformance tests: The remainingunits vested on November 30, 2010upon determination that the test toassure eligibility under Sec-tion 162(m) was satisfied.

(B) Options granted January 10, 2007:The remaining unexercisableoptions became exercisable onJanuary 10, 2011.

(C) Restricted stock units grantedJanuary 10, 2007 subject toperformance tests: The remainingunits vested on January 10, 2011.

(D) Options granted January 9, 2008:One half of the remainingunexercisable options becameexercisable on January 9, 2011 andthe remaining unexercisable optionsare scheduled to becomeexercisable on January 9, 2012.

(E) Restricted stock units grantedJanuary 30, 2008 subject toperformance tests: The remainingunits are scheduled to vest onJanuary 30, 2012, subject todetermination that the test to assureeligibility under Section 162(m) wassatisfied, except that vesting of halfof the units is also subject to sat-isfaction of a total shareholderreturn or earnings per share test asdescribed in prior proxy statements.

(F) Options granted January 31, 2008 inconnection with the extension ofMr. Iger’s employment agreement:

40


500,000 of the options becomeexercisable on each of January 31,2011and January 31, 2012 andoptions with respect to 1,000,000shares become exercisable onJanuary 31, 2013.

(G) Options granted January 14, 2009:One third of the remaining optionsbecame exercisable on January 14,2011. One half of the then remainingunexercisable options are sched-uled to become exercisable on eachof January 14, 2012 and 2013.

(H) Restricted stock units grantedJanuary 14, 2009 subject toperformance tests: Approximately43% of the units vested on Jan-uary 14, 2011. One quarter of thethen remaining units are scheduledto vest on each of January 14, 2012and 2013, in each case subject todetermination that the test to assureeligibility under Section 162(m) wassatisfied. One half of the thenremaining units are scheduled tovest on January 14, 2013, subject todetermination that the test to assureeligibility under Section 162(m) wassatisfied and also subject to sat-isfaction of a total shareholderreturn or earnings per share testdescribed in prior proxy statements.

(I) Options granted January 13, 2010:One-fourth of the remainingunexercisable options becameexercisable on January 13, 2011and one-third of the then remainingunexercisable options are sched-uled to become exercisable on eachof January 13, 2012, 2013 and 2014.

(J) Restricted stock units grantedJanuary 13, 2010 subject toperformance tests: 10% of the unitsvested January 13, 2011 and 10%of the units vest on each of Jan-uary 13, 2012, 2013 and 2014, ineach case subject to determinationthat the test to assure eligibilityunder Section 162(m) was satisfied.The remaining units vest Jan-uary 13, 2013 subject to determi-nation that the test to assureeligibility under Section 162(m) wassatisfied and also subject to sat-isfaction of the total shareholder

return and earnings per share testdescribed under “CompensationDiscussion and Analysis — Compen-sation Objectives and ProgramDesign — Performance-basedCompensation — Equity-basedCompensation,” above, with thenumber of units vesting dependingon the level at which the tests weresatisfied. The amount shown is themaximum number of units thatcould vest.

(K) Restricted stock units grantedJanuary 10, 2007, half of which weresubject to performance tests: Theremaining units vested on Jan-uary 10, 2011.

(L) Restricted stock units grantedJanuary 9, 2008: The remainingunits are scheduled to vest onJanuary 30, 2012.

(M)Restricted stock units grantedJanuary 30, 2008, subject to per-formance tests: The remaining unitsare scheduled to vest on Jan-uary 30, 2012, subject to sat-isfaction of total shareholder returnor earnings per share test describedin prior proxy statements.

(N) Restricted stock units grantedJanuary 14, 2009, half of which weresubject to performance tests:Approximately 43% of the unitsvested on January 14, 2011. Onequarter of the then remaining unitsare scheduled to vest on each ofJanuary 14, 2012 and 2013. One halfof the remaining units are sched-uled to vest on January 14, 2013,subject to satisfaction of totalshareholder return or earnings pershare test described in prior proxystatements.

(O) Restricted stock units grantedJanuary 10, 2007: The remainingunits vested on January 10, 2011.

(P) Restricted units awarded toMr. Braverman on October 2, 2008in connection with the execution ofhis new employment agreement.One half of these units vested uponthe certification by the Compensa-tion Committee on November 30,2010 that the test to assure eligi-

41


bility under Section 162(m) wassatisfied with respect to these units.The remaining units are scheduledto vest on October 2, 2012, subjectto the test to assure eligibility underSection 162(m).

(Q) Restricted stock units awarded toMr. Braverman on January 13, 2010pursuant to his employment agree-ment in connection with hisassumption of new responsibilities.One half of these units vest on eachof January 13, 2012 and 2014, sub-ject to the test to assure eligibilityunder Section 162(m).

(R) Restricted stock units grantedJanuary 10, 2007: The remainingunits vested on January 10, 2011.

(S) Restricted stock units granted toMr. Staggs January 30, 2008 inconnection with the execution of anew employment agreement andsubject to performance tests: All ofthe units are scheduled to vest on

March 31, 2013, subject to determi-nation that the test to assure eligi-bility under Section 162(m) issatisfied.

(T) Restricted stock units grantedJanuary 13, 2010, 40% of which aresubject to performance tests: 10%of the units vested January 13, 2011and 10% of the units vest on eachof January 13, 2012, 2013 and 2014.The remaining units vest Jan-uary 13, 2013 subject to satisfactionof the total shareholder return andearnings per share test describedunder “Compensation Discussionand Analysis — CompensationObjectives and Program Design —Performance-based Compensation —Equity-based Compensation,” above,with the number of units vestingdepending on the level at which thetests were satisfied. The amountshown is the maximum number ofunits that could vest.

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Option Exercises and Stock Unit Vesting During Fiscal 2010

The following table provides information concerning exercises of options and vesting ofrestricted stock units held by the named executive officers during fiscal 2010. Informationregarding the amounts in the columns follows the table.

FISCAL 2010 OPTION EXERCISE AND STOCK VESTED

Option Awards Stock Awards

Number ofShares

Acquired onExercise

ValueRealized

onExercise

Number ofShares

Acquired onVesting

ValueRealized on

Vesting

Robert A. Iger 1,750,000 $21,181,908 515,142 $15,876,417

James A. Rasulo 150,000 1,754,610 89,089 2,792,882

Alan N. Braverman 40,000 191,000 73,671 2,286,447

Kevin A. Mayer 90,000 828,750 35,945 1,112,777

M. Jayne Parker 11,118 52,977 4,595 143,276

Thomas O. Staggs 935,000 7,934,067 162,600 5,035,393

The value realized on exercise of optionsis equal to the amount per share at whichthe executive sold shares acquired onexercise (all of which occurred on the dateof exercise) minus the exercise price ofthe options times the number of sharesacquired on exercise of the options. Thevalue realized on vesting of stock awards

is equal to the closing market price of theCompany’s common stock on the date ofvesting times the number of sharesacquired upon vesting. The number ofshares and value realized on vestingincludes shares that were withheld at thetime of vesting to satisfy tax withholdingrequirements.

Equity Compensation Plans

The following table summarizes information, as of October 2, 2010, relating to equity compen-sation plans of the Company pursuant to which grants of options, restricted stock, restrictedstock units or other rights to acquire shares may be granted from time to time.

EQUITY COMPENSATION PLANS

Plan category

Number of securitiesto be issued upon exercise

of outstanding options,warrants and rights

(a)

Weighted-averageexercise price of

outstanding options,warrants and rights

(b)

Number of securitiesremaining available forfuture issuance underequity compensation

plans (excluding securitiesreflected in column (a))

(c)

Equity compensationplans approved bysecurity holders1 152,261,7672 $27.733 106,701,8264

Equity compensationplans not approved bysecurity holders — — —

Total 152,261,7672 $27.733 106,701,8264

1 These plans are the Company’s Amended and Restated 2005 Stock Incentive Plan, 1995 Stock Option Plan for Non-EmployeeDirectors, Amended and Restated 1995 Stock Incentive Plans, The Walt Disney Company/Pixar 1995 Stock Plan, and The WaltDisney Company/Pixar 2004 Equity Incentive Plan (Disney/Pixar Plans were assumed by the Company in connection with theacquisition of Pixar).

2 Includes an aggregate of 32,504,206 restricted stock units and performance-based restricted stock units. Also includes options topurchase an aggregate of 19,919,739 shares, at a weighted average exercise price of $24.57, and 475,578 restricted stock units, ineach case granted under plans assumed by the Company in connection with the acquisition of Pixar, which plans were approved bythe shareholders of Pixar prior to the Company’s acquisition.

3 Weighted average exercise price of outstanding options; excludes restricted stock units and performance-based restricted stockunits.

4 Includes 389,800 securities available for future issuance under plans assumed by the Company in connection with the acquisition ofPixar, which plans were approved by the shareholders of Pixar prior to the Company’s acquisition.

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Pension Benefits

The Company maintains a tax-qualified,noncontributory retirement plan, called theDisney Salaried Retirement Plan, for sal-aried employees who have completed oneyear of service. Benefits are based on apercentage of total average monthlycompensation plus a portion of averagemonthly compensation that exceeds$2,500 multiplied by years of creditedservice. Average monthly compensation isequal to base salary and excludes othercompensation such as bonuses and equitycompensation and is calculated based onthe highest five consecutive years ofcompensation during the ten year periodprior to termination or retirement, which-ever is earlier. In addition, each participantreceives a flat dollar amount derived froma table based solely on years and hours ofservice. Retirement benefits arenon-forfeitable after five years of vestingservice, or at age 65 after one year of serv-ice. After five years of vesting service,actuarially reduced benefits are paid toparticipants who retire before age 65 buton or after age 55.

In calendar year 2010, the maximumcompensation limit under a tax-qualifiedplan was $245,000, and the maximumannual benefit that may be accrued undera tax-qualified defined benefit plan was$195,000. To provide additional retirementbenefits for key salaried employees, theCompany maintains a supplemental non-qualified, unfunded plan, the Amendedand Restated Key Plan, which providesretirement benefits in excess of the com-pensation limitations and maximum bene-fit accruals under tax-qualified plans. Thisplan recognizes deferred amounts of basesalary for years prior to 2006 for purposesof determining applicable retirement bene-fits, and benefits are otherwise calculatedon the same basis as under thetax-qualified plan.

Company employees (including two of thenamed executive officers) who transferredto the Company from ABC, Inc. after theCompany’s acquisition of ABC are alsoentitled to benefits under the ABC, Inc.Retirement Plan. Benefits under that planare based on a percentage of average

compensation and years of credited serv-ice while employed by ABC, Inc., less anactuarially determined Social Securityoffset, while a participant under the plan.Average compensation is based on thehighest five consecutive years ofcompensation during the last ten-yearperiod of active plan participation, andcompensation includes salary and bonus,but excludes equity compensation, fringebenefits and expense allowances. Like theCompany’s Amended and Restated KeyPlan, the Benefits Equalization Plan ofABC, Inc., is a non-qualified, non-fundedplan that provides eligible participantsretirement benefits in excess of the com-pensation limits and maximum benefitaccruals that apply to tax-qualified plans.In addition, a term of the 1995 purchaseagreement between ABC, Inc. and theCompany provides that employees trans-ferring employment to coverage under aDisney pension plan will receive an addi-tional benefit under Disney plans equal to(a) the amount the employee wouldreceive under the Disney pension plans ifall of his or her ABC service were countedunder the Disney pension less (b) thecombined benefits he or she receivesunder the ABC plan (for service prior tothe transfer) and the Disney plan (for serv-ice after the transfer).

Both Mr. Iger and Mr. Braverman trans-ferred from ABC, and each receives apension benefit to bring his total benefitup to the amount he would have receivedif all his years of service had been creditedunder the Disney plans. (The effect ofthese benefits is reflected in the presentvalue of benefits under the Disney plans inthe table below).

Both Mr. Iger and Mr. Braverman are cur-rently eligible for early retirement. Theearly retirement reduction for the DisneySalaried Retirement Plan and the Restatedand Amended Key Plan is 50% at age 55,decreasing to 0% at age 65. The earlyretirement reduction for the ABC, Inc.,Retirement Plan, and the Benefit Equal-ization Plan of ABC, Inc. is 28% at age 55,decreasing to 0% at age 62 (the SocialSecurity offset reduction at age 55 is 42%,decreasing to 0% at age 62).

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The following table sets forth the presentvalue to each of the named executive offi-cers of the pension benefits to which he orshe is entitled under each of the plansdescribed above. The present valuesassume each officer retires at age 65 forpurposes of the Disney Salaried Retire-ment Plan and the Amended and RestatedKey Plan and age 62 for purposes of theABC, Inc. Retirement Plan, and the BenefitEqualization Plan of ABC, Inc. Age 65 isthe normal retirement age under each of

the plans and is also the age at whichunreduced benefits are payable under theDisney plans; the earliest age at whichunreduced benefits are payable under theABC plans is age 62. The values alsoassume straight life-annuity payment foran unmarried participant. Participants mayelect other actuarially reduced forms ofpayment, such as joint and survivor bene-fits and payment of benefits for a periodcertain irrespective of the death of theparticipant.

FISCAL YEAR END 2010 PENSION BENEFITS

Name Plan Name

Number ofYears ofCredited

Service atFiscal Year End

Present Value ofAccumulated

Benefit atFiscal Year End

PaymentsDuring LastFiscal Year

Robert A. Iger Disney Salaried Retirement Plan 11 $ 560,549 —Disney Amended and Restated Key Plan 11 4,231,950 —ABC, Inc. Retirement Plan 25 805,085 —Benefit and Equalization Plan of ABC, Inc. 25 6,356,147 —

Total $11,953,731 —

James A. Rasulo Disney Salaried Retirement Plan 25 767,960 —Disney Amended and Restated Key Plan 25 3,087,036 —

Total $ 3,854,996 —

Alan N. Braverman Disney Salaried Retirement Plan 8 $ 571,489 —Disney Amended and Restated Key Plan 8 1,485,600 —ABC, Inc. Retirement Plan 9 258,727 —Benefit and Equalization Plan of ABC, Inc. 9 1,442,467 —

Total $ 3,758,282 —

Kevin A. Mayer Disney Salaried Retirement Plan 13 $ 289,576 —Disney Amended and Restated Key Plan 13 518,747 —

Total $ 808,323 —

M. Jayne Parker Disney Salaried Retirement Plan 22 $ 545,475 —Disney Amended and Restated Key Plan 22 260,754 —

Total $ 806,229 —

Thomas O. Staggs Disney Salaried Retirement Plan 21 $ 505,446 —Disney Amended and Restated Key Plan 21 2,080,300 —

Total $ 2,585,746 —

The present values were calculated usingthe 5.25% discount rate assumptions setforth in footnote 11 to the Company’sAudited Financial Statements for fiscalyear 2010 and using actuarial factorsincluding RP2000 white collar combinedmortality table projected 10 years formales and females. The present valuesshown in the table are not available aslump sum payment under the plans.

Deferred Compensation

The Company does not now defer currentcompensation of any named executiveofficer on a basis that is not tax qualified,but from 2000 to 2005, $500,000 per yearof Mr. Iger’s annual salary was deferred.Mr. Iger’s employment agreement pro-vides that the deferred compensation willbe paid, together with interest at theapplicable federal rate for mid-term treas-uries, reset annually, no later than 30 daysafter Mr. Iger is no longer subject to theprovisions of Section 162(m) of the Internal

45


Revenue Code (or at such later date as isnecessary to avoid the imposition of anadditional tax on Mr. Iger under Sec-tion 409A of the Internal Revenue Code).The interest rate is adjusted annually inMarch and the weighted average interestrate for fiscal 2010 was 2.38%. The follow-ing table sets forth the earnings on thedeferred amount in fiscal 2010 and theaggregate balance including accumulatedearnings as of October 2, 2010. Therewere no additions during the fiscal year tothe deferred amount by either the Com-pany or Mr. Iger other than these earningsand no withdrawals during the fiscal year.Because the earnings during this year andprevious years were not above market orpreferential, these amounts are notincluded in the Summary CompensationTable.

FISCAL 2010 NONQUALIFIED DEFERREDCOMPENSATION

AggregateEarningsin LastFiscal Year

AggregateBalance atLast Fiscal

Year End

$86,641 $3,730,826

Payments and Rights on Termination

Our named executive officers may receivecompensation in connection with thetermination of their employment. Thiscompensation is payable pursuant to(a) the terms of compensation plans appli-cable by their terms to all participatingemployees and (b) the terms of employ-ment agreements of Mr. Iger, Mr. Rasulo,Mr. Braverman, Mr. Mayer, Ms. Parker andMr. Staggs. The availability, nature andamount of this compensation differdepending on whether employment termi-nates because of:

• death or disability;

• the Company’s termination of the execu-tive pursuant to the Company’s termi-nation right or the executive’s decisionto terminate because of action theCompany takes or fails to take;

• the Company’s termination of theemployee for cause; or

• expiration of an employment agreement,retirement or other voluntary termination.

The compensation that each of our namedexecutive officers may receive under eachof these termination circumstances isdescribed below, including quantificationof the amount each executive would havebecome entitled to assuming a terminationat the end of fiscal 2010 under the circum-stances described.

Any actual compensation received by ournamed executive officers in the circum-stances described below may be differentthan we describe because many factorsaffect the amount of any compensationreceived. These factors include: the dateof the executive’s termination of employ-ment; the executive’s base salary at thetime of termination; the Company’s stockprice at the time of termination; and theexecutive’s age and service with theCompany at the time of termination. Inaddition, although the Company hasentered into individual agreements witheach of our named executive officers, inconnection with a particular termination ofemployment the Company and the namedexecutive officer may mutually agree onseverance terms that vary from thoseprovided in pre-existing agreements.

In each of the circumstances describedbelow, our executive officers are entitledto earned, unpaid salary through the dateof termination and accrued benefits thatare unconditionally accrued as of the dateof termination pursuant to policies appli-cable to all employees. In Mr. Iger’s case,this includes the deferred salary and inter-est earned on it as described under“Deferred Compensation,” above. Thisearned compensation is not described orquantified below because the amount ofcompensation to which the officer is enti-tled does not change because of thetermination, but we do describe and quan-tify benefits that continue beyond the dateof termination that are in addition to thoseprovided for in the applicable benefitplans. The executive’s accrued benefitsinclude the pension benefits describedunder “Pension Benefits,” above, whichbecome payable to all participants whohave reached retirement age. Becausethey have reached retirement age underthe plans, Mr. Iger and Mr. Bravermaneach would have been entitled to theseearly retirement benefits if their employ-ment had terminated at the end of fiscal

46


year 2010. Because the pension benefitsavailable to Mr. Iger and Mr. Bravermanupon termination are not different fromthose described above under “PensionBenefits” except in ways that are equallyapplicable to all salaried employees, thenature and amount of pension benefits arenot described or quantified below.

Death and Disability

The employment agreements of Mr. Iger,Mr. Rasulo, Mr. Braverman, Mr. Mayer,Ms. Parker and Mr. Staggs each providethat if he or she dies or his or heremployment terminates because of dis-ability during the term of the agreement,he or she (or his or her estate) will receivea bonus for any fiscal year that had beencompleted at the time of his death ortermination of employment due to dis-ability but for which the bonus had not yetbeen paid. The amount of the bonus willbe determined by the CompensationCommittee using the same criteria usedfor determining a bonus as if the executiveremained employed.

In addition, Mr. Iger, Mr. Staggs andMr. Braverman are currently eligible forparticipation in the Company’s FamilyIncome Assurance Plan, which is beingphased out as described in the Compensa-tion Discussion and Analysis, above. Theplan provides that, in the event of thedeath of a participating key executivewhile employed by the Company, theeligible spouse, same sex domestic part-ner or dependent child is entitled toreceive an amount equal to 100% of theexecutive’s salary in effect at the date ofdeath for the first year after such date ofdeath, 75% thereof during the secondyear, and 50% thereof during the thirdyear.

In addition to the compensation and rightsin the employment agreements describedabove, pursuant to the terms of theAmended and Restated 1995 StockIncentive Plan and the Amended andRestated 2005 Stock Incentive Plan (whichwe refer to as the 1995 and 2005 Plans,respectively), all options awarded to aparticipant (including the named executiveofficers) become exercisable upon thedeath of the participant and remainexercisable for 18 months, and all

restricted stock units awarded to the par-ticipant under the plans will, to the extentthe units had not previously been forfeited,vest and become payable upon the deathor disability of the participant. Upontermination due to disability, the exercis-ability of options will not accelerate butthe participant will have one year followingtermination (or 18 months in the case ofparticipants who are eligible for immediateretirement benefits) rather than threemonths following termination to exerciseoptions that were at the time of termi-nation, or within three months wouldbecome, exercisable.

Options awarded after December 2009(and awarded at least one year beforetermination) will continue to vest for threeyears after termination of employment byreason of disability and will remainexercisable until the earlier of three yearsafter such termination and the originalexpiration date if the participant is age 60or greater and has at least ten years ofservice at the time of termination due todisability except that this does not applyfor certain employees outside the UnitedStates. As none of the awards to namedexecutive officers covered by this provi-sion had been awarded more than a yearprior to the end of fiscal year 2010, it didnot have any effect on the quantification ofbenefits described below.

In addition, Mr. Iger’s employment agree-ment provides that, upon his death, therestricted stock units (plus any dividendequivalent units that had accrued withrespect to those units) awarded to Mr. Igerin connection with the signing of his 2005employment agreement that had not pre-viously vested will immediately vest. Theagreement provides that upon Mr. Iger’stermination due to disability, these unitswill be distributed on the dates they wouldhave vested in the absence of such termi-nation, but without regard to whether theperformance tests were satisfied as ofthose dates. All remaining units under thisaward vested October 2, 2010, subject tocertification by the CompensationCommittee that the test to assure eligi-bility under Section 162(m) was satisfied,which certification was made onNovember 30, 2010, and accordingly theaffect of their acceleration in not includedin the table below.

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The following table provides the value ofbenefits each of our executive officerswould have received under compensationplans and their employment agreementsor compensation arrangements in effecton the date of this proxy statement if theiremployment had terminated at the closeof business on the last day of fiscal 2010as a result of death or disability. The valueof option acceleration is equal to thedifference between the $33.34 closingmarket price of shares of the Company’scommon stock on October 1, 2010 (thelast trading day in fiscal 2010) and the

weighted average exercise price ofoptions with an exercise price less thanthe market price times the number of suchoptions that would accelerate as a resultof termination. The value of restrictedstock unit acceleration is equal to the$33.34 market price of shares of theCompany’s common stock on October 2,2010 and the number of units that wouldaccelerate as a result of (or, in the case ofMr. Iger’s disability, continue to vestdespite) termination.

DEATH AND DISABILITY

CashPayment

OptionAcceleration

(only upondeath)

RestrictedStock Unit

Acceleration

Robert A. Iger $17,960,0001 $13,939,649 $22,273,292

James A. Rasulo 3,700,0001 1,628,480 6,404,964

Alan N. Braverman 5,587,5001 1,454,425 8,575,038

Kevin A. Mayer 1,590,0001 992,715 3,256,927

M. Jayne Parker 850,0001 286,923 1,086,385

Thomas O. Staggs 6,850,0001 2,604,492 17,496,853

1 This amount is equal to the bonus awarded to the executives with respect to fiscal 2010 and set forth in theSummary Compensation Table under the column labeled “Non-Equity Incentive Plan Compensation” plus, in thecases of Mr. Iger, Mr. Braverman and Mr. Staggs, amounts payable under the Family Income Assurance Plan.

Termination Pursuant to CompanyTermination Right or by Executive forGood Reason

The employment agreements of Mr. Iger,Mr. Rasulo, Mr. Braverman, Mr. Mayer,Ms. Parker and Mr. Staggs each providethat if his or her employment is terminatedby the Company pursuant to the Compa-ny’s termination right (as described below)or by the named executive officer withgood reason (as described below), he willreceive, in addition to salary and benefitsthrough the date his employment is termi-nated, a bonus for any fiscal year that hadbeen completed at the time of his termi-nation of employment but for which thebonus had not yet been paid. The amountof the bonus will be determined by theCompensation Committee using the samecriteria used for determining a bonus if theexecutive remained employed.

In addition, the employment agreementsof Mr. Iger, Mr. Rasulo, Mr. Braverman,

Mr. Mayer, Ms. Parker and Mr. Staggseach provide that the named executiveofficer will receive the followingcompensation and rights conditioned onhis or her executing a mutual release ofliability and agreeing to provide theCompany with certain consulting servicesfor a period of six months after his or hertermination (or, if less, for the remainingterm of his or her employment agreement)pursuant to a form of consulting agree-ment attached to the employment agree-ment.

• A lump sum payment to be made sixmonths and one day after terminationequal to the base salary the namedexecutive officer would have earned hadhe remained employed during the termof his consulting agreement.

• If the consulting agreement was notterminated as a result of the namedexecutive officer’s material breach of theconsulting agreement, a further lumpsum payment to be made six months

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and one day after termination of hisemployment equal to the base salary thenamed executive officer would haveearned had he or she remainedemployed after the termination of his orher consulting agreement and until theoriginal scheduled expiration date of hisor her employment agreement.

• A bonus for the year in which he or sheis terminated equal to a pro-rata amountof a target bonus amount determined inaccordance with his or her employmentagreement.

• All options that had vested as of thetermination date or were scheduled tovest prior to the original scheduledexpiration date of his or her employmentagreement (or within three monthsthereafter) will remain or becomeexercisable as though the named execu-tive officer were employed until theoriginal scheduled expiration date of hisor her employment agreement and willremain exercisable until the earlier of(a) the scheduled expiration date of theoptions and (b) three months (or in thecase of Mr. Iger and Mr. Braverman, 18months, as provided in the Company’sequity compensation plans) after theoriginal scheduled expiration date of hisor her employment agreement. In addi-tion, all options issued to Mr. Iger priorto 2005 (all of which are currentlyexercisable) will remain exercisable forthe period specified in the applicableoption agreements.

• All restricted stock units that were sched-uled to vest prior to the original sched-uled expiration date of his or heremployment agreement will (subject tosatisfaction of applicable performanceconditions) vest as though the namedexecutive officer were employed until theoriginal scheduled expiration date of hisor her employment agreement, exceptthat any test to assure deductibility ofcompensation under Section 162(m) willbe waived for any units scheduled tovest after the fiscal year in which thetermination of employment occursunless application of the test is neces-sary to preserve deductibility.

Under the employment agreements, theCompany has the right to terminate the

named executive officer’s employmentsubject to the foregoing compensation inits sole, absolute and unfettered discretionfor any reason or no reason whatsoever. Atermination for cause does not constitutean exercise of this right and would besubject to the compensation provisionsdescribed below under “Termination forCause.”

Termination by the executive for goodreason means a termination by the namedexecutive officer following notice given tothe Company within three months of hishaving actual notice of the occurrence ofany of the following events (except thatthe Company will have 30 days afterreceipt of the notice to cure the conductspecified in the notice): (i) a reduction inthe named executive officer’s base salary,annual target bonus opportunity or (whereapplicable) annual target long-termincentive award opportunity; (ii) theremoval of the officer from his position(including in the case of Mr. Iger, the fail-ure to elect or reelect him as a member ofthe Board or his removal from the positionof president other than in connection withthe appointment of another person who isacceptable to him to serve as president);(iii) a material reduction in his duties andresponsibilities (other than, in the case ofMr. Iger, in connection with the appoint-ment of another person to serve aspresident); (iv) the assignment to him ofduties that are materially inconsistent withhis position or duties or that materiallyimpair his ability to function in his office;(v) relocation of his principal office to alocation that is more than 50 miles outsideof the greater Los Angeles area and, in thecase of Mr. Iger, that is also more than 50miles from Manhattan; or (vi) a materialbreach of any material provision of theagreement by the Company.

Termination for good reason also includesany occurrence after a change in control(as defined in the 1995 and 2005 Plans)that would constitute a triggering event.The 1995 and 2005 Plans each providethat if, within 12 months following achange in control as defined in the plans,a “triggering event” occurs, any out-standing stock options, restricted stockunits, performance-based restricted stockunits or other plan awards will generally

49


become fully vested and, in certain cases,paid to the plan participant. A triggeringevent is defined to include: (a) a termi-nation of employment by the Companyother than for death, disability or “cause;”or (b) a termination of employment by theparticipant following a reduction in posi-tion, pay or other “constructivetermination.” Under the plans, cause hasthe meaning in the executive’s employ-ment agreement, if applicable, as definedbelow under “Termination for Cause” or, ifthere is no employment agreement or theexecutive would have greater rights underthe following definition, cause meansconviction for or pleading to a felonyunder state or Federal law, willful grossmisconduct or material breach of anagreement with the Company with respectto confidentiality, noncompetition, non-solicitation or a similar restrictive cove-nant. Under the terms of the plans,payments under awards that becomesubject to the excess parachute tax rulesmay be reduced under certain circum-stances.

If any of the compensation or rightsdescribed above is paid after a change incontrol such that the compensation orrights could be subject to excise tax as an“excess parachute payment” under federalincome tax rules, the Company has agreedto pay Mr. Iger, Mr. Rasulo, Mr. Bravermanand Mr. Staggs an additional amount tocompensate for the incremental tax costsas a result of the excise tax, up to a max-imum of $2 million in the case ofMr. Rasulo and Mr. Braverman and $4 mil-lion in the case of Mr. Staggs. This obliga-tion to provide additional compensationwill not apply if the aggregate amountspayable to the named executive officerthat are treated as “parachute payments”for purposes of the applicable federal taxprovisions would not exceed the max-imum amount that can be paid to thenamed executive officer without incurringsuch excise tax by at least 10%, in whichcase the named executive officer’s com-pensation would be reduced to the max-imum amount that would not result in thenamed executive officer incurring theexcise tax.

The employment agreements of Mr. Iger,Mr. Rasulo, Mr. Braverman, Mr. Mayer,

Ms. Parker and Mr. Staggs provide thatthey are not required to seek otheremployment to obtain compensation tooffset the amounts payable by the Com-pany as described above, and compensa-tion resulting from subsequentemployment will not be offset againstamounts described above.

Restricted stock units that were awardedin lieu of cash as a portion of a bonusaward vest upon termination for any rea-son other than a termination for cause asdefined in an executive’s employmentagreement.

Options and restricted stock unitsawarded after December 2009 (andawarded at least one year before termi-nation) will continue to vest for three yearsafter termination of employment for anyreason other than death, cause (as definedin the 1995 and 2005 Plans, as applicable)or, in the case of restricted stock units,disability (and options will remainexercisable until the earlier of three yearsafter such termination and the originalexpiration date) if the participant is age 60or greater and has at least ten years ofservice at the time of retirement exceptthat this does not apply for certainemployees outside the United States.Where, as is the case with named execu-tive officers, vesting and, in the case ofstock options, exercise is extended by theterms of the holder’s employment agree-ment to the original scheduled expirationdate of the holder’s employment agree-ment, this provision for continued vestingand exercise is applied as of the originalscheduled expiration date of the holder’semployment agreement.

The following table quantifies benefitseach of our executive officers would havereceived if their employment had beenterminated at the end of fiscal 2010 by theCompany pursuant to its termination rightor by the executive with good reason.

The table quantifies the benefits of con-tinued vesting and exercisability of optionsin the case of a termination in the absenceof a change in control by setting forth thedifference between the $33.34 closingmarket price of shares of the Company’scommon stock on October 1, 2010 and the

50


weighted average exercise price ofoptions with an exercise price less thanthe market price times the number ofoptions that would become exercisabledespite the termination, although, asdescribed above, options do not becomeimmediately exercisable absent a changein control. The actual value of the optionsrealized by an executive when theybecome exercisable may therefore bemore or less than that shown belowdepending on movements in the stockprice pending actual vesting of theoptions. The table quantifies the benefitsof continued vesting of restricted stockunits in the absence of a change in controlby setting forth an amount equal to the$33.34 closing market price of shares ofthe Company’s common stock onOctober 1, 2010 times the target numberof units that are scheduled to vest prior tothe scheduled termination date of theapplicable employment agreement,although, as described above, restrictedstock units do not immediately vestabsent a change in control. The value ofrestricted stock units realized by anexecutive may again be more or less thanthat shown below depending on move-ments in the stock price pending actual

vesting of the restricted stock units anddepending on the number of units that willvest, which depends on the extent towhich performance tests are satisified.

The value of compensation for additionaltaxation is the amount estimated to bepayable to compensate the executive forthe excise tax payable (and the additionaltaxes payable due to such additionalpayment) by reason of the compensationreceived as a result of a change in con-trol. The calculation of whether, and towhat extent, any such compensationwould have been payable to each of theexecutive officers was based on theassumption that the termination occurre-das of the close of business on the lastday of fiscal 2010 and applying the regu-lations under Section 280G of the InternalRevenue Code, including, as applicable(including in respect of the annualbonuses payable to each such officer), thespecial rules applicable to amounts thepayment of which is contingent solely onthe continued performance of services fora specified period and in respect of whichat least a portion of the services wereperformed before the termination.

TERMINATION PURSUANT TO COMPANY TERMINATION RIGHT OR BY EXECUTIVE FOR GOOD REASON

CashPayment

OptionValuation

RestrictedStock UnitValuation

Compensationfor Additional

TaxationRobert A. Iger

No change in control $18,126,6671 $13,939,649 $22,273,292 —Change in control 18,126,6671 13,939,649 22,273,292 —

James A. RasuloNo change in control 9,766,6671 1,628,480 6,404,964 —Change in control 9,766,6671 1,628,480 6,404,964 —

Alan N. BravermanNo change in control 6,450,0001 1,454,425 8,575,038 —Change in control 6,450,0001 1,454,425 8,575,038 —

Kevin A. MayerNo change in control 3,040,0001 660,573 1,830,986 —Change in control 3,040,0001 992,715 3,256,927 —

M. Jayne ParkerNo change in control 2,047,9171 176,842 418,940 —Change in control 2,047,9171 286,923 1,086,385 —

Thomas O. StaggsNo change in control 7,200,0001 2,505,831 17,159,377 —Change in control 7,200,0001 2,604,492 17,496,853 —

1 This amount is equal to the bonus awarded to the executives with respect to fiscal 2010 and set forth in the SummaryCompensation Table under the column labeled “Non-Equity Incentive Plan Compensation” plus the lump sum payments basedon salary through the end of the employment term as described above.

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Termination for Cause

The employment agreements of Mr. Iger,Mr. Rasulo, Mr. Braverman, Mr. Mayer,Ms. Parker and Mr. Staggs each providethat if his or her employment is terminatedby the Company for cause he or she willonly be entitled to compensation earnedand benefits vested through the date oftermination, including any rights he or shemay have under his indemnificationagreement with the Company or the equityplans of the Company.

“Termination for Cause” is defined inMr. Iger’s employment agreement astermination by the Company due to(i) conviction of a felony or the entering ofa plea of nolo contendere to a felonycharge; (ii) gross neglect, willful malfea-sance or willful gross misconduct in con-nection with his employment which hashad a material adverse effect on the busi-ness of the Company and its subsidiaries,unless he reasonably believed in goodfaith that such act or non-act was in, ornot opposed to, the best interests of theCompany; (iii) his substantial and continualrefusal to perform his duties,responsibilities or obligations under theagreement that continues after receipt ofwritten notice identifying the duties,responsibilities or obligations not beingperformed; (iv) a violation that is not timelycured of the Company’s code of conductor any Company policy that is generallyapplicable to all employees or all officersof the Company that he knows or reasonably should know could reasonably beexpected to result in a material adverseeffect on the Company; (v) any failure (thatis not timely cured) to cooperate, ifrequested by the Board, with any inves-tigation or inquiry into his or the Compa-ny’s business practices, whether internalor external; or (vi) any material breach thatis not timely cured of covenants relating tonon-competition during the term ofemployment and protection of theCompany’s confidential information.

“Termination for Cause” is defined inMr. Rasulo’s, Mr. Braverman’s,Mr. Mayer’s, Ms. Parker’s and Mr. Stagg’semployment agreement as termination bythe Company due to gross negligence,gross misconduct, willful nonfeasance or

willful material breach of the agreement bythe executive unless, if the Companydetermines that the conduct or cause iscurable, such conduct or cause is timelycured by the executive.

Expiration of Employment Term;Retirement

Under his employment agreement, ifMr. Iger’s employment ends at or within 30days following the expiration of the statedterm of his employment agreement (i.e.,January 31, 2013), he will be entitled to thefollowing compensation and rights, inaddition to compensation earned throughthat date:

• A separation payment equal to the sumof his then current base salary and aver-age bonus payable to him for the lastthree completed fiscal years for whichthe bonus has been determined at thetime of the termination. In determiningthe average bonus, the bonus for anyyear for which no bonus is received shallbe zero. Payment of the separationpayment is subject to Mr. Iger executinga mutual release of liability in sub-stantially the form attached to hisemployment agreement. If Mr. Iger’semployment agreement were scheduledto expire at the end of fiscal 2010 and heterminated within 30 days thereafter, thispayment would be equal to $14,292,060.

• Mr. Iger and his eligible dependants willbe entitled to continue participating in allmedical, dental and hospitalizationbenefit plans until the earlier of 12months following the date of terminationand the date Mr. Iger receives equivalentcoverage and benefits from a sub-sequent employer. If this continuation ofbenefits conflicts with any law or regu-lation or has adverse tax consequencesfor Mr. Iger, the Company or other pro-gram participants, Mr. Iger will receivethe economic equivalent of the con-tinuation of benefits includingcompensation for the tax costs of receiv-ing the economic equivalent rather thanthe benefits. If Mr. Iger’s employmentagreement were scheduled to expire atthe end of fiscal 2010 and he terminatedwithin 30 days thereafter, this value ofcontinued benefits would be $19,884based on the Company’s estimated costof providing these benefits.

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Mr. Iger is not required to seek otheremployment to obtain compensation tooffset the amounts payable by the Com-pany as described above, and compensa-tion resulting from subsequentemployment will not be offset againstamounts described above except thatcontinuation of medical benefits may beterminated if Mr. Iger receives equivalentcoverage and benefits as describedabove.

Under the terms of restricted stock unitsawarded to Mr. Braverman and Mr. Staggsin lieu of a portion of their annual bonusaward, these restricted stock units willvest immediately upon termination of theiremployment for any reason other thancause. If Mr. Braverman or Mr. Staggs’semployment had terminated at the end offiscal 2010 for any reason other thancause, the value of this acceleration,based on the market price of shares of theCompany’s common stock on October 2,2010 times the number of units that wouldaccelerate as a result of termination,would be $218,876 and $411,686 forMr. Braverman and Mr. Staggs,respectively.

Mr. Rasulo, Mr. Braverman, Mr. Mayer,Ms. Parker and Mr. Staggs are entitled toearned, unpaid salary and unconditionallyvested accrued benefits if their employ-ment terminates at the expiration of theiremployment agreement (where applicable)or they otherwise retire, but they are notcontractually entitled to any additionalcompensation in this circumstance.

Options and restricted stock unitsawarded after December 2009 (andawarded at least one year before retire-ment) will continue to vest for three yearsafter retirement (and options will remainexercisable until the earlier of three yearsafter retirement and the originalexpirationdate) if the participant is age 60or greater and has at least ten years ofservice at the time of retirement exceptwhen, in the judgment of management,this would create issues under applicablelocal laws. As none of the awards tonamed executive officers covered by thisprovision had been awarded more than ayear prior to the end of fiscal year 2010, itdid not have any effect on the quantifica-tion of benefits described above.

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The Walt Disney Compan y Notice of 2011 Annual Meeting and Proxy Statement

Audit-Related Matters

Audit Committee Report

The charter of the Audit Committee of theBoard specifies that the purpose of theCommittee is to assist the Board in itsoversight of:

• the integrity of the Company’s financialstatements;

• the adequacy of the Company’s systemof internal controls;

• the Company’s compliance with legaland regulatory requirements;

• the qualifications and independence ofthe Company’s independent registeredpublic accountants; and

• the performance of the Company’sindependent registered public account-ants and of the Company’s internal auditfunction.

In carrying out these responsibilities, theAudit Committee, among other things:

• monitors preparation of quarterly andannual financial reports by the Compa-ny’s management;

• supervises the relationship between theCompany and its independent registeredpublic accountants, including: havingdirect responsibility for their appoint-ment, compensation and retention;reviewing the scope of their audit serv-ices; approving audit and non-audit serv-ices; and confirming the independenceof the independent registered publicaccountants; and

• oversees management’s implementationand maintenance of effective systems ofinternal and disclosure controls, includ-ing review of the Company’s policiesrelating to legal and regulatory com-pliance, ethics and conflicts of interestsand review of the Company’s internalauditing program.

The Committee met nine times duringfiscal 2010. The Committee schedules itsmeetings with a view to ensuring that itdevotes appropriate attention to all of itstasks. The Committee’s meetings include,

whenever appropriate, executive sessionsin which the Committee meets separatelywith the Company’s independent regis-tered public accountants, the Company’sinternal auditors, the Company’s chieffinancial officer and the Company’s gen-eral counsel.

As part of its oversight of the Company’sfinancial statements, the Committeereviews and discusses with bothmanagement and the Company’sindependent registered public account-ants all annual and quarterly financialstatements prior to their issuance. Duringfiscal 2010, management advised theCommittee that each set of financialstatements reviewed had been prepared inaccordance with generally acceptedaccounting principles, and managementreviewed significant accounting and dis-closure issues with the Committee. Thesereviews included discussion with theindependent registered public account-ants of matters required to be discussedpursuant to Public Company AccountingOversight Board AU 380 (CommunicationWith Audit Committees), including the qual-ity of the Company’s accounting princi-ples, the reasonableness of significantjudgments and the clarity of disclosures inthe financial statements. The Committeealso discussed with Pricewaterhou-seCoopers LLP matters relating to itsindependence, including a review of auditand non-audit fees and the written dis-closures and letter from Pricewaterhou-seCoopers LLP to the Committee pursuantto applicable requirements of the PublicCompany Accounting Oversight Boardregarding the independent accountants’communications with the Audit Committeeconcerning independence.

In addition, the Committee reviewed keyinitiatives and programs aimed atmaintaining the effectiveness of theCompany’s internal and disclosure controlstructure. As part of this process, theCommittee continued to monitor thescope and adequacy of the Company’sinternal auditing program, reviewinginternal audit department staffing levelsand steps taken to maintain the effective-ness of internal procedures and controls.

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Taking all of these reviews and dis-cussions into account, the undersignedCommittee members recommended to theBoard that the Board approve theinclusion of the Company’s audited finan-cial statements in the Company’s AnnualReport on Form 10-K for the fiscal yearended October 2, 2010, for filing with theSecurities and Exchange Commission.

Members of the Audit Committee

Monica C. LozanoRobert W. MatschullatJohn E. Pepper, Jr.Orin C. Smith (Chair)

Policy for Approval of Audit andPermitted Non-audit Services

All audit, audit-related and tax serviceswere pre-approved by the Audit Commit-tee, which concluded that the provision ofsuch services by PricewaterhouseCoopersLLP was compatible with the maintenanceof that firm’s independence in the conductof its auditing functions. The AuditCommittee’s Outside AuditorIndependence Policy provides forpre-approval of specifically describedaudit, audit-related and tax services by theCommittee on an annual basis, butindividual engagements anticipated toexceed pre-established thresholds mustbe separately approved. The policy alsorequires specific approval by the Commit-tee if total fees for audit-related and taxservices would exceed total fees for auditservices in any fiscal year. The policy

authorizes the Committee to delegate toone or more of its members pre-approvalauthority with respect to permitted serv-ices, and the Committee has delegated tothe Chairman of the Committee theauthority to pre-approve services in cer-tain circumstances.

Auditor Fees and Services

The following table presents fees for pro-fessional services rendered by Pricewa-terhouseCoopers LLP for the audit of theCompany’s annual financial statementsand internal control over financial report-ing for fiscal 2010 and fiscal 2009,together with fees for audit-related serv-ices and tax services rendered byPricewaterhouseCoopers LLP during fiscal2010 and fiscal 2009. Audit-related serv-ices consisted principally of audits ofemployee benefit plans and other entitiesrelated to the Company and financial duediligence reviews. Tax services consistedprincipally of tax compliance (primarilyinternational returns), planning and advi-sory services, sales and use tax recoveryassistance, tax due diligence assistance,and tax examination assistance.

Fiscal 2010 Fiscal 2009

(in millions)

Audit fees $17.2 $18.9Audit-related fees 2.6 2.3Tax fees 3.6 2.3All other fees — —

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Items to Be Voted On

Election of Directors

The current term of office of all of theCompany’s Directors expires at the 2011annual meeting. The Board proposes thatall of the currently serving Directors bere-elected for a term of one year and untiltheir successors are duly elected andqualified. Each of the nominees hasconsented to serve if elected. If any ofthem becomes unavailable to serve as aDirector before the annual meeting, theBoard may designate a substitute nomi-nee. In that case, the persons named asproxies will vote for the substitute nomi-nee designated by the Board.

Directors are elected by a majority ofvotes cast unless the election is con-tested, in which case Directors are electedby a plurality of votes cast. A majority ofvotes cast means that the number ofshares voted “for” a Director exceeds thenumber of votes cast “against” the Direc-tor. If an incumbent Director in an uncon-tested election does not receive a majorityof votes cast for his or her election, theDirector is required to submit a letter ofresignation to the Board of Directors forconsideration by the Governance andNominating Committee. The Governance

and Nominating Committee is required topromptly assess the appropriateness ofsuch nominee continuing to serve as aDirector and recommend to the Board theaction to be taken with respect to thetendered resignation. The Board isrequired to determine whether to acceptor reject the resignation, or what otheraction should be taken, within 90 days ofthe date of the certification of electionresults.

Brokers holding shares beneficially ownedby their clients do not have the ability tocast votes with respect to the election ofDirectors unless they have receivedinstructions from the beneficial owner ofthe shares. It is therefore important thatyou provide instructions to your broker ifyour shares are held by a broker so thatyour vote with respect to Directors iscounted.

The Board recommends a vote “FOR”each of the persons nominated by theBoard.

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Susan E. Arnold, 56, isretired and was Presi-dent—Global BusinessUnits of Procter & Gam-ble from 2007 to 2009.Prior to that, she wasVice Chair of P&G Beautyand Health from 2006,Vice Chair of P&G Beauty

from 2004 and President Global PersonalBeauty Care and Global Feminine Carefrom 2002. She has been a director ofMcDonalds Corporation since 2008. Ms.Arnold has been a Director of the Com-pany since 2007.

Ms. Arnold contributes to the mix of experi-ence and qualifications the Board seeks tomaintain primarily through her experienceas an executive of Procter & Gamble andher other public company board experi-ence. At Procter & Gamble, Ms. Arnoldwas a senior executive responsible formajor consumer brands in a large, com-plex retailing and global brand manage-ment company. As a result of thisexperience, Ms. Arnold brings to ourBoard in-depth knowledge of brandmanagement and marketing, environ-mental sustainability, product develop-ment, international consumer markets,finance and executive management,including executive compensation andmanagement leadership.

John E. Bryson, 67,serves as Senior Advisorto Kohlberg Kravis Rob-erts & Co. (KKR) and isRetired Chairman of theBoard and Chief Execu-tive Officer, Edison Inter-national. Mr. Bryson wasChairman and Chief

Executive Officer of Edison International(an electric power generator anddistributor), the parent company of South-ern California Edison and Edison MissionGroup from 1990 to 2008. He has been adirector of The Boeing Company since1995, is a non-executive chairman of theboard of BrightSource Energy, Inc. and ofthe board of overseers of Keck School ofMedicine of the University of SouthernCalifornia, and is a trustee of the California

Institute of Technology, a director of theW.M. Keck Foundation and the CaliforniaEndowment, and was a director of West-ern Asset Income Fund from 1986 to 2006.Mr. Bryson has been a Director of theCompany since 2000.

Mr. Bryson contributes to the mix of experi-ence and qualifications the Board seeks tomaintain primarily through his years ofexperience in senior management at Edi-son International culminating as chairmanand chief executive officer, through hisother public company board experienceand through his involvement in gov-ernmental and non-governmental orga-nizations engaged in environmental andother matters. At Edison, Mr. Brysonserved in senior legal, finance and operat-ing positions before becoming chairmanand chief executive officer and thus hadresponsibilities for the entire range of thislarge public utility’s business. Mr. Bryson’sexperience on governmental andnon-governmental organizations includedservice as President of the California Pub-lic Utilities Commission and as Chairmanof the California State Water ResourcesControl Board and as founder and attor-ney for the Natural Resources DefenseCouncil and service on the boards of theCouncil on Foreign Relations, the PublicPolicy Institute of California, and the Cal-ifornia Institute of Technology. As a resultof this experience, Mr. Bryson brings toour Board practical knowledge in allaspects of managing and providingleadership to complex business orga-nizations and expertise in environmentalissues.

57


John S. Chen, 55, isChairman and ChiefExecutive Officer of Syb-ase Inc., a softwaredeveloper and a wholly-owned subsidiary of SAPAG. Prior to SAP’s acquis-ition of Sybase in July2010, Mr. Chen had been

Chairman of the Board, Chief ExecutiveOfficer and President of Sybase, Inc.,since November 1998. From February1998 through November 1998, he servedas co-Chief Executive Officer. Mr. Chenjoined Sybase in August 1997 as ChiefOperating Officer and served in thatcapacity until February 1998. From March1995 to July 1997, Mr. Chen was Presidentof the Open Enterprise Computing Divi-sion, Siemens Nixdorf, a computer andelectronics company, and Chief ExecutiveOfficer and Chairman of Siemens Pyramid,a subsidiary of Siemens Nixdorf. He hasbeen a director of Wells Fargo & Companysince 2006. Mr. Chen has been a Directorof the Company since 2004.

Mr. Chen contributes to the mix of experi-ence and qualifications the Board seeks tomaintain primarily through his experienceas a leader of a variety of technologybusinesses, his experience doing businessin Asia and his other public companyboard experience. In his roles at Sybaseand Siemens Nixdorf, Mr. Chen wasresponsible for overseeing and managingexecutive teams and a sizeable work forceengaged in high technology development,production and marketing. Mr. Chen alsointeracted regularly with businesses andgovernments in Asia in connection withthese businesses. As a result of thisexperience, Mr. Chen brings to our Boardan understanding of the rapidly changingtechnological landscape and intense famil-iarity with all issues involved in managingtechnology businesses and particularlywith businesses and governmental practi-ces in Asia.

Judith L. Estrin, 56, isChief Executive Officer ofJLABS, LLC, (formerlyPacket Design Manage-ment Company, LLC), aprivately held companyfocused on furtheringinnovation in business,government and

non-profit organizations. Ms. Estrin servedas Chief Technology Officer and SeniorVice President of Cisco Systems Inc., adeveloper of networking products, from1998 until April 2000, and as President andChief Executive Officer of Precept Soft-ware, Inc., a developer of networkingsoftware of which she was co-founder,from 1995 until its acquisition by Cisco in1998. She was also a director of FedExCorporation, an international provider oftransportation and delivery services, from1989 to September 2010. Ms. Estrin hasbeen a Director of the Company since1998.

Ms. Estrin contributes to the mix of experi-ence and qualifications the Board seeks tomaintain primarily through her experiencein both large and developing technologybusinesses, her other public companyboard experience and her ongoing work inthe field of innovation. In addition to serv-ing as Chief Technology Officer at Cisco,Ms. Estrin co-founded seven technologybusinesses and is author of a book oninnovation. She continues to promoteinnovation in business and academiathrough her work at JLabs and her serviceon academic advisory boards. As a resultof this experience, Ms. Estrin brings to ourBoard an understanding of the process oftechnological innovation, its application ina wide variety of settings, and practice inthe oversight of complex public busi-nesses.

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Robert A. Iger, 59, hasserved as President andChief Executive Officer ofthe Company sinceOctober 2005, having pre-viously served as Presidentand Chief Operating Officersince January 2000 and asPresident of Walt Disney

International and Chairman of the ABCGroup from 1999 to January 2000. From1974 to 1998, Mr. Iger held a series ofincreasingly responsible positions at ABC,Inc. and its predecessor Capital Cities/ABC,Inc., culminating in service as President ofthe ABC Network Television Group from1993 to 1994 and President and ChiefOperating Officer of ABC, Inc. from 1994 to1999. He is a member of the Board of Direc-tors of Lincoln Center for the PerformingArts in New York City. Mr. Iger has been aDirector of the Company since 2000. TheCompany has agreed in Mr. Iger’s employ-ment agreement to nominate him forre-election as a member of the Board at theexpiration of each term of office during theterm of the agreement, and he has agreedto continue to serve on the Board if elected.

Mr. Iger contributes to the mix of experi-ence and qualifications the Board seeks tomaintain primarily through his position aschief executive officer of the Company andhis long experience with the business of theCompany. As president and chief executiveofficer and as a result of the experience hegained in over 35 years at ABC and Disney,Mr. Iger has an intimate knowledge of allaspects of the Company’s business andclose working relationships with all of theCompany’s senior executives.

Steven P. Jobs, 55, hasserved as Chief ExecutiveOfficer of Apple Inc., adesigner, manufacturer andmarketer of a range ofpersonal computers,mobile communication andmedia devices and port-able digital music and

video players, since February 1997 and is amember of its Board of Directors. Prior tothe Company’s acquisition of Pixar,Mr. Jobs also served as Chairman of theBoard of Pixar from March 1991 and asChief Executive Officer of Pixar from

February 1986. Mr. Jobs has been a Direc-tor of the Company since the Company’sacquisition of Pixar in May 2006.

Mr. Jobs contributes to the mix of experi-ence and qualifications the Board seeks tomaintain primarily through his experienceas chief executive officer of Apple and hisexperience with Apple and NeXT, Inc.beginning in 1976 and with Pixar from itscreation in 1986 through the Company’sacquisition of Pixar in 2006. In these posi-tions, Mr. Jobs was responsible foroverseeing all aspects of Apple and Pixar’sbusinesses.

Fred H. Langhammer, 67,is Chairman, Global Affairs,of The Estée LauderCompanies Inc., a manu-facturer and marketer ofcosmetics products. Priorto being named Chairman,Global Affairs,Mr. Langhammer was Chief

Executive Officer of The Estée LauderCompanies Inc. from 2000 to 2004, Presi-dent from 1995 to 2004 and Chief OperatingOfficer from 1985 through 1999.Mr. Langhammer joined The Estée LauderCompanies in 1975 as President of itsoperations in Japan. In 1982, he wasappointed Managing Director of its oper-ations in Germany. He has been a directorof Central European Media Enterprises,Ltd., since December 2009 and was also adirector of The Shinsei Bank Limited from2005 to 2009 and a director of AIG from2006 to 2008. Mr. Langhammer has been aDirector of the Company since 2005.

Mr. Langhammer contributes to the mix ofexperience and qualifications the Boardseeks to maintain primarily through hisexperience at Estee Lauder, a complexworldwide branded consumer productsbusiness, and his experience with businessoutside the United States. In addition toserving in Estee Lauder’s Japan and Ger-man operations and on the Board of ShinseiBank, a Japan based commercial bank, Mr.Langhammer served as general manager ofthe Japan operations of a British tradingcompany. He also serves as Co-Chairmanof the American Institute for ContemporaryGerman Studies at Johns Hopkins Uni-versity and he is a senior fellow of the

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Foreign Policy Association and a memberof the Trilateral Commission. As a result ofthis experience, Mr. Langhammer bringsto our Board an understanding of growthstrategies in worldwide branded busi-nesses, specific knowledge of Asian andEuropean markets, and extensive familiar-ity with all aspects of managing andproviding leadership to a complex busi-ness organization.

Aylwin B. Lewis, 56, hasserved as President andChief Executive Officer ofPotbelly Sandwich Workssince June 2008. Prior tothat, Mr. Lewis wasPresident and ChiefExecutive Officer of SearsHoldings Corporation, a

nationwide retailer, from September 2005to February 2008. Prior to being namedChief Executive Officer of Sears, Mr. Lewiswas President of Sears Holdings and ChiefExecutive Officer of KMart and SearsRetail following Sears’ acquisition ofKMart Holding Corporation in March 2005.Prior to that acquisition, Mr. Lewis hadbeen President and Chief Executive Offi-cer of KMart since October 2004. Prior tothat, Mr. Lewis was Chief Multibrandingand Operating Officer of YUM! Brands,Inc., a franchisor and licensorof quick service restaurants includingKFC, Long John Silvers, Pizza Hut, TacoBell and A&W, from 2003 until October2004, Chief Operating Officer of YUM!Brands from 2000 until 2003 and ChiefOperating Officer of Pizza Hut from 1996.Mr. Lewis served on the Board of Direc-tors of Sears Holding Corp. from 2005through 2008 and on the Board of Direc-tors of Kmart from 2004 through 2008.Mr. Lewis has been a Director of theCompany since 2004.

Mr. Lewis contributes to the mix of experi-ence and qualifications the Board seeks tomaintain primarily through his experiencein various positions at, Yum! Brands,Kmart, Sears and Potbelly SandwichWorks. At Yum! Brands, Mr. Lewis wasresponsible for marketing and branding ofconsumer facing products and services inthe quick serve food industry, and atKmart and Sears he was responsible for allaspects of complex, worldwide busi-

nesses offering consumer products. AtPotbelly Sandwich Works, Mr. Lewis’sresponsibilities include developing andimplementing the company’s growthstrategy. As a result of this experience, Mr.Lewis brings to our Board knowledge ofconsumer branding strategy and tactics,management and leadership of complexworldwide retail and service businesses,and insights into promoting growth strat-egies for new consumer-facing busi-nesses.

Monica C. Lozano, 54, isChief Executive Officer ofImpermedia, LLC, andPublisher and ChiefExecutive Officer ofLa Opinión, the largestSpanish-language news-paper in the UnitedStates. In addition,

Ms. Lozano is a member of the Board ofRegents of the University of California anda trustee of the University of SouthernCalifornia. She has been a director of Bankof America Corporation since 2005 and isa director of the Weingart Foundation.Ms. Lozano has been a Director of theCompany since 2000.

Ms. Lozano contributes to the mix ofexperience and qualifications the Boardseeks to maintain primarily through herexperience managing Impremedia’s mediabusinesses, her other public companyboard experience and her service on avariety of non-profit boards and advisorygroups. In addition to the board servicedescribed above, Ms. Lozano is a memberof the President’s Economic RecoveryAdvisory Board and the Council on For-eign Relations, and has served on theboards of Sumitomo Bank, First InterstateBank of California, Tenet Healthcare Corp.,the National Council of La Raza (whereshe served as chair of the board), the Cal-ifornia Health Care Corp., and the PublicPolicy Institute of California, among oth-ers. Through this experience, Ms. Lozanobrings to our Board a wide-rangingknowledge of cultural and consumertrends, particularly in the Hispanic com-munity, and an understanding of corporategovernance practices and practice inoverseeing the management of complexpublic businesses.

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Robert W. Matschullat,63, a private equityinvestor, served from1995 until 2000 as ViceChairman of the board ofdirectors and ChiefFinancial Officer of TheSeagram Company Ltd., aglobal company with

entertainment and beverage operations.Prior to joining Seagram, Mr. Matschullatwas head of worldwide investment bank-ing for Morgan Stanley & Co.Incorporated, a securities and investmentfirm, and was on the Morgan StanleyGroup board of directors. He is a directorof The Clorox Company, where he wasInterim Chairman of the Board and InterimChief Executive Officer from March toOctober 2006, and a director of Visa Inc.He was a director of McKesson Corpo-ration from 2002 to 2007. Mr. Matschullathas been a Director of the Company since2002.

Mr. Matschullat contributes to the mix ofexperience and qualifications the Boardseeks to maintain primarily through hisexperience at Seagram and Morgan Stan-ley, his expertise in financial managementand his other public company board expe-rience. At Seagram, Mr. Matschullat wasresponsible for the financial function of thefirm as well as serving on Seagram’sboard of directors. At Morgan Stanley, hewas engaged in an active investmentbanking practice, as well as serving as asenior executive and on the board ofdirectors of the firm. As a result of thisexperience, Mr. Matschullat brings to ourBoard expertise in a wide range of finan-cial and accounting matters, practicalknowledge of executive management ofcomplex, worldwide businesses, andknowledge of board level oversight asboth a director and interim leader of aworldwide consumer products business.

John E. Pepper, Jr., 72,has served as Chairmanof the Board of theCompany sinceJanuary 1, 2007 and isCo-Chairman of theNational UndergroundRailroad Freedom Center.Previously, he served as

Chief Executive Officer of the National

Underground Railroad Freedom Centerfrom December 2005 to May 2007 and asVice President of Finance and Admin-istration at Yale University from January2004 to December 2005. Prior to that, heserved as Chairman of the ExecutiveCommittee of the Board of Directors ofThe Procter & Gamble Company untilDecember 2003. Since 1963, he hadserved in various positions at Procter &Gamble, including Chairman of the Boardfrom 2000 to 2002, Chief Executive Officerand Chairman from 1995 to 1999, Presi-dent from 1986 to 1995 and director from1984 to 2003. Mr. Pepper served on theboard of Boston Scientific Corp. from 2003to May 2010 and is a member of theExecutive Committee of the CincinnatiYouth Collaborative. Mr. Pepper has beena Director of the Company since 2006.

Mr. Pepper contributes to the mix of expe-rience and qualifications the Board seeksto maintain primarily through his experi-ence at Procter & Gamble, at Yale and hisother public company board experience.At Procter & Gamble, Mr. Pepper had a 40year career including positions as execu-tive for product lines and for internationaloperations, and culminating in service asChief Executive Officer and Chairman ofthe Board and, separately, asnon-executive Chairman of the Board.Following his retirement from Procter &Gamble, Mr. Pepper provided hisexpertise in finance and administration toYale University and the National Under-ground Railroad Freedom Center. In addi-tion to the Board experience describedabove, Mr. Pepper served on the Board ofDirectors of Xerox and Motorola. As aresult of this experience, Mr. Pepperbrings to our Board facility in managing allaspects of a large, complex and diversi-fied company involved in selling brandedproducts worldwide, as well as under-standing of financial and administrativematters in a variety of contacts. Hisexperience as both an executive andnon-executive chairman makes himexceptionally qualified to provideindependent leadership to our Board ofDirectors and a constructive working rela-tionship with senior management of theCompany.

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Sheryl Sandberg, 41, hasserved as the Chief Operat-ing Officer of Facebook,Inc., an online social net-working company, sinceMarch 2008. From 2001 toMarch 2008, Ms. Sandbergwas the Vice President ofGlobal Online Sales and

Operations for Google Inc., an Internetsearch engine company. Ms. Sandberg alsois a former Chief of Staff of the UnitedStates Treasury Department and previouslyserved as a management consultant withMcKinsey & Company and as an economistwith The World Bank. Ms. Sandberg hasbeen a director of Starbucks Corp. since2009 and serves on a number of nonprofitboards including Women for Women Inter-national, and V-Day. She served as a direc-tor of eHealth, Inc. from 2006 to 2008. Shehas been a Director of the Company sinceMarch 2010.

Ms. Sandberg contributes to the mix ofexperience and qualifications the Boardseeks to maintain primarily through herexperience at Google, Facebook, McKinsey& Company and in government service. AtFacebook, Ms. Sandberg is responsible forall of Facebook’s operational functions, andat Google she was responsible for thedevelopment and marketing of Google’sonline advertising products and services. AtMcKinsey, she advised businesses ongrowth strategies. In addition to her servicein a senior position at the United StatesTreasury, Ms. Sandberg served at the WorldBank. As a result of this experience, Ms.Sandberg brings to our Board expertise inthe online world, considerable knowledgeof international finance and business and adeep understanding of consumer behavior.

Orin C. Smith, 68, is retiredand was President andChief Executive Officer ofStarbucks Corporationfrom 2000 to 2005. Hejoined Starbucks as VicePresident and Chief Finan-cial Officer in 1990,became President and

Chief Operating Officer in 1994, andbecame a director of Starbucks in 1996.Prior to joining Starbucks, Mr. Smith spenta total of 14 years with Deloitte & Touche.Mr. Smith has been a director of Nike, Inc.since 2004 and of Washington Mutual, Inc.since 2005. He also serves on the Board ofDirectors of Conservation International andthe University of Washington FoundationBoard and is Chairman of the StarbucksFoundation Board. Mr. Smith has been aDirector of the Company since 2006.

Mr. Smith contributes to the mix of experi-ence and qualifications the Board seeks tomaintain primarily through his experience atStarbucks, Deloitte & Touche, his otherpublic company board experience and hisservice on not for profit boards. At Star-bucks, Mr. Smith was first responsible forthe financial function and then, as presi-dent, chief operating officer, chief executiveofficer and a member of the board of direc-tors, for all aspects of managing and lead-ing Starbuck’s business offering brandedproducts and services worldwide. Throughhis service on the board of ConservationInternational, Mr. Smith has experience witha range of environmental and sustainabilityissues. As a result of this experience, Mr.Smith brings to our Board practical knowl-edge of management and leadership ofcomplex worldwide consumer productsbusinesses, expertise in financial mattersand insights into international labor stan-dards, environmental, sustainability andother corporate responsibility issues.

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Ratification of Appointment ofIndependent Registered PublicAccountants

The Audit Committee of the Board hasappointed PricewaterhouseCoopers LLPas the Company’s independent registeredpublic accountants for the fiscal yearending October 1, 2011. Services providedto the Company and its subsidiaries byPricewaterhouseCoopers LLP in fiscal2010 are described under “Audit-RelatedMatters — Auditor Fees and Services,”above.

We are asking our shareholders to ratifythe selection of PricewaterhouseCoopersLLP as our independent registered publicaccountants. Although ratification is notrequired by our Bylaws or otherwise, theBoard is submitting the selection ofPricewaterhouseCoopers LLP to ourshareholders for ratification as a matter ofgood corporate practice.

Representatives of Pricewaterhou-seCoopers LLP will be present at theannual meeting to respond to appropriatequestions and to make such statementsas they may desire.

The affirmative vote of the holders of amajority of shares represented in personor by proxy and entitled to vote on thisitem will be required for approval.Abstentions will be counted as repre-sented and entitled to vote and will there-fore have the effect of a negative vote.

The Board recommends that share-holders vote “FOR” ratification of theappointment of Pricewaterhou-seCoopers LLP as the Company’sindependent registered publicaccountants for fiscal 2011.

In the event shareholders do not ratify theappointment, the appointment will bereconsidered by the Audit Committee andthe Board. Even if the selection is ratified,the Audit Committee in its discretion mayselect a different registered publicaccounting firm at any time during theyear if it determines that such a changewould be in the best interests of theCompany and our shareholders.

Approval of the 2011 StockIncentive Plan

The Board of Directors recommends thatshareholders approve the Company’s2011 Stock Incentive Plan (which we referto as the 2011 Plan). The 2011 Plan wouldgovern grants of stock-based awards toemployees and non-employee directorsand is intended to replace the Amendedand Restated 1995 Stock Incentive Plan(which we refer to as the 1995 Plan) andthe Amended and Restated 2005 StockIncentive Plan (which we refer to as the2005 Plan), each of which expires during2011. The 2011 Plan provides that sharesthat remain available for issuance pur-suant to the 1995 Plan and the 2005 Planand shares that become available underthose plans as a result of forfeitures maybe issued under the 2011 Plan. As ofJanuary 26, 2011, 70.5 million shares wereavailable under the 1995 Plan and the2005 Plan. In addition, the 2011 Planincludes authorization for the issuance ofan additional 64.0 million shares of Disneycommon stock thereunder.

The terms of the 2011 Plan are sub-stantially similar to the terms of the 2005Plan as currently in effect. The materialterms of the 2011 Plan are describedunder “Summary of the 2011 Plan,” below,and a copy of the 2011 Plan is attached asAnnex A to this proxy statement. Thesubstantive changes from the 2005 Planare as follows:

• The 2011 Plan (in Section 6.3) providesfor acceleration of vesting of optionsupon termination of employment due todisability, which makes treatment ofthese awards on disability consistentwith the treatment of restricted stockunits.

• The 2011 Plan (in Section 6.5) allowsawards to continue to vest when anemployee is transferred to an entity inwhich the Company holds an investmenteven if the entity does not meet theformal definition of Affiliate.

• The definition of “Fair Market Value” hasbeen changed to give the CompensationCommittee additional flexibility todetermine an appropriate measure of fairmarket value.

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• Language has been changed (in Sec-tion 6.6) to facilitate cashless exercise ofoptions and the payment of taxes by anexercising holder.

The term of the 2011 Plan is 10 years.

Based upon the recommendation of theBoard’s Compensation Committee, theBoard of Directors has unanimouslyapproved the 2011 Plan, subject to share-holder approval at the annual meeting. The2011 Plan is designed to support theCompany’s long-term business objectivesin a manner consistent with our executivecompensation philosophy.

The increase in authorized shares repre-sented by the 2011 Plan is intended tosecure adequate shares to fund expectedawards under the Company’s long-termincentive program through at least thenext annual award in January 2012. TheBoard believes that this number repre-sents a reasonable amount of potentialequity dilution and allows the Company tocontinue awarding equity incentives,which are an important component of ouroverall compensation program.

The affirmative vote of the holders of amajority of shares represented in personor by proxy and entitled to vote on thisitem will be required for approval of theamendments to the 2011 Plan.Abstentions will be counted as repre-sented and entitled to vote and will there-fore have the effect of a negative vote.Broker non-votes (as described under“Information About Voting and the Meet-ing — Voting”) will not be considered enti-tled to vote on this item and therefore willnot be counted in determining the numberof shares necessary for approval.

Additional information regarding the pur-pose of the 2011 Plan, shares availableunder plans, and the terms of the 2011and existing plans is set out below.

Purpose of the 2011 Plan

The 2011 Plan will govern grants of stock-based awards to employees andnon-employee directors. It is designed tosupport the Company’s long-term busi-ness objectives in a manner consistentwith our executive compensation philoso-phy. The Board believes that by allowingthe Company to continue to offer itsemployees long-term, performance-basedcompensation through the 2011 Plan, theCompany will promote the following keyobjectives:

• aligning the interest of employees withthose of the shareholders;

• reinforcing key Company goals andobjectives that help drive shareholdervalue; and

• attracting, motivating and retainingexperienced and highly qualifiedemployees who contribute to theCompany’s financial success.

Shares Available Under Plans

Shares available under the 2011 Plan willinclude shares that remain available, orbecome available due to forfeitures ofawards currently outstanding, under the1995 and 2005 Plans plus an additional64.0 million shares authorized by the 2011Plan. As of January 26, 2011, and prior tothe adoption of the 2011 Plan,70.5 million shares remain available forissuance of future awards pursuant to the1995 Plan and the 2005 Plan. In addition,0.4 million shares remain available forfuture awards pursuant to the Walt DisneyCompany/Pixar 2004 Equity Incentive Plan(which we refer to as the Disney/PixarPlan). The shares that are available forissuance under the 2011 Plan from the1995 and 2005 Plan, and shares that areavailable for issuance under the Disney/Pixar Plan, may increase to the extentoutstanding awards are cancelled due toforfeiture of awards or expiration ofawards without exercise. The Companymaintains other plans under which thereare outstanding awards, but no futureawards may be made from those plans.

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The following table sets forth the number of shares authorized for future issuance (includingshares authorized for issuance pursuant to restricted stock, restricted stock unit and stockawards) as of January 26, 2011 and after including the additional shares authorized by the2011 Plan, along with the equity dilution represented by the shares available for futureawards as a percentage of the common shares outstanding.

SHARE AUTHORIZATION (shares in millions)

Total Shares Available

Equity Dilution:Percent of Basic Common Shares

Outstanding

Shares authorized for future awards as ofJanuary 26, 20111 71.0 3.74%Requested increase to shares available inthe 2011 Plan 64.0 3.37%Shares authorized for future awards afterapproval of the 2011 Plan1 135.0 7.11%

1 Includes shares authorized under the Amended and Restated 2005 Stock Incentive Plan, Amended and Restated 1995 StockIncentive Plan, and the Walt Disney Company/Pixar 2004 Equity Incentive Plan.

On January 26, 2011, the equity overhang, or the percentage of outstanding shares (plusshares that could be issued pursuant to plans) represented by all stock incentives grantedand those available for future grant under all plans, was 9.8%.1 The equity overhang from allstock incentives granted and available would be approximately 12.5% assuming approval ofthe 2011 Plan. Equity overhang following the original approval of the 2005 Plan in February2005 and subsequent amendments was as follows:

Action and Date Overhang After Action

Adoption in February 2005 12.9%

Amendment in March 2007 12.1%Amendment in March 2008 12.7%

Amendment in March 2009 13.6%Amendment in March 2010 12.7%

In light of the Company’s ongoing sharebuyback program, under which the Com-pany repurchased 21.2 million sharesduring Fiscal 2010 (net of shares issued in

connection with the acquisition of Marvel),the Company believes its overhang level isreasonable and will continue to be so afterapproval of the 2011 Plan.

1 Equity overhang was calculated as all shares issuable upon exercise of outstanding options and vesting of outstanding restrictedstock units plus shares available for future grant divided by (a) basic common shares outstanding + (b) shares in the numerator.

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The following table sets forth information regarding outstanding options and restricted stockunits as of January 26, 2011.

OUTSTANDING AWARDS BY EXERCISE PRICE (shares in millions)

Range ofExercise Prices

OutstandingOptions

WeightedAverageExercise

Price

Weighted AverageRemaining Years

of Contractual Life

UnvestedRestricted

StockUnits

$0 - $15.99 1.7 $12.42 2.1 n/a

$16 - $20.99 16.1 19.99 4.5 n/a$21 - $25.99 13.4 24.16 2.4 n/a

$26 - $30.99 32.4 28.98 3.9 n/a$31 - $35.99 27.4 32.89 5.5 n/a

$36 - $45.99 10.5 39.62 10.0 n/aTotal 101.5 $28.81 4.8 34.3

The following table sets forth information regarding options outstanding on January 26, 2011.Approximately 61.7% of all options outstanding on January 26, 2011 were exercisable on thatdate and had exercise prices below the closing trading price on that date, and approximately15.3% of the options outstanding on that date were exercisable, had been outstanding formore than six years and had exercise prices below the closing price on that date.

OUTSTANDING AWARDS BY TIME OUTSTANDING (shares in millions)

OutstandingOptions

WeightedAverageExercise

Price

Weighted AverageRemaining Years

of Contractual Life

In-the-money options outstanding six years or more 15.5 $22.85 1.9

All options outstanding less than six years 85.9 $29.88 5.3

Underwater options outstanding six years or more 0.0 NA NA

The following table sets forth information regarding awards granted and earned, the run ratefor each of the last three fiscal years and the average run rate over the last three years.

RUN RATE (shares in millions)

Fiscal2008

Fiscal2009

Fiscal2010

3-yearAverage

Stock options granted 29.8 17.4 12.0 19.7

Service-based restricted stock units granted 7.4 11.3 13.8 10.8Actual performance-based restricted stock units earned 0.3 1.8 2.6 1.6

Basic common shares outstanding at fiscal year end 1,853.8 1,861.4 1,894.1 1,869.8Run rate 2.02% 1.64% 1.50% 1.72%

The Company continues to manage its runrate1 of awards granted over time to levelsit believes are reasonable in light ofchanges in its business and number ofoutstanding shares while ensuring that ouroverall executive compensation programis competitive, relevant and motivational.The Committee adjusted grant guidelinesfor fiscal years 2008, 2009 and 2010 toreduce average awards per recipient. Therun rate in fiscal 2008 was impacted by the

special award in connection with theextension of Mr. Iger’s employmentagreement and the reduction in commonshares outstanding due to the Company’sactive repurchase of shares during thefiscal year. Adjusting for the impact ofthese two factors, the 2008 run rate wouldhave been 1.74%. The Committee furtheradjusted grant guidelines for fiscal 2011 asa means to continue reducing averageawards per recipient.

1 Run rate was calculated as (a) all option awards and non-performance restricted stock units granted in a fiscal year + (b) actualperformance-based restricted stock units vested in a fiscal year, divided by the number of basic common shares outstanding at theend of that fiscal year.

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On January 26, 2011, the closing price ofour common stock traded on the NewYork Stock Exchange was $39.44 pershare.

Overview of Plans

As with the 2005 Plan, all employees of theCompany and its affiliates will be eligibleto receive awards under the 2011 Plan, butawards under the existing plans in fiscal2010 were generally limited to approx-imately 4,800 employees andnon-employee Directors of Disney (ofwhom there are currently 12 and one ofwhom does not receive Directorcompensation). The relative weight ofequity compensation in the total compen-sation package generally increases in rela-tion to a participant’s role in influencingshareholder value.

Like the 2005 Plan, the 2011 Plan is an“omnibus” stock plan that provides for avariety of equity award vehicles to main-tain flexibility. The 2011 Plan permits thegrant of stock options, stock appreciationrights, restricted and unrestricted stockawards and stock units. As describedmore fully in Compensation Discussion andAnalysis, participants currently are gen-erally granted a mix of stock options andrestricted stock units. Restricted stockunits granted in fiscal 2010 that do nothave performance conditions (other thanthe test to assure deductibility under Sec-tion 162(m)) vest 25% on each of the firstfour anniversaries of grant. Restrictedstock units granted in fiscal 2010 that haveperformance conditions (in addition to thetest to assure deductibility under Sec-tion 162(m), where applicable) vest on thethird anniversary of the grant. Except forrestricted stock units issued as a part ofan executive’s bonus, a portion ofrestricted stock units awarded to seniorexecutives (and all non-bonus relatedunits awarded to executives subject toSection 162(m)) include performancerequirements for vesting. The 2011 Plan isdesigned to meet the requirements fordeductibility of executive compensationunder Section 162(m) of the Internal Rev-enue Code with respect to stock optionsand stock appreciation rights. Otherawards may qualify under Section 162(m)

if they are granted in accordance with theCompany’s Amended and Restated 2002Executive Performance Plan and subjectto performance conditions as specified inthat plan. Also, in order to meet Sec-tion 162(m) requirements, the 2011 Planincludes limits on the number and type ofshares that any one participant mayreceive during any calendar-year period,as described below.

Neither the 2011 Plan nor the 1995 or 2005Plans permit any modification of optionsor stock appreciation rights that would betreated as a “repricing” (under applicablerules, regulations or New York StockExchange listing requirements) without theapproval of shareholders, nor the grantingof discounted options or stock optionswith reload features. They each countstock appreciation rights as one share forevery stock-settled exercise, regardless ofthe actual number of shares used to settlethe stock appreciation right upon exercise.None of these plans contain an“evergreen” provision to automaticallyincrease the number of shares availablefor future issuance.

The Disney/Pixar Plan does not permit thegranting of discounted options or stockoptions with reload features. The Disney/Pixar Plan does not prohibit the repricingof options, but the Board does not intendto reprice options or stock appreciationrights granted from this plan without theapproval of shareholders. In addition, theCompany is subject to exchange ruleswhich prohibit the repricing of stockoptions without shareholder approval.

Summary of the 2011 Plan

The following is a summary of the materialterms of the 2011 Plan.

Plan Administration

The selection of employee participants inthe 2011 Plan, the level of participation ofeach participant and the terms and con-ditions of all awards are determined by theCompensation Committee. It is intendedthat each member of the CompensationCommittee will be an “independent direc-tor” for purposes of the Company’s Corpo-rate Governance Guidelines, the

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Compensation Committee’s charter andthe New York Stock Exchange listingrequirements; a “non-employee Director”within the meaning of Rule 16b-3 underthe Securities Exchange Act of 1934, asamended, and an “outside director” withinthe meaning of Section 162(m) of theInternal Revenue Code. Currently, theCompensation Committee is comprised offive directors meeting these independencecriteria. The Compensation Committee hasthe discretionary authority to interpret the2011 Plan, to prescribe, amend andrescind rules and regulations relating tothe 2011 Plan, and to make all otherdeterminations necessary or advisable forthe administration of the 2011 Plan. TheCommittee may delegate authority toadminister the 2011 Plan as it deemsappropriate, subject to the express limi-tations set forth in the 2011 Plan. In thecase of awards under the 2011 Plan tonon-employee Directors, the powers of theCompensation Committee will beexercised by the full Board.

Limits on Plan Awards

The Board has reserved a maximum of64,000,000 new shares, plus the number ofshares remaining available for issuanceunder the 1995 and 2005 Plans immedi-ately prior to approval of the 2011 Plan, forissuance pursuant to stock options, stockappreciation rights, restricted and unre-stricted stock awards and stock unitawards under the 2011 Plan. Each sharesubject to a stock option or stockappreciation award reduces the number ofshares available for issuance under the2011 Plan by one share, and each sharesubject to an award of restricted or unre-stricted stock, or stock unit awardsreduces the number of shares available forissuance by two shares. A maximum of4,0000,000 shares may be granted underthe 2011 Plan to an individual pursuant tostock options and stock appreciationrights awarded during any calendar year.For restricted stock, restricted stock unitsand stock awards, a maximum of2,000,000 shares may be granted underthe 2011 Plan to an individual during anycalendar year. These limitations on grantsto an individual will be applied inaggregate to all awards granted under anyequity-based compensation plan of theCompany.

Shares delivered under the 2011 Plan willbe authorized but unissued shares ofDisney common stock, treasury shares orshares purchased in the open market orotherwise. To the extent that any awardpayable in shares granted under the 2011Plan, the 2005 Plan or the 1995 Plan isforfeited, cancelled, returned to theCompany for failure to satisfy vestingrequirements or upon the occurrence ofother forfeiture events, or otherwiseterminates without payment being made inshares, the shares covered thereby will nolonger be charged against the maximumshare limitation (if granted under the 2011Plan) and will be available for new awardsunder the 2011 Plan, and will return at thesame ratio as the ratio at which they weregranted under the terms of the applicableplan. Notwithstanding the foregoing, uponexercise of a stock-settled stockappreciation right, the number of sharessubject to the award being exercised shallbe counted against the maximumaggregate number of shares of commonstock that may be issued under the planas provided above, on the basis of oneshare for every share subject thereto,regardless of the actual number of sharesused to settle the stock appreciation rightupon exercise. Any awards settled in cashwill not be counted against the maximumshare reserve under the 2011 Plan. Anyshares exchanged by a participant orwithheld from a participant as full or partialpayment to the Company of the exerciseprice or the tax withholding upon exerciseor payment of an award will not bereturned to the number of shares availablefor issuance under the 2011 Plan.

Eligibility and Participation

All of the approximately 106,000 full-timeemployees of the Company and its affili-ates, as well as the Company’snon-employee Directors, are eligible toparticipate in the 2011 Plan. Approx-imately 4,800 Disney employees (includingsix executive officers of the Company) andnon-employee Directors receive long-termincentive awards in a given year, althoughthis may vary from year to year. From timeto time, the Compensation Committee (oras to non-employee Directors, the Board)will determine who will be granted awards,the number of shares subject to suchgrants and all other terms of awards.

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As described in “Corporate Governanceand Board Matters — Board Compensation”,each non-employee Director (other thanMr. Jobs) was awarded in 2010 and prioryears stock options to purchase shares ofDisney common stock pursuant to aDirector compensation program adoptedby the Board of Directors. Eachnon-employee Director (other thanMr. Jobs) is also awarded a grant orgrants of stock or deferred stock units.The Board has determined not to includestock options in Director compensationbeginning in 2011. The Board expects thatannual awards of stock or deferred stockunits will be continued under the 2011Plan, and any change to that programwould be determined by the Board ofDirectors in the future.

Types of Plan Awards

As described in the Compensation Dis-cussion and Analysis, the Company’s cur-rent equity compensation awards toemployees are generally comprised ofstock options and restricted stock units,though the Company did issue stockappreciation rights in exchange for exist-ing equity awards in connection with arecent acquisition. The 2011 Plan providesfor a variety of other equity instruments topreserve flexibility. The types of securitiesthat may be issued under the 2011 Planare described below.

Stock Options. Stock options grantedunder the 2011 Plan may be eithernon-qualified stock options or incentivestock options qualifying under Section 422of the Internal Revenue Code. The price ofany stock option granted may not be lessthan the fair market value of the Disneycommon stock on the date the option isgranted. The option price is payable incash, shares of Disney common stock,through a broker-assisted cashlessexercise or as otherwise permitted by theCompensation Committee. As notedabove, the 2011 Plan allows the Commit-tee to determine fair market value fromseveral generally accepted alternativemethods of establishing such value.

The Compensation Committee determinesthe terms of each stock option grant at thetime of the grant. Beginning with the 2010

annual awards, the exercise term is tenyears. The Committee specifies at the timeeach option is granted the time or times atwhich, and in what proportions, an optionbecomes vested and exercisable. Vestingmay be based on the continued service ofthe participant for specified time periodsor on the attainment of specified businessor stock price performance goals estab-lished by the Committee or both. TheCommittee may accelerate the vesting ofoptions at any time and, unless otherwiseprovided in the award agreement, vestingaccelerates if the participant dies or his orher employment terminates due to dis-ability while employed by the Company orany of its affiliates.

In general, except for termination forcause as described in the 2011 Plan, astock option expires on the earlier of thescheduled expiration date and (i) 12months after termination of service, ifservice ceases due to disability, (ii) forawards granted on or after January 1,2010, 36 months after termination, if serv-ice ceases when the participant hasreached the age of 60 with 10 years ofservice unless management determinesthat doing so for a participant outside theUnited States would create issues underapplicable local laws, (iii) 18 months aftertermination, if service ceases when theparticipant is eligible to elect immediatecommencement of retirement benefitsunder a pension plan to which the Com-pany has made contributions or if the par-ticipant died while employed by theCompany or any of its affiliates, or (iv) 3months after termination, if service ceasesunder any other circumstances. TheCompensation Committee may provide forextension of the expiration of options inindividual option agreements and hasdone so pursuant to employment agree-ments of certain officers as describedunder Payments and Rights on Termination,above.

Stock Appreciation Rights. A stockappreciation right (which we refer to as anSAR) entitles the participant, upon settle-ment, to receive a payment based on theexcess of the fair market value of a shareof Disney common stock on the date ofsettlement over the base price of the right,multiplied by the applicable number of

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shares of Disney common stock. SARsmay be granted on a stand-alone basis orin tandem with a related stock option. Thebase price may not be less than the fairmarket value of a share of Disney commonstock on the date of grant. TheCompensation Committee will determinethe vesting requirements and the paymentand other terms of an SAR, including theeffect of termination of service of a partic-ipant. Vesting may be based on the con-tinued service of the participant forspecified time periods or on the attain-ment of specified business performancegoals established by the Committee orboth. The Committee may accelerate thevesting of SARs at any time. Generally,any SAR, if granted, would terminate afterthe ten-year period from the date of thegrant. SARs may be payable in cash or inshares of Disney common stock or in acombination of both as determined by theCommittee.

Restricted Stock. A restricted stockaward represents shares of Disney com-mon stock that are issued subject torestrictions on transfer and vestingrequirements as determined by the Com-pensation Committee. Vesting require-ments may be based on the continuedservice of the participant for specified timeperiods or on the attainment of specifiedbusiness performance goals establishedby the Committee or both. Subject to thetransfer restrictions and vesting require-ments of the award, the participant willhave the same rights as one of Disney’sshareholders, including all voting anddividend rights, during the restriction peri-od, unless the Committee determinesotherwise at the time of the grant.

Stock Units. An award of stock unitsprovides the participant the right toreceive a payment based on the value of ashare of Disney common stock. Stockunits may be subject to such vestingrequirements, restrictions and conditionsto payment as the Compensation Commit-tee determines are appropriate. Vestingrequirements may be based on the con-tinued service of the participant for aspecified time period or on the attainmentof specified business performance goalsestablished by the Committee or both asdetermined by the Committee. A stock

unit award may also be granted on a fullyvested basis, with a deferred paymentdate. Stock unit awards are payable incash or in shares of Disney common stockor in a combination of both. Stock unitsmay also be granted together with relateddividend equivalent rights.

Stock Awards. A stock award repre-sents shares of Disney common stock thatare issued free of restrictions on transferand free of forfeiture conditions and towhich the participant is entitled all therights of a shareholder. A stock award maybe granted for past services, in lieu ofbonus or other cash compensation, asDirector’s compensation or for any othervalid purpose as determined by theCompensation Committee.

Section 162(m) Awards

Awards of options and stock appreciationrights granted under the 2011 Plan willautomatically qualify as “performance-based compensation” under Sec-tion 162(m) of the Internal Revenue Codepursuant to their expected terms. In addi-tion, awards of restricted stock, stockunits or stock awards may qualify underSection 162(m) if they are granted inaccordance with the Company’s Amendedand Restated 2002 Executive PerformancePlan (or successor plans) and theperformance conditions specified there-under. Under Section 162(m), the terms ofthe award must state, in terms of anobjective formula or standard, the methodof computing the amount of compensationpayable under the award, and must pre-clude discretion to increase the amount ofcompensation payable under the terms ofthe award (but may give the Compensa-tion Committee discretion to decrease theamount of compensation payable).

Effect of Change in Control

Awards under the 2011 Plan are generallysubject to special provisions upon theoccurrence of a “change in control” (asdefined in the 2011 Plan) transaction withrespect to the Company. Under the 2011Plan, if within twelve months of a changein control there occurs a “triggering event”(as defined in the 2011 Plan) with respectto the employment of the participant, any

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outstanding stock options, SARs or otherequity awards under the 2011 Plan willgenerally become fully vested andexercisable, and, in certain cases, paid tothe participant. A triggering event isdefined generally to include a terminationof employment by the Company other thanfor cause or a termination of employmentby the participant following a reduction inposition, pay or other constructive termi-nation event. Payments under awards thatbecome subject to the excess parachutepayment rules under Section 280G of theInternal Revenue Code may be reducedunder certain circumstances.

Limited Transferability

All options, stock appreciation rights,restricted stock and restricted stock unitsgranted under the 2011 Plan are non-transferable except upon death, either bythe participant’s will or the laws of descentand distribution or through a beneficiarydesignation, or in the case of nonqualifiedoptions, during the participant’s lifetime toimmediate family members of the partic-ipant as may be approved by theCompensation Committee.

Adjustments for Corporate Changes

In the event of stock splits, stock divi-dends, recapitalizations, reclassifications,mergers, spin-offs or other changesaffecting the Company or shares of Disneycommon stock, equitable adjustmentsshall be made to the number of shares ofDisney common stock available for grant,as well as to other maximum limitationsunder the 2011 Plan, and the number andkind of shares of Disney common stock orother rights and prices under outstandingawards and other terms of outstandingawards affected by such events.

Term, Amendment and Termination

The 2011 Plan has a term of ten yearsexpiring on December 1, 2020, unlessterminated earlier by the Board of Direc-tors. The Board may at any time and fromtime to time and in any respect amend ormodify the Plan. The Board may seek theapproval of any amendment or mod-ification by the Company’s shareholdersto the extent it deems necessary or advis-

able in its sole discretion for purposes ofcompliance with Section 162(m) or Sec-tion 422 of the Internal Revenue Code, thelisting requirements of the New York StockExchange or other exchange or securitiesmarket or for any other purpose. Noamendment or modification of the 2011Plan will adversely affect any outstandingaward without the consent of the partic-ipant or the permitted transferee of theaward.

Plan Benefits

Future benefits under the 2011 Plan arenot currently determinable. With respect tofiscal year 2010, stock options andrestricted stock units were granted underthe 2005 Plan to the Company’s namedexecutive officers as set forth in the tablecaptioned Fiscal 2010 Grants of PlanBased Awards, and options for a total of1.1 million shares and a total of 0.5 millionrestricted stock units, having an aggregategrant date fair value of $27.0 million wereawarded to the executive officers as agroup, including Mr. Staggs, who servedas an executive officer for a portion of thefiscal year. With respect to fiscal year2010, options, stock units and deferredunits were granted to non-employeeDirectors as set forth in the tables cap-tioned Form of Receipt of Director Feesfor Fiscal 2010 and, Director Stock UnitAwards for Fiscal 2010 and the accom-panying text and having an aggregategrant date fair value of $2.3 million.Options for a total of 10.8 million sharesand a total of 13.7 million restricted stockunits, having an aggregate grant date fairvalue of $530 million, were awarded toemployees other than executive officerswith respect to fiscal year 2010.

U.S. Tax Treatment of Awards

Incentive Stock Options. An incentivestock option results in no taxable incometo the optionee or deduction to the Com-pany at the time it is granted or exercised.However, the excess of the fair marketvalue of the shares acquired over theoption price is an item of adjustment incomputing the alternative minimum tax-able income of the optionee. If the optio-nee holds the stock received as a result ofan exercise of an incentive stock option

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for at least two years from the date of thegrant and one year from the date ofexercise, then the gain realized on dis-position of the stock is treated as a long-term capital gain. If the shares aredisposed of during this period (i.e., a“disqualifying disposition”), then theoptionee will include in income, as com-pensation for the year of the disposition,an amount equal to the excess, if any, ofthe fair market value of the shares uponexercise of the option over the optionprice (or, if less, the excess of the amountrealized upon disposition over the optionprice). The excess, if any, of the sale priceover the fair market value on the date ofexercise will be a short-term capital gain.In such case, the Company will be entitledto a deduction, in the year of such a dis-position, for the amount includible in theoptionee’s income as compensation. Theoptionee’s basis in the shares acquiredupon exercise of an incentive stock optionis equal to the option price paid, plus anyamount includible in his or her income as aresult of a disqualifying disposition.

Non-Qualified Stock Options. Anon-qualified stock option results in notaxable income to the optionee ordeduction to the Company at the time it isgranted. An optionee exercising such anoption will, at that time, realize taxablecompensation in an amount equal to thedifference between the option price andthe then market value of the shares. Adeduction for federal income tax purposeswill be allowable to the Company in theyear of exercise in an amount equal to thetaxable compensation recognized by theoptionee.

The optionee’s basis in such shares isequal to the sum of the option price plusthe amount includible in his or her incomeas compensation upon exercise. Any gain(or loss) upon subsequent disposition ofthe shares will be a long-term or short-term gain (or loss), depending upon theholding period of the shares.

If a non-qualified option is exercised bytendering previously owned shares of theCompany’s common stock in payment ofthe option price, then, instead of thetreatment described above, the followinggenerally will apply: a number of newshares equal to the number of previously

owned shares tendered will be consideredto have been received in a tax-freeexchange; the optionee’s basis and hold-ing period for such number of new shareswill be equal to the basis and holdingperiod of the previously owned sharesexchanged. The optionee will have com-pensation income equal to the fair marketvalue on the date of exercise of the num-ber of new shares received in excess ofsuch number of exchanged shares; theoptionee’s basis in such excess shareswill be equal to the amount of such com-pensation income; and the holding periodin such excess shares will begin on thedate of exercise.

Stock Appreciation Rights. Generally,the recipient of a stand-alone SAR will notrecognize taxable income at the time thestand-alone SAR is granted. If anemployee receives the appreciationinherent in the SARs in cash, the cash willbe taxed as ordinary income to theemployee at the time it is received. If anemployee receives the appreciationinherent in the SARs in stock, the spreadbetween the then current fair market valueof the stock and the base price will betaxed as ordinary income to the employeeat the time the stock is received. In gen-eral, there will be no federal income taxdeduction allowed to the Company uponthe grant or termination of SARs. How-ever, upon the settlement of an SAR, theCompany will be entitled to a deductionequal to the amount of ordinary incomethe recipient is required to recognize as aresult of the settlement.

Other Awards. The current UnitedStates federal income tax consequencesof other awards authorized under the 2011Plan are generally in accordance with thefollowing: (i) restricted stock is generallysubject to ordinary income tax at the timethe restrictions lapse, unless the recipientelects to accelerate recognition as of thedate of grant; (ii) stock unit awards aregenerally subject to ordinary income tax atthe time of payment; and (iii) unrestrictedstock awards are generally subject toordinary income tax at the time of grant. Ineach of the foregoing cases, the Companywill generally be entitled to a correspond-ing federal income tax deduction at thesame time the participant recognizesordinary income.

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Section 162(m). Compensation of per-sons who are “covered employees” of theCompany is subject to the tax deductionlimits of Section 162(m) of the InternalRevenue Code. Awards that qualify as“performance-based compensation” areexempt from Section 162(m), thus allowingthe Company the full federal tax deductionotherwise permitted for such compensa-tion. The 2011 Plan enables theCompensation Committee to grant awardsthat will be exempt from the deductionlimits of Section 162(m).

Section 409A. Acceleration of income,additional taxes, and interest apply tononqualified deferred compensation thatis not compliant with Section 409A of theInternal Revenue Code. To be compliantwith Section 409A rules with respect to thetiming of elections to defer compensation,distribution events and funding must besatisfied. The terms of the 2011 Plan areintended to ensure that awards under itwill not be subject to adverse tax con-sequences applicable to deferredcompensation under Section 409A.

Tax Treatment of Awards toNon-Employee Directors and to Employ-ees Outside the United States. Thegrant and exercise of options and awardsunder the 2011 Plan to non-employeeDirectors and to employees outside theUnited States may be taxed on a differentbasis.

The Board recommends thatshareholders vote “FOR” approval ofthe 2011 Stock Incentive Plan.

Advisory Vote on ExecutiveCompensation

As required by Section 14A of the Secu-rities Exchange Act, we are seeking advi-sory shareholder approval of thecompensation of named executive officersas disclosed in the section of this proxystatement titled “Executive Compensation.”Shareholders are being asked to vote onthe following advisory resolution:

Resolved, that the shareholdersadvise that they approve thecompensation of the Company’s

named executive officers, as dis-closed pursuant to the compensa-tion disclosure rules of theSecurities and ExchangeCommission (which disclosureshall include the CompensationDiscussion and Analysis, thecompensation tables, and anyrelated material).

The compensation of our executive offi-cers is based on a design that ties a sub-stantial percentage of an executive’scompensation to the attainment of finan-cial and other performance measures that,the Board believes, promote the creationof long-term shareholder value and posi-tion the Company for long-term success.As described more fully in the Compensa-tion Discussion and Analysis, the mix offixed and performance based compensa-tion, the terms of the ManagementIncentive Bonus Program and the terms oflong-term incentive awards, as well as theterms of executives’ employment agree-ments, are all designed to enable theCompany to attract and maintain top tal-ent while, at the same time, creating aclose relationship between performanceand compensation. The CompensationCommittee and the Board of Directorsbelieve that the design of the program,and hence the compensation awarded tonamed executive officers under the cur-rent program, fulfills this objective.

Shareholders are urged to read the Com-pensation Discussion and Analysis sectionof this Proxy Statement, which discussesin detail how our compensation policiesand procedures implement our compensa-tion philosophy.

Although the vote is non-binding, theBoard of Directors and the CompensationCommittee will review the voting results inconnection with their ongoing evaluationof the Company’s compensation program.Broker non-votes (as described under“Information About Voting and the Meeting— Voting”) are not entitled to vote on theseproposals and will not be counted inevaluating the results of the vote.

The Board of Directors recommends avote FOR advisory approval of theresolution set forth above.

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Advisory Vote on Frequency of Voteson Executive Compensation

Section 14A of the Securities Exchange Actrequires us to submit a non-binding, advisoryresolution to shareholders at least once everysix years to determine whether advisoryvotes on executive compensation should beheld every one, two or three years. In sat-isfaction of this requirement, shareholdersare being asked to vote on the followingadvisory resolution:

Resolved, that the shareholders ofthe Company advise that an advi-sory resolution with respect toexecutive compensation should bepresented every one, two or threeyears as reflected by their votes foreach of these alternatives in con-nection with this resolution.

In voting on this resolution, you shouldmark your proxy for one, two or threebased on your preference as to the fre-quency with which an advisory vote onexecutive compensation should be held. Ifyou have no preference you should abstain.

The optimal frequency of vote necessarilyturns on a judgment about the relativebenefits and burdens of each of theoptions. There have been diverging viewsexpressed on this question and the Boardbelieves there is a reasonable basis foreach of the options.

Some have argued for less frequency. Theypoint out that a less frequent vote wouldallow shareholders to focus on overalldesign issues rather than details ofindividual decisions, would align with thegoal of compensation programs — such asthat of this Company — which aredesigned to reward performance thatpromotes long-term shareholder value, andwould avoid the burden that annual voteswould impose on shareholders required toevaluate the compensation programs of alarge number of companies each year.

Others believe that an annual vote isneeded to give shareholders the oppor-tunity to react promptly to emergingtrends in compensation, provide feedbackbefore those trends become pronouncedover time, and give the Board and the

Compensation Committee the opportunityto evaluate individual compensation deci-sions each year in light of the ongoingfeedback from shareholders.

Given the expression of views the Companyhas received from shareholders on thisquestion, the Board believes that the moststrongly held views on this question favor anannual advisory vote. For that reason, theBoard of Directors recommends a votefor the holding of advisory votes onexecutive compensation every year.

Broker non-votes (as described under“Information About Voting and the Meeting— Voting”) are not entitled to vote on theseproposals and will not be counted inevaluating the results of the vote.

Shareholder Proposal

The Company has been notified that UniteHere, a shareholder of the Company,intends to present a proposal for consid-eration at the annual meeting. Unite Herehas presented the following proposal andsupporting statement and we are present-ing the proposal and the supportingstatement as it was submitted to us. Whilewe take issue with certain of the state-ments contained in the proposal and thesupporting statement, we have limited ourresponse to the most important points andhave not attempted to address all thestatements with which we disagree. Theaddress and stock ownership of theproponent will be furnished by theCompany’s Secretary to any person, orallyor in writing as requested, promptly uponreceipt of any oral or written request.

The affirmative vote of the holders of amajority of shares represented in person orby proxy and entitled to vote on the proposalwill be required for approval of the proposal.Abstentions will be counted as representedand entitled to vote and will have the effect ofa negative vote on the proposal. Brokernon-votes (as described under “InformationAbout Voting and the Meeting — Voting”) willnot be considered entitled to vote on thisproposal and will not be counted indetermining the number of shares necessaryfor approval of the proposal.

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Unite Here has notified the Company thatit intends to present the following pro-posal for consideration at the annualmeeting:

RESOLVED, that shareholdersrecommend that the Company’sCompensation Committee adopt apolicy to only use one test toassess performance in determin-ing eligibility for awards of stockin the Long Term Incentive Planfor senior executives, rather thanallowing re-tests that increase thelikelihood of executives receivingthe awards.

Supporting Statement: In fiscalyears 2008 and 2009, Disney’sCompensation Committee allowedsenior executives re-tests todetermine whether they receivedperformance-based “restrictedstock units” under the company’sLong Term Incentive Plan. Such apractice delinks executive com-pensation from companyperformance because it allowssenior executives multiple oppor-tunities under different criteria toreceive awards andde-emphasizes companyperformance as a factor in receiv-ing them.

Disney’s Compensation Commit-tee modified the plan prior to the2009 annual meeting to give topexecutives three tests in order toreceive stock units granted infiscal year 2008. RiskMetricsGroup (RMG), noted that “if per-formance units do not vest underthe first criteria, the second cri-teria would apply. If the perform-ance units do not vest under thesecond criteria, the third criteriawould apply.” A May 11, 2009MarketWatch article notes that“re-testing like this means execu-tives are more likely to eventuallyget their shares, making perform-ance a less important part of theoutcome.”

This arrangement was notapproved by shareholders.

RMG criticized the re-testing prac-tice, noting in February 2009 that“the company’s disclosure on thevarious performance tests isconvoluted and not transparent toshareholders…RMG believes thatcompanies should not retest theirperformance conditions and ifthey fail to meet the performancerequirements, the awards shouldbe forfeited.”

Disney’s 2010 proxy statementnotes that only one re-test wasallowed for stock units granted incalendar year 2010. Crucially,however, there is currently noguarantee that Disney will notintroduce more re-testing oppor-tunities in future years.

The re-testing practice shines anunfavorable spotlight on directorFred Langhammer who becamethe Compensation CommitteeChairman before the 2008 annualmeeting. Mr. Langhammer was adirector of AIG from January 2006until his November 2008 resig-nation, and sat on AIG’s“Compensation and ManagementResources Committee” and“Finance Committee.” During thisperiod, AIG endured criticism forshowering large bonuses and lav-ish junkets on top executives asthe company imploded.

Disney shareholders and othershave also displayed an increasingconcern over Disney’s executivecompensation policies:

• A majority of outside share-holders voted for a resolution atthe 2010 annual meeting advo-cating an advisory vote onexecutive compensation.

• The Corporate Library, arespected corporate governanceauthority, gave Disney a “D”grade in its September 2010report, stating that the grade “isa reflection of high governancerisk due to continued concernsrelated to executivecompensation.”

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Disney should better tie compen-sation to performance byimplementing a policy disallowingre-tests for assessing perform-ance to determine eligibility forawards, in order to better linkcompensation with companyperformance. Accordingly, weurge shareholders to vote FORthis proposal.

The Board of the Companyrecommends a vote “AGAINST” thisproposal for the following reasons:

The Board believes that the proposal’srestriction to a single measure forperformance tests would inappropriatelylimit the Compensation Committee’s abil-ity to craft a compensation program thatappropriately incentivizes performancethat drives long term shareholder value.

As discussed more fully in the Compensa-tion Discussion and Analysis section ofthis proxy statement, one core element ofthe compensation program for our execu-tives established by the CompensationCommittee is the performance vestingcriteria that tie compensation to perform-ance measures that the Committeebelieves create the appropriate set ofincentives to drive the creation of long-term shareholder value. In each annualgrant of such awards, the CompensationCommittee establishes performance goalsthat it believes to be appropriate toachieve that end in light of the prevailingcompetitive environment for executivetalent. The Board believes that programhas worked effectively to meet this goal.

The Board believes that the appropriatecriteria for a performance test sometimescan and should be based on more thanone measure of performance or based onmeasurements at more than one time. Forexample, the performance test establishedfor stock unit awards made in 2010 and2011 included both a total shareholderreturn element and an earnings per shareelement, in each case based on theCompany’s performance relative to othercompanies in the S&P 500. In creating thatdesign, the Committee believed that theuse of both of these measures was

appropriate to create the desiredincentives for management. While totalshareholder return directly measures thecreation of shareholder value, superiorearnings per share performance is itself animportant contributor to the creation ofsuch value that should likewise berewarded. Yet, there can be instanceswhere even superior earnings performancewould not be reflected in the Company’srelative stock price such as where eventsextraneous to management’s performancehave a short-term detrimental effect onshare prices for businesses in our industryat the time the measurement is made. TheCommittee established the earnings pershare measure so that the contribution tolong-term value could be rewarded even inthese circumstances.

Similarly, in years prior to 2010, the Com-mittee established a performance test thatpermitted vesting after four years if theperformance test was not met after twoyears. The Committee did so in the beliefthat measures designed to increaseshareholder value may have an impactover varying periods of time, and that it isappropriate to reward such improvementswhether they take a relatively shorter orlonger time to mature. While the Commit-tee opted to simplify the structure of itsperformance tests in 2010 by moving to asingle, three-year test, the Board believesit is important to retain the flexibility to usethose performance measures that itbelieves create the most appropriate setof incentives based on experience withincentives previously used or in reaction tochanging conditions.

Because the proposal would restrict theCompensation Committee’s ability to usemeasures that it believes are necessary toappropriately align incentives with thecreation of long-term shareholder value,the Board believes the proposal isill-advised.

Accordingly, the Boardrecommends that you vote“AGAINST” this proposal, and if theproposal is presented your proxywill be voted against this proposalunless you specify otherwise.

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Other Matters

Management is not aware of any othermatters that will be presented at theAnnual Meeting, and Company Bylaws donot allow proposals to be presented at themeeting unless they were properly pre-sented to the Company prior toDecember 10, 2010. However, if any otherquestion that requires a vote is properlypresented at the meeting, the proxy hold-ers will vote as recommended by theBoard or, if no recommendation is given,in their own discretion.

Information About Voting andthe Meeting

Shares Outstanding

Shareholders owning Disney commonstock at the close of business on Jan-uary 24, 2011 (the record date), may voteat the 2011 Annual Meeting and any post-ponements or adjournments of the meet-ing. On that date, 1,898,305,774 shares ofcommon stock were outstanding. Eachshare is entitled to one vote on each mat-ter considered at the meeting.

Voting

Shareholders have a choice of voting overthe Internet, by telephone or by using atraditional proxy card.

• To vote by Internet, go towww.ProxyVote.com and follow theinstructions there. You will need the 12digit number included on your proxycard, voter instruction form or notice.

• To vote by telephone, registered share-holders should dial (800) 690-6903 andfollow the instructions. Beneficial hold-ers should dial the phone number listedon your voter instruction form. You willneed the 12 digit number included onyour proxy card, voter instruction form ornotice.

• If you received a notice and wish to voteby traditional proxy card, you canreceive a full set of materials at no

charge through one of the followingmethods:

1) by internet: www.ProxyVote.com

2) by Phone: (800) 579-1639

3) by email:[email protected] (youremail should contain the 12 digitnumber in the subject line).

The deadline for voting by telephone orelectronically is 11:59 p.m., Eastern Time,on March 22, 2011. If you are a registeredshareholder and attend the meeting, youmay deliver your completed proxy card inperson. “Street name” shareholders whowish to vote at the meeting will need toobtain a proxy form from the institutionthat holds their shares.

If you properly sign and return your proxycard or complete your proxy via the tele-phone or Internet, your shares will bevoted as you direct. If you sign and returnyour proxy but do not specify how youwant your shares voted, they will be votedFOR the election of all nominees for Direc-tor as set forth under “Election ofDirectors,” FOR the ratification of theappointment of the independent regis-tered public accountants, FOR approval ofthe 2011 Stock Incentive Plan, FOR theadvisory vote on executive compensation,ONE YEAR on the resolution relating to thefrequency of advisory votes on executivecompensation and AGAINST the share-holder proposal.

You may revoke your proxy and changeyour vote at any time before the close ofballoting at the Annual Meeting by submit-ting a written notice to the Secretary, bysubmitting a later dated and properlyexecuted proxy (including by means of atelephone or Internet vote) or by voting inperson at the Annual Meeting.

If you participate in the Disney Savingsand Investment Plan or the Disney HourlySavings and Investment Plan, you maygive voting instructions as to the numberof shares of common stock you hold in theplan as of the record date. You may pro-vide voting instructions to FidelityManagement Trust Company by votingonline or by completing and returning aproxy card if you received one. If you hold

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shares other than through these plans andyou vote electronically, voting instructionsyou give with respect to your other shareswill be applied to Disney stock credited toyour accounts in a savings and investmentplan unless you request a separate controlnumber with respect to each account. Toreceive separate control numbers, pleasecall (866) 412-8382.

The trustee will vote your shares in accord-ance with your duly executed instructionsreceived by March 18, 2011. If you do notsend instructions, the trustee will vote thenumber of shares equal to the shareequivalents credited to your account in thesame proportion that it votes shares inyour plan for which it did receive timelyinstructions from other participants. Youmay revoke previously given votinginstructions by March 18, 2011, by eitherrevising your instructions on line or bysubmitting to the trustee either a writtennotice of revocation or a properly com-pleted and signed proxy card bearing alater date. Your voting instructions will bekept confidential by the trustee.

Under New York Stock Exchange Rules,the proposal to approve the appointmentof independent auditors is considered a“discretionary” item. This means thatbrokerage firms may vote in their dis-cretion on this matter on behalf of clientswho have not furnished voting instructionsat least 10 days before the date of themeeting. In contrast, the election of direc-tors, the approval of the 2011 StockIncentive Plan, the advisory vote onexecutive compensation, the advisory voteon frequency of advisory votes on execu-tive compensation and the shareholderproposals are “non-discretionary” items.This means brokerage firms that have notreceived voting instructions from theirclients on these proposals may not voteon them. These so-called “brokernon-votes” will be included in the calcu-lation of the number of votes consideredto be present at the meeting for purposesof determining a quorum, but will not beconsidered in determining the number ofvotes necessary for approval and will haveno effect on the outcome of the vote forDirectors, the advisory vote on executivecompensation, the advisory vote on fre-quency of advisory votes on executive

compensation and the shareholder pro-posals.

We will post preliminary results of votingat the meeting on our investor relationsweb site promptly after the meeting andfile results with the Securities andExchange Commission as required byapplicable rules.

Attendance at the Meeting

If you plan to attend the meeting, youmust request an admission ticket inadvance. Tickets will be issued to regis-tered and beneficial owners and to oneguest accompanying each registered orbeneficial owner. You may request ticketsby:

• visiting www.disney.com/annualmeeting2011 and following theinstructions provided;

• sending an e-mail to the ShareholderServices department [email protected] the name under which youhold shares of record or the evidencedescribed below of your beneficialownership of shares and whether youare requesting one or two tickets;

• sending a fax to (818) 553-7210 provid-ing the name under which you holdshares of record or the evidencedescribed below of your beneficialownership of shares and whether youare requesting one or two tickets;

• calling Shareholder Services at(818) 553-7200 and following theinstructions provided; or

• sending a request by mail to ShareholderServices, The Walt Disney Company, 500S. Buena Vista St., MC 9722, Burbank,CA 91521 providing the name underwhich you hold shares of record or theevidence described below of yourbeneficial ownership of shares andwhether you are requesting one or twotickets.

Please note that if you hold your shares in“street name” (that is, through a broker orother nominee), you will need to send awritten request for a ticket either by regu-lar mail, fax or e-mail, along with proof of

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share ownership, such as a copy of theportion of your voting instruction formshowing your name and address, a bankor brokerage firm account statement or aletter from the broker, trustee, bank ornominee holding your shares, confirmingownership.

Requests for admission tickets will beprocessed in the order in which they arereceived and must be requested no laterthan March 18, 2011. Please note thatseating is limited and requests for ticketswill be accepted on a first-come, first-served basis. On the day of the meeting,each shareholder will be required to pres-ent a valid picture identification such as adriver’s license or passport with theiradmission ticket. Seating will begin at 9:00a.m. and the meeting will begin at 10:00a.m. Cameras (including cell phones withphotographic capabilities), recordingdevices and other electronic devices willnot be permitted at the meeting.

Other Information

Stock Ownership

Based on a review of filings with the Secu-rities and Exchange Commission, theCompany has determined that the follow-ing person holds more than 5% of theoutstanding shares of Disney commonstock:

Name andAddress of Beneficial owner Shares

Percentof Class

Steven P. JobsOne Infinite LoopCupertino, CA 95014

138,000,0071 7.3%

FMR LLC82 Devonshire StreetBoston, MA 02109

97,073,0552 5.1%

1 Held indirectly by Mr. Jobs through a trust.2 Based on a report on Form 13F filed by FMR on

November 15, 2010 reporting share ownership as ofSeptember 30, 2010.

The following table shows the amount ofDisney common stock beneficially owned(unless otherwise indicated) by our currentDirectors, nominees and named executiveofficers and by Directors, nominees andexecutive officers as a group. Except asotherwise indicated, all information is as ofJanuary 24, 2011.

Name Shares1,2Stock

Units3,4

SharesAcquirable

Within60 Days4,5

Percentof

Class

Susan E. Arnold 4,926 12,457 10,315 *Alan N. Braverman 249,091 — 664,854 *John E. Bryson 13,392 35,743 51,115 *John S. Chen 16,170 16,586 33,115 *Judith L. Estrin 39,197 6,272 51,115 *Robert A. Iger 1,051,401 — 2,549,961 *Steven P. Jobs 138,000,007 — — 7.3%Fred H.Langhammer 19,092 19,885 27,115 *Aylwin B. Lewis 11,466 18,059 33,115 *Monica C. Lozano 11,627 27,170 51,115 *Robert W. Matschullat 10,923 34,004 39,115 *Kevin A. Mayer 65 — 115,280 *M. Jayne Parker 19,433 — 59,352 *John E. Pepper, Jr. 71,488 17,484 21,115 *James A. Rasulo 53,815 — 638,389 *Sheryl Sandberg — 3,363 — —Orin C. Smith 9,571 6,272 21,115 *All Directors andexecutive officersas a group (18persons) 139,637,261 197,295 4,604,671 7.6%

* Less than 1% of outstanding shares.1 The number of shares shown includes shares that are

individually or jointly owned, as well as shares overwhich the individual has either sole or shared invest-ment or voting authority. Some Directors and executiveofficers disclaim beneficial ownership of some of theshares included in the table, as indicated below:• Mr. Chen – 1,125 shares held for the benefit of chil-

dren;• Ms. Lozano – 57 shares held for the benefit of a child;• Mr. Mayer – 65 shares held for the benefit of mem-

bers of his family; and• Mr. Pepper – 150 shares held for the benefit of a

child.All Directors and executive officers as a group disclaimbeneficial ownership of a total of 1,397 shares.

2 For executive officers, the number of shares listedincludes interests in shares held in Company savingsand investment plans as of January 24, 2011: Mr. Iger—17,979 shares; Mr. Rasulo—20,943 shares;Mr. Braverman—8,916 shares; Ms. Parker—12,418shares and all executive officers as a group—63,114shares.

3 Reflects the number of stock units credited as ofJanuary 24, 2011 to the account of each non-employeeDirector participating in the Company’s Amended andRestated 1997 Non-Employee Directors Stock andDeferred Compensation Plan. These units are payablesolely in shares of Company common stock asdescribed under “Corporate Governance and BoardMatters — Board Compensation,” but do not have currentvoting or investment power. Excludes unvestedrestricted stock units awarded to executives under theCompany’s Amended and Restated 2002 ExecutivePerformance Plan which vest on a performance basisand other restricted stock units awarded to executivesthat have not vested under their vesting schedules.

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4 Excludes dividends to be credited March 31, 2011 onrestricted stock units held on December 31, 2010.

5 Reflects the number of shares that could be purchasedby exercise of options exercisable at January 24, 2011,or within 60 days thereafter under the Company’s stockoption plans and the number of shares underlyingrestricted stock units that are not subject to perform-ance conditions and vest within 60 days of January 24,2011.

6 Held indirectly by Mr. Jobs through a trust.

Section 16(a) Beneficial OwnershipReporting Compliance

Based upon a review of filings with theSecurities and Exchange Commission andwritten representations that no otherreports were required, we believe that allof our Directors and executive officerscomplied during fiscal 2010 with thereporting requirements of Section 16(a) ofthe Securities Exchange Act of 1934.

Electronic Availability of ProxyStatement and Annual Report

As permitted by Securities and ExchangeCommission rules, we are making thisproxy statement and our annual reportavailable to shareholders electronically viathe Internet on the Company’s website atwww.disney.com/investors. On January 28,2011, we began mailing to our share-holders a notice containing instructions onhow to access this proxy statement andour annual report and how to vote online.If you received that notice, you will notreceive a printed copy of the proxymaterials unless you request it by follow-ing the instructions for requesting suchmaterials contained on the notice or setforth in the following paragraph.

If you received a paper copy of this proxystatement by mail and you wish to receivea notice of availability of next year’s proxystatement either in paper form orelectronically via e-mail, you can elect toreceive a paper notice of availability bymail or an e-mail message that will providea link to these documents on our website.By opting to receive the notice of avail-ability and accessing your proxy materialsonline, you will save the Company the costof producing and mailing documents toyou, reduce the amount of mail youreceive and help preserve environmentalresources. Registered shareholders may

elect to receive electronic proxy andannual report access or a paper notice ofavailability for future annual meetings byregistering online at www.disney.com/investors. If you received electronic orpaper notice of availability of these proxymaterials and wish to receive paper deliv-ery of a full set of future proxy materials,you may do so at the same location.Beneficial or “street name” shareholderswho wish to elect one of these optionsmay also do so at www.disney.com/investors.

Reduce Duplicate Mailings

The Company is required to provide anannual report and proxy statement ornotice of availability of these materials toall shareholders of record. If you havemore than one account in your name or atthe same address as other shareholders,the Company or your broker may dis-continue mailings of multiple copies. If youwish to receive separate mailings formultiple accounts at the same address,you should mark the designated box onyour proxy card. If you are voting by tele-phone or the Internet and you wish toreceive multiple copies, you may notify usat the address and phone number at theend of the following paragraph if you are ashareholder of record or notify your brokerif you hold through a broker.

Once you have received notice from yourbroker or us that they or we will dis-continue sending multiple copies to thesame address, you will receive only onecopy until you are notified otherwise oruntil you revoke your consent. If youreceived only one copy of this proxystatement and the annual report or noticeof availability of these materials and wishto receive a separate copy for eachshareholder at your household, or if, atany time, you wish to resume receivingseparate proxy statements or annualreports or notices of availability, or if youare receiving multiple statements andreports and wish to receive only one,please notify your broker if your shares areheld in a brokerage account or us if youhold registered shares. You can notify usby sending a written request to The WaltDisney Company, Shareholder Services,500 South Buena Vista Street, MC 9722,

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Burbank, California 91521, or by callingShareholder Services at (818) 553-7200and we will promptly deliver additionalmaterials as requested.

Proxy Solicitation Costs

The proxies being solicited hereby arebeing solicited by the Board of Directorsof the Company. The cost of solicitingproxies in the enclosed form will be borneby the Company. We have retained Phoe-nix Advisory Partners, LLC, 110 WallStreet, New York, New York 10005, to aid

in the solicitation. For these and relatedadvisory services, we will pay Phoenix afee of $35,000 and reimburse it for certainout-of-pocket disbursements andexpenses. Officers and regular employeesof the Company may, but withoutcompensation other than their regularcompensation, solicit proxies by furthermailing or personal conversations, or bytelephone, facsimile or electronic means.We will, upon request, reimburse broker-age firms and others for their reasonableexpenses in forwarding solicitationmaterial to the beneficial owners of stock.

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Annex A

2011 Stock Incentive Plan

1. Purpose. The purpose of The Walt Dis-ney Company 2011 Stock Incentive Plan isto further align the interests of employeesand directors with those of the share-holders by providing incentive compensa-tion opportunities tied to the performanceof the Common Stock and by promotingincreased ownership of the CommonStock by such individuals. The Plan is alsointended to advance the interests of theCompany and its shareholders by attract-ing, retaining and motivating key person-nel upon whose judgment, initiative andeffort the successful conduct of theCompany’s business is largely dependent.

2. Definitions. Wherever the following cap-italized terms are used in the Plan, theyshall have the meanings specified below:

“Affiliate” means (i) any entity that wouldbe treated as an “affiliate” of the Companyfor purposes of Rule 12b-2 under theExchange Act and (ii) any joint venture orother entity in which the Company has adirect or indirect beneficial ownershipinterest representing at least one-third(1/3) of the aggregate voting power of theequity interests of such entity or one-third(1/3) of the aggregate fair market value ofthe equity interests of such entity, asdetermined by the Committee.

“Applicable Exchange” means the NewYork Stock Exchange or such otherexchange or automated trading system onwhich the Common Stock is principallytraded at the applicable time.

“Award” means an award of a StockOption, Stock Appreciation Right,Restricted Stock Award, Stock Unit Awardor Stock Award granted under the Plan.

“Award Agreement” means a written orelectronic agreement, and any and allamendments thereto (including anyamendment affected through a Partic-ipant’s employment agreement), enteredinto between the Company and a Partic-ipant setting forth the terms and con-ditions of an Award granted to aParticipant.

“Board” means the Board of Directors ofthe Company.

“Code” means the Internal Revenue Codeof 1986, as amended.

“Common Stock” means the Company’scommon stock, par value $0.01 per share.

“Committee” means the CompensationCommittee of the Board, or such othercommittee of the Board appointed by theBoard to administer all or any specifiedportion of the Plan.

“Company” means The Walt DisneyCompany, a Delaware corporation.

“Date of Grant” means the date on whichan Award under the Plan is granted by theCommittee, or such later date as theCommittee may specify to be the effectivedate of an Award.

“Disability” means a Participant beingconsidered “disabled” within the meaningof Section 409A(a)(2)(C) of the Code,unless otherwise provided in an AwardAgreement.

“Effective Date” has the meaning ascribedto it in Section 14.1 hereof.

“Eligible Person” means any person who isan employee of the Company or any Affili-ate or any person to whom an offer ofemployment with the Company or anyAffiliate is extended, as determined by theCommittee, or any person who is aNon-Employee Director.

“Exchange Act” means the SecuritiesExchange Act of 1934, as amended.

“Fair Market Value” of a share of CommonStock as of a given date shall be a valuebased on the opening, closing, actual,high, low, or average selling prices of ashare of the Common Stock on the Appli-cable Exchange on the applicable date,the preceding trading day, the next suc-ceeding trading day, or an average of trad-ing days, as determined by the Committeein its discretion. Such definition(s) of FairMarket Value shall be specified in eachAward Agreement and may differ depend-

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ing on whether Fair Market Value is inreference to the grant, exercise, vesting,settlement, or payout of an Award. If theCommittee does not specify a differentdefinition, Fair Market Value of a share ofCommon Stock as of a given date shall bethe average of the highest and lowest ofthe composite tape market prices at whichthe shares of Common Stock shall havebeen sold regular way on the ApplicableExchange (or, if more appropriate underthe rules of the Applicable Exchange, theaverage of the highest bid and lowest askprices) on the date as of which Fair MarketValue is to be determined or, if there shallbe no such sale on such date, the nextpreceding day on which such a sale shallhave occurred. If the Common Stock isnot traded on an established stockexchange, the Committee shall determinein good faith the Fair Market Value inwhatever manner it considers appropriate,but based on objective criteria.

“Full-Value Award” means any RestrictedStock Award, Stock Unit Award or StockAward.

“Incentive Stock Option” means a StockOption granted under Section 6 hereofthat is intended to meet the requirementsof Section 422 of the Code and the regu-lations thereunder.

“Non-Employee Director” means anymember of the Board who is not anemployee of the Company.

“Nonqualified Stock Option” means a StockOption granted under Section 6 hereofthat is not an Incentive Stock Option.

“Participant” means any Eligible Personwho holds an outstanding Award underthe Plan.

“Plan” means The Walt Disney Company2011 Stock Incentive Plan as set forthherein, effective as provided in Sec-tion 14.1 hereof and as may be amendedfrom time to time.

“Predecessor Plans” collectively meansThe Walt Disney Company Amended andRestated 2005 Stock Incentive Plan (the“2005 Plan”) and The Walt Disney Com-pany Amended and Restated 1995 Stock

Incentive Plan (the “1995 Plan”), in eachcase as in effect immediately prior to theEffective Date.

“Restricted Stock Award” means a grant ofshares of Common Stock to an EligiblePerson under Section 8 hereof that areissued subject to such vesting and trans-fer restrictions as the Committee shalldetermine, and such other conditions, asare set forth in the Plan and the applicableAward Agreement.

“Section 162(m)” means Section 162(m) ofthe Code or any successor provisionthereto and the regulations thereunder.

“Service” means a Participant’s employ-ment with the Company or any Affiliate ora Participant’s service as a Non-EmployeeDirector with the Company, as applicable.

“Stock Award” means a grant of shares ofCommon Stock to an Eligible Personunder Section 10 hereof that are issuedfree of transfer restrictions and forfeitureconditions.

“Stock Appreciation Right” means a con-tractual right granted to an Eligible Personunder Section 7 hereof entitling suchEligible Person to receive a payment,whether in cash, Common Stock or acombination thereof, or representing thedifference between the base price pershare of the right and the Fair MarketValue of a share of Common Stock, atsuch time, and subject to such conditions,as are set forth in the Plan and the appli-cable Award Agreement.

“Stock Option” means a contractual rightgranted to an Eligible Person under Sec-tion 6 hereof to purchase shares ofCommon Stock at such time and price,and subject to such conditions, as are setforth in the Plan and the applicable AwardAgreement.

“Stock Unit Award” means a contractualright granted to an Eligible Person underSection 9 hereof representing notional unitinterests equal in value to a share ofCommon Stock to be paid or distributed atsuch times, and subject to such con-ditions, as set forth in the Plan and theapplicable Award Agreement.

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3. Administration.

3.1 Committee Members. The Plan shall beadministered by a Committee comprisedof no fewer than two members of theBoard. It is intended that each Committeemember shall satisfy the requirements for(i) an “independent director” for purposesof the Company’s Corporate GovernanceGuidelines and the CompensationCommittee Charter, (ii) an “independentdirector” under rules adopted by theApplicable Exchange, (iii) a “nonemployeedirector” for purposes of such Rule 16b-3under the Exchange Act and (iv) an“outside director” under Section 162(m) ofthe Code. No member of the Committeeshall be liable for any action or determi-nation made in good faith by the Commit-tee with respect to the Plan or any Awardthereunder.

3.2 Committee Authority. The Committeeshall have such powers and authority asmay be necessary or appropriate for theCommittee to carry out its functions asdescribed in the Plan. Subject to theexpress limitations of the Plan, the Com-mittee shall have authority in its discretionto determine the Eligible Persons towhom, and the time or times at which,Awards may be granted, the number ofshares, units or other rights subject toeach Award, the exercise, base or pur-chase price of an Award (if any), the timeor times at which an Award will becomevested, exercisable or payable, the per-formance goals and other conditions of anAward, the duration of the Award, and allother terms of the Award. Subject to theterms of the Plan, the Committee shallhave the authority to amend the terms ofan Award in any manner that is not incon-sistent with the Plan, provided that nosuch action shall adversely affect in anymaterial way the rights of a Participantwith respect to an outstanding Awardwithout the Participant’s consent. TheCommittee shall also have discretionaryauthority to interpret the Plan and AwardAgreements issued under the Plan, tomake factual determinations under thePlan, and to make all other determinationsnecessary or advisable for Plan admin-istration, including, without limitation, tocorrect any defect, to supply any omissionor to reconcile any inconsistency in thePlan or any Award Agreement hereunder.

The Committee may prescribe, amend,and rescind rules and regulations relatingto the Plan. The Committee’s determi-nations under the Plan need not be uni-form and may be made by the Committeeselectively among Participants and EligiblePersons, whether or not such persons aresimilarly situated. The Committee shall, inits discretion, consider such factors as itdeems relevant in making its inter-pretations, determinations and actionsunder the Plan including, without limi-tation, the recommendations or advice ofany officer or employee of the Company orsuch attorneys, consultants, accountantsor other advisors as it may select. Allinterpretations, determinations andactions by the Committee shall be final,conclusive, and binding upon all parties.

3.3 Delegation of Authority. The Committeeshall have the right, from time to time, todelegate to one or more officers of theCompany the authority of the Committee togrant and determine the terms and con-ditions of Awards granted under the Plan,subject to the requirements of Sec-tion 157(c) of the Delaware General Corpo-ration Law (or any successor provision) andsuch other limitations as the Committeeshall determine. In no event shall any suchdelegation of authority be permitted withrespect to Awards to be granted to anymember of the Board or to any EligiblePerson who is subject to the reportingrequirements of Section 16(a) of theExchange Act or who is a coveredemployee under Section 162(m) of theCode. The Committee shall also be permit-ted to delegate, to any appropriate officeror employee of the Company, responsibilityfor performing certain ministerial functionsunder the Plan. In the event that the Com-mittee’s authority is delegated to officers oremployees in accordance with the fore-going, all provisions of the Plan relating tothe Committee shall be interpreted in amanner consistent with the foregoing bytreating any such reference as a referenceto such officer or employee for such pur-pose. Any action undertaken in accordancewith the Committee’s delegation of author-ity hereunder shall have the same force andeffect as if such action was undertakendirectly by the Committee and shall bedeemed for all purposes of the Plan to havebeen taken by the Committee.

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3.4 Grants to Non-Employee Directors. AnyAwards or formula for granting Awardsunder the Plan made to Non-EmployeeDirectors shall be approved by the Board.With respect to awards to such directors,all rights, powers and authorities vested inthe Committee under the Plan shallinstead be exercised by the Board, and allprovisions of the Plan relating to theCommittee shall be interpreted in a man-ner consistent with the foregoing by treat-ing any such reference as a reference tothe Board for such purpose.

4. Shares Subject to the Plan.

4.1 Maximum Share Limitations. Subject toadjustment pursuant to Section 4.3 hereof,the maximum aggregate number of sharesof Common Stock that may be issued andsold under all Awards granted under thePlan shall be 64 million shares, plus theaggregate number of shares remainingavailable for issuance as awards under thePredecessor Plans immediately prior tothe Effective Date. Any shares of CommonStock subject to Stock Options or StockAppreciation Rights shall be countedagainst the maximum share limitation ofthis Section 4.1 as one share of CommonStock for every share of Common Stocksubject thereto. Any shares of CommonStock subject to Full-Value Awards shallbe counted against the maximum sharelimitation of this Section 4.1 as two sharesof Common Stock for every share ofCommon Stock subject thereto. To theextent that any Award of Stock Options orStock Appreciation Rights granted underthe Plan or any similar award grantedunder the Predecessor Plans prior to theEffective Date is forfeited, cancelled,returned to the Company on or after theEffective Date for failure to satisfy vestingrequirements or other conditions thereof,or otherwise terminates without an issu-ance of shares of Common Stock beingmade thereunder, the maximum sharelimitation in this Section 4.1 shall be cred-ited with the number of shares of CommonStock covered thereby and such creditednumber of shares may be made subject toAwards under the Plan, on the basis ofone share for every share of CommonStock subject to such Award of StockOptions or Stock Appreciation Rights orsimilar award under the Predecessor

Plans. To the extent that any awardgranted under the 1995 Plan or under the2005 Plan prior to March 10, 2009 iscomparable to a Full-Value Award and isforfeited, cancelled, returned to theCompany on or after the Effective Date forfailure to satisfy vesting requirements orother conditions to such award undersuch Predecessor Plan, or otherwiseterminates without an issuance of sharesof Common Stock being made thereunder,the maximum share limitation in this Sec-tion 4.1 shall be credited with one share ofCommon Stock for each share of CommonStock subject to such award under eithersuch Predecessor Plan, and such numberof credited shares of Common Stock maybe made subject to Awards under thePlan. To the extent that any Full-ValueAward granted under the Plan or anyaward comparable to a Full-Value Awardgranted under the 2005 Plan on or afterMarch 10, 2009 is forfeited, cancelled,returned to the Company for failure tosatisfy vesting requirements or other con-ditions to the Award, or otherwise termi-nates without an issuance of shares ofCommon Stock being made thereunder,the maximum share limitation in this Sec-tion 4.1 shall be credited with two sharesof Common Stock for each share ofCommon Stock subject to such Full-ValueAward or other comparable award andsuch number of credited shares of Com-mon Stock may be made subject toAwards under the Plan. Shares of Com-mon Stock delivered to the Company by aParticipant to (A) purchase shares ofCommon Stock upon the exercise of anAward or any award under the Prede-cessor Plan or (B) satisfy tax withholdingobligations (including shares retained fromthe Award or any award under the Prede-cessor Plan creating the obligation) shallnot be added back to the number ofshares available for the future grant ofAwards. Shares of Common Stockrepurchased by the Company on the openmarket using the proceeds from theexercise of an Award or any award underthe Predecessor Plan shall not increasethe number of shares available for futuregrant of Awards. Upon exercise of a StockAppreciation Right or the exercise of aStock Option by means of a net settle-ment, the number of shares subject to theAward that are then being exercised shall

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be counted against the maximumaggregate number of shares of CommonStock that may be issued under the Planas provided above, on the basis of oneshare for every share subject thereto,regardless of the actual number of shares,if any, used to settle the Stock Apprecia-tion Right upon exercise. This share con-tinuing rule shall also be applied todetermine the number of shares that maybecome available for Awards hereunder inrespect to the exercise of any comparableaward granted under the PredecessorPlans. Except as otherwise expressly pro-vided in this Section 4.1, any Awards orportions thereof that are settled in cashand not in shares of Common Stock shallnot be counted against the maximumshare limitation of this Section 4.1. Sharesof Common Stock issued and sold underthe Plan may be either authorized butunissued shares or shares held in theCompany’s treasury. In the case ofIncentive Stock Options, the foregoingprovisions shall be subject to the provi-sions of the Code.

4.2 Individual Participant Limitations. Themaximum number of shares of CommonStock that may be subject to StockOptions and Stock Appreciation Rights inthe aggregate granted to any one Partic-ipant during any single calendar yearperiod shall be four million shares. Themaximum number of shares of CommonStock that may be subject to Full-ValueAwards in the aggregate granted to anyone Participant during any single calendaryear period shall be two million shares.The foregoing limitations shall each beapplied on an aggregate basis taking intoaccount Awards granted to a Participantunder the Plan as well as awards of thesame type granted to a Participant underany other equity-based compensationplan of the Company or any Affiliate. Theper Participant limits described in thisSection 4.2 shall be construed and appliedconsistently with Section 162(m).

4.3 Adjustments. If there shall occur anychange with respect to the outstandingshares of Common Stock by reason of anyrecapitalization, reclassification, stockdividend, extraordinary dividend, stocksplit, reverse stock split or other dis-tribution with respect to the shares of

Common Stock, or any merger, reorganiza-tion, consolidation, combination, spin-off,or other similar corporate change, or anyother change affecting the CommonStock, the Committee shall, in the mannerand to the extent it considers equitable tothe Participants and consistent with theterms of the Plan, cause an adjustment tobe made in (i) the maximum number andkind of shares and the share countingrules provided in Section 4.1 and Sec-tion 4.2 hereof, (ii) the number and kind ofshares of Common Stock, units, or otherrights subject to then outstanding Awards,(iii) the exercise or base price for eachshare or unit or other right subject to thenoutstanding Awards, and (iv) any otherterms of an Award that are affected by theevent. Notwithstanding the foregoing, inthe case of Incentive Stock Options, anysuch adjustments shall, to the extentpracticable, be made in a manner con-sistent with the requirements of Sec-tion 424(a) of the Code.

5. Participation and Awards.

5.1 Designation of Participants. All EligiblePersons are eligible to be designated bythe Committee to receive Awards andbecome Participants under the Plan. TheCommittee has the authority, in its dis-cretion, to determine and designate fromtime to time those Eligible Persons whoare to be granted Awards, the types ofAwards to be granted and the number ofshares of Common Stock or units subjectto Awards granted under the Plan. Inselecting Eligible Persons to be Partic-ipants and in determining the type andamount of Awards to be granted under thePlan, the Committee shall consider anyand all factors that it deems relevant orappropriate.

5.2 Determination of Awards. The Commit-tee shall determine the terms and con-ditions of all Awards granted toParticipants in accordance with its author-ity under Section 3.2 hereof. An Awardmay consist of one type of right or benefithereunder or of two or more such rights orbenefits granted in tandem or in the alter-native. In the case of any fractional shareor unit resulting from the grant, vesting,payment or crediting of dividends or divi-

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dend equivalents under an Award, theCommittee shall have the discretionaryauthority to (i) disregard such fractionalshare or unit, (ii) round such fractionalshare or unit to the nearest lower or higherwhole share or unit, or (iii) convert suchfractional share or unit into a right toreceive a cash payment. To the extentdeemed necessary by the Committee, anAward shall be evidenced by an AwardAgreement as described in Section 13.1hereof.

6. Stock Options.

6.1 Grant of Stock Options. A Stock Optionmay be granted to any Eligible Personselected by the Committee. Subject to theprovisions of Section 6.8 hereof and Sec-tion 422 of the Code, each Stock Optionshall be designated, in the discretion ofthe Committee, as an Incentive StockOption or as a Nonqualified Stock Option.

6.2 Exercise Price. The exercise price pershare of a Stock Option shall not be lessthan 100 percent of the Fair Market Valueof the shares of Common Stock on theDate of Grant, provided that the Commit-tee may in its discretion specify for anyStock Option an exercise price per sharethat is higher than the Fair Market Valueon the Date of Grant.

6.3 Vesting of Stock Options. The Commit-tee shall in its discretion prescribe thetime or times at which, or any conditionsupon which, a Stock Option or portionthereof shall become vested and/orexercisable, and may accelerate the vest-ing or exercisability of any Stock Option atany time. The requirements for vesting andexercisability of a Stock Option may bebased on the continued Service of theParticipant with the Company or an Affili-ate for a specified time period (or periods),on the attainment of a specified perform-ance goal (or goals) or on such otherterms and conditions as approved by theCommittee in its discretion. Notwithstand-ing the foregoing provisions of this Sec-tion 6.3, unless otherwise provided by theCommittee, each Stock Option granted toa Participant under the Plan shall becomeexercisable in full upon such Participant’sDisability while in Service.

6.4 Term of Stock Options. The Committeeshall in its discretion prescribe in anAward Agreement the period during whicha vested Stock Option may be exercised,provided that the maximum term of aStock Option shall be ten years from theDate of Grant. Except as otherwise pro-vided in this Section 6, Section 13.2 or asotherwise may be provided by theCommittee in an Award Agreement, noStock Option may be exercised at anytime during the term thereof unless theParticipant is then in the Service of theCompany or one of its Affiliates.

6.5 Termination of Service. Subject to Sec-tion 6.8 hereof with respect to IncentiveStock Options, the Stock Option of anyParticipant whose Service with the Com-pany or one of its Affiliates is terminatedfor any reason shall terminate on the ear-lier of (A) the date that the Stock Optionexpires in accordance with its terms or(B) unless otherwise provided in an AwardAgreement, and except for termination forcause (as described in Section 12.2hereof), the expiration of the applicabletime period following termination of Serv-ice, in accordance with the following:(1) twelve months if Service ceased due toDisability, (2) eighteen months if Serviceceased at a time when the Participant iseligible to elect immediate commence-ment of retirement benefits at a specifiedretirement age under a pension plan towhich the Company or any of its Affiliateshad made contributions, (3) eighteenmonths if the Participant died while in theService of the Company or any of its Affili-ates, or (4) three months if Service ceasedfor any other reason. Except as otherwiseprovided in Section 6, Section 13.2 or theParticipant’s Award Agreement, or as mayotherwise be specified by the Committee,following any termination of Service forany reason, solely for the purposes of (andsolely to the extent necessary in)determining the extent to which a StockOption shall be exercisable (i.e., may vest)following termination of Service, a Partic-ipant shall be treated as though he or shehad remained in the continued Service ofthe Company or any Affiliate for threemonths after the date his or her Serviceterminated and shall not be entitled to vestin any Stock Options that would havebecome exercisable after such three

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month period of deemed Service. TheCommittee shall have authority todetermine in each case whether anauthorized leave of absence or thereassignment of a Participant’s employ-ment, at the request of the Company, toan entity in which the Company has asubstantial, direct or indirect, financialinterest shall be deemed a termination ofService for any or all purposes hereof, aswell as the effect of such a leave ofabsence or Company requested transferof employment on the vesting andexercisability of a Stock Option; provided,however, that, unless the Committee shallotherwise determine, an approved leave ofabsence or employment with an entity thatis not a Subsidiary but in which the Com-pany holds at least one-third of the votingpower or the economic value of all classesof capital stock or other preferred andcommon equity shall be deemed not toresult in a termination of employment forpurposes of the Plan and any PredecessorPlan. Unless otherwise provided by theCommittee, if an entity ceases to be anAffiliate or otherwise ceases to be quali-fied under the Plan or if all or substantiallyall of the assets of an Affiliate are con-veyed (other than by encumbrance), suchcessation or action, as the case may be,shall be deemed for purposes hereof to bea termination of the Service.

6.6 Stock Option Exercise; Tax Withholding.Subject to such terms and conditions asshall be specified in an Award Agreement,a Stock Option may be exercised in wholeor in part at any time during the termthereof by notice in the form required bythe Company, together with payment ofthe aggregate exercise price therefor andapplicable withholding tax. Unless other-wise specified by the Committee, paymentof the exercise price may be made inaccordance with any of the followingmethods: (i) in cash or by cash equivalentacceptable to the Committee, (ii) bypayment in shares of Common Stock thathave been held by the Participant for atleast six months (or such period as theCommittee may deem appropriate, foraccounting purposes or otherwise) valuedat the Fair Market Value of such shares onthe date of exercise, (iii) through an open-market, broker-assisted sales transactionpursuant to which the Company is

promptly delivered the amount of pro-ceeds necessary to satisfy the exerciseprice, or (iv) by a combination of themethods described above. The Committeemay permit payment to be made by anyother method as it shall approve. In addi-tion, the Committee may permit any StockOption to be exercised without payment ofthe purchase price, in which case theCompany’s sole obligation shall be toissue to the Participant the same numberof shares of Common Stock as wouldhave been issued had such Stock Optionbeen Stock Appreciation Rights that arebeing exercised at the same time inrespect of an identical number of sharesof Common Stock. In addition to and atthe time of payment of the exercise price(or as a condition to the delivery of anyshares without payment of the exerciseprice), the Participant shall pay to theCompany the full amount of any and allapplicable income tax, employment taxand other amounts required to be withheldin connection with such exercise, usingsuch of the methods described above forthe payment of the exercise price or suchother methods as may be approved by theCommittee and set forth in the AwardAgreement.

6.7 Limited Transferability of NonqualifiedStock Options. All Stock Options shall benontransferable except (i) upon the Partic-ipant’s death, in accordance with Sec-tion 13.2 hereof or (ii) in the case ofNonqualified Stock Options only, for thetransfer of all or part of the Stock Optionto a Participant’s “family member” (asdefined for purposes of the Form S-8registration statement under the SecuritiesAct of 1933), as may be approved by theCommittee in its discretion at the time ofproposed transfer. The transfer of a Non-qualified Stock Option may be subject tosuch terms and conditions as the Commit-tee may in its discretion impose from timeto time. Subsequent transfers of a Non-qualified Stock Option shall be prohibitedother than in accordance with Section 13.2hereof.

6.8 Additional Rules for Incentive StockOptions.

(a) Eligibility. An Incentive Stock Optionmay only be granted to an Eligible

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Person who is considered an employeefor purposes of Treasury Regulation§1.421-7(h) with respect to the Com-pany or any Affiliate that qualifies as a“subsidiary corporation” with respectto the Company for purposes of Sec-tion 424(f) of the Code.

(b) Annual Limits. No Incentive StockOption shall be granted to a Participantas a result of which the aggregate FairMarket Value (determined as of theDate of Grant) of the stock with respectto which incentive stock options underSection 422 of the Code areexercisable for the first time in anycalendar year under the Plan and anyother stock option plans of the Com-pany or any subsidiary or parentcorporation, would exceed $100,000,determined in accordance with Sec-tion 422(d) of the Code. This limitationshall be applied by taking stockoptions into account in the order inwhich granted.

(c) Termination of Employment. Notwith-standing the provisions of Section 6.5,an Award of an Incentive Stock Optionmay provide that such Stock Optionmay be exercised not later than 3months following termination ofemployment of the Participant with theCompany and all Subsidiaries, or notlater than one year following a perma-nent and total disability within themeaning of Section 22(e)(3) of theCode, as and to the extent determinedby the Committee to comply with therequirements of Section 422 of theCode.

(d) Other Terms and Conditions; Non-transferability. Any Incentive StockOption granted hereunder shall containsuch additional terms and conditions,not inconsistent with the terms of thePlan, as are deemed necessary ordesirable by the Committee, whichterms, together with the terms of thePlan, shall be intended and interpretedto cause such Incentive Stock Optionto qualify as an “incentive stockoption” under Section 422 of the Code.Notwithstanding anything else in thisSection 6.8 to the contrary, an AwardAgreement for an Incentive StockOption may provide that such StockOption shall be treated as a Non-

qualified Stock Option to the extentthat certain requirements applicable to“incentive stock options” under theCode shall not be satisfied. AnIncentive Stock Option shall by itsterms be nontransferable other than bywill or by the laws of descent and dis-tribution, and shall be exercisable dur-ing the lifetime of a Participant only bysuch Participant.

(e) Disqualifying Dispositions. If sharesof Common Stock acquired by exerciseof an Incentive Stock Option are dis-posed of within two years following theDate of Grant or one year following thetransfer of such shares to the Partic-ipant upon exercise, the Participantshall, promptly following such dis-position, notify the Company in writingof the date and terms of such dis-position and provide such otherinformation regarding the dispositionas the Company may reasonablyrequire.

6.9 Repricing Prohibited. Subject to theanti-dilution adjustment provisions con-tained in Section 4.3 hereof, without theprior approval of the Company’s share-holders, given in accordance with the rulesof the Applicable Exchange and applicablelaw, neither the Committee nor the Boardshall cause the cancellation, substitutionor amendment of a Stock Option thatwould have the effect of reducing theexercise price of such a Stock Optionpreviously granted under the Plan or anysimilar award granted under any Prede-cessor Plan, or otherwise approve anymodification to such a Stock Option thatwould be treated as a “repricing” underthe then applicable rules, regulations orlisting requirements adopted by the Appli-cable Exchange.

7. Stock Appreciation Rights.

7.1 Grant of Stock Appreciation Rights. AStock Appreciation Right may be grantedto any Eligible Person selected by theCommittee. Stock Appreciation Rightsmay be granted on a basis that allows forthe exercise of the right by the Participantor that provides for the automatic paymentof the right upon a specified date or event.

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7.2 Freestanding Stock Appreciation Rights.A Stock Appreciation Right may begranted without any related Stock Option.The Committee shall in its discretion pro-vide in an Award Agreement the time ortimes at which, or the conditions uponwhich, a Stock Appreciation Right or por-tion thereof shall become vested and/orexercisable, and may accelerate the vest-ing or exercisability of any StockAppreciation Right at any time. Therequirements for vesting and exercisabilityof a Stock Appreciation Right may bebased on the continued Service of aParticipant with the Company or an Affili-ate for a specified time period (or periods).on the attainment of a specified perform-ance goal (or goals) or on such otherterms and conditions as approved by theCommittee in its discretion. A StockAppreciation Right will be exercisable orpayable at such time or times asdetermined by the Committee, providedthat the maximum term of a StockAppreciation Right shall be ten years fromthe Date of Grant. The base price of aStock Appreciation Right granted withoutany related Stock Option shall bedetermined by the Committee in its solediscretion; provided, however, that thebase price per share of any such free-standing Stock Appreciation Right shallnot be less than 100 percent of the FairMarket Value of the shares of CommonStock on the Date of Grant. Without limit-ing the generality of the foregoing, unlessotherwise determined by the Committee atthe time of grant, any free-standing StockAppreciation Right shall be subject to thesame rules regarding exercisability(including those pertaining to the impactof termination of employment and theperiods during which such Award may beexercised following termination ofemployment) that apply to Stock Optionsunder Section 6.

7.3 Tandem Stock Option/Stock AppreciationRights. A Stock Appreciation Right may begranted in tandem with a Stock Option,either at the time of grant or at any timethereafter during the term of the StockOption. A tandem Stock Option/StockAppreciation Right will entitle the holder toelect, as to all or any portion of the numberof shares subject to the Award, to exerciseeither the Stock Option or the Stock

Appreciation Right, resulting in the reductionof the corresponding number of sharessubject to the right so exercised as well asthe tandem right not so exercised. A StockAppreciation Right granted in tandem with aStock Option hereunder shall have a baseprice per share equal to the per shareexercise price of the Stock Option, will bevested and exercisable at the same time ortimes that a related Stock Option is vestedand exercisable, and will expire no later thanthe time at which the related Stock Optionexpires.

7.4 Payment of Stock Appreciation Rights. AStock Appreciation Right will entitle theholder, upon exercise or other payment ofthe Stock Appreciation Right, as appli-cable, to receive an amount determined bymultiplying: (i) the excess of the Fair Mar-ket Value of a share of Common Stock onthe date of exercise or payment of theStock Appreciation Right over the baseprice of such Stock Appreciation Right, by(ii) the number of shares as to which suchStock Appreciation Right is exercised orpaid. Subject to the requirements of Sec-tion 409A of the Code, payment of theamount determined under the foregoingmay be made, as approved by theCommittee and set forth in the AwardAgreement, in shares of Common Stockvalued at their Fair Market Value on thedate of exercise or payment, in cash, or ina combination of shares of Common Stockand cash, subject to applicable tax with-holding requirements.

7.5 Repricing Prohibited. Subject to the anti-dilution adjustment provisions contained inSection 4.3 hereof, without the prior appro-val of the Company’s shareholders given inaccordance with the rules of the ApplicableExchange or applicable law, neither theCommittee nor the Board shall cause thecancellation, substitution or amendment of aStock Appreciation Right that would havethe effect of reducing the base price of sucha Stock Appreciation Right previouslygranted under the Plan or any similar awardgranted under any Predecessor Plan, orotherwise approve any modification to sucha Stock Appreciation Right that would betreated as a “repricing” under the thenapplicable rules, regulations or listingrequirements adopted by the ApplicableExchange.

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8. Restricted Stock Awards.

8.1 Grant of Restricted Stock Awards. ARestricted Stock Award may be granted toany Eligible Person selected by the Com-mittee. The Committee may require thepayment by the Participant of a specifiedpurchase price in connection with anyRestricted Stock Award.

8.2 Vesting Requirements. The restrictionsimposed on shares granted under aRestricted Stock Award shall lapse inaccordance with the vesting requirementsspecified by the Committee, which shallbe set forth in the Award Agreement. Therequirements for vesting of a RestrictedStock Award may be based on the con-tinued Service of the Participant with theCompany or an Affiliate for a specifiedtime period (or periods), on the attainmentof a specified performance goal (or goals)or on such other terms and conditions asapproved by the Committee in its dis-cretion. The Committee may acceleratethe vesting of a Restricted Stock Award atany time. If the vesting requirements of aRestricted Stock Award shall not be sat-isfied, the Award shall be forfeited and theshares of Common Stock subject to theAward shall be returned to the Company.

8.3 Restrictions. Shares granted under anyRestricted Stock Award may not be trans-ferred, assigned or subject to any encum-brance, pledge, or charge until allapplicable restrictions are removed orhave expired, unless otherwise allowed bythe Committee. Failure to satisfy anyapplicable restrictions shall result in thesubject shares of the Restricted StockAward being forfeited and returned to theCompany. The Committee may require inan Award Agreement that, if certificatesare issued to evidence such RestrictedStock, any certificates representing theshares granted under a Restricted StockAward bear a legend making appropriatereference to the restrictions imposed, andthat certificates representing the sharesgranted or sold under a Restricted StockAward will remain in the physical custodyof an escrow holder until all restrictionsare removed or have expired.

8.4 Rights as Shareholder. Subject to theforegoing provisions of this Section 8 and

the applicable Award Agreement, the Par-ticipant shall have all rights of a share-holder with respect to the shares grantedto the Participant under a Restricted StockAward, including the right to vote theshares and receive all dividends and otherdistributions paid or made with respectthereto. The Committee may provide in anAward Agreement for the payment of divi-dends and distributions to the Participantat such times as paid to shareholdersgenerally or at the times of vesting orother payment of the Restricted StockAward.

8.5 Section 83(b) Election. If a Participantmakes an election pursuant to Sec-tion 83(b) of the Code with respect to aRestricted Stock Award, the Participantshall file, within 30 days following the Dateof Grant, a copy of such election with theCompany and with the Internal RevenueService, in accordance with the regu-lations under Section 83 of the Code. TheCommittee may provide in an AwardAgreement that the Restricted StockAward is conditioned upon the Partic-ipant’s making or refraining from makingan election with respect to the Awardunder Section 83(b) of the Code.

9. Stock Unit Awards.

9.1 Grant of Stock Unit Awards. A StockUnit Award may be granted to any EligiblePerson selected by the Committee. Thevalue of each stock unit under a StockUnit Award is equal to the Fair MarketValue of the Common Stock on the appli-cable date or time period of determination,as specified by the Committee. A StockUnit Award shall be subject to suchrestrictions and conditions as the Commit-tee shall determine. A Stock Unit Awardmay be granted together with a dividendequivalent right with respect to the sharesof Common Stock subject to the Award,which may be accumulated and may bedeemed reinvested in additional stockunits, as determined by the Committee inits discretion.

9.2 Vesting of Stock Unit Awards. On theDate of Grant, the Committee shalldetermine any vesting requirements withrespect to a Stock Unit Award, which shallbe set forth in the Award Agreement. The

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requirements for vesting of a Stock UnitAward may be based on the continuedService of the Participant with the Com-pany or an Affiliate for a specified timeperiod (or periods), on the attainment of aspecified performance goal (or goals) oron such other terms and conditions asapproved by the Committee in its dis-cretion. A Stock Unit Award may begranted on a fully vested basis, with adeferred payment date and/or theCommittee may accelerate the vesting of aStock Unit Award at any time.

9.3 Payment of Stock Unit Awards. A StockUnit Award shall become payable to aParticipant at the time or times determinedby the Committee and set forth in theAward Agreement, which may be upon orfollowing the vesting of the Award. Pay-ment of a Stock Unit Award may be made,at the discretion of the Committee, in cashor in shares of Common Stock, or in acombination thereof, subject to applicabletax withholding requirements. Any cashpayment of a Stock Unit Award shall bemade based upon the Fair Market Value ofthe Common Stock, determined on suchdate or over such time period asdetermined by the Committee.

9.4 No Rights as Shareholder. The Partic-ipant shall not have any rights as a share-holder with respect to the shares subjectto a Stock Unit Award until such time asshares of Common Stock are delivered tothe Participant pursuant to the terms ofthe Award Agreement.

10. Stock Awards.

10.1 Grant of Stock Awards. A Stock Awardmay be granted to any Eligible Personselected by the Committee. A StockAward may be granted for past services, inlieu of bonus or other cash compensation,as directors’ compensation or for anyother valid purpose as determined by theCommittee. A Stock Award granted to anEligible Person represents shares ofCommon Stock that are issued withoutrestrictions on transfer and other incidentsof ownership and free of forfeiture con-ditions, except as otherwise provided inthe Plan and the Award Agreement. TheCommittee may, in connection with anyStock Award, require the payment of aspecified purchase price.

10.2 Rights as Shareholder. Subject to theforegoing provisions of this Section 10 andthe applicable Award Agreement, upon theissuance of the Common Stock under aStock Award the Participant shall have allrights of a shareholder with respect to theshares of Common Stock, including theright to vote the shares and receive alldividends and other distributions paid ormade with respect thereto.

11. Change in Control.

11.1 Effect of a Change in Control. Exceptto the extent an Award Agreement pro-vides for a different result (in which casethe Award Agreement will govern and thisSection 11 of the Plan shall not beapplicable), and except as may be limitedby the provisions of Section 11.3 hereof,notwithstanding anything elsewhere in thePlan or any rules adopted by the Commit-tee pursuant to the Plan to the contrary, ifa Triggering Event shall occur within the12-month period beginning with a Changein Control of the Company, then, effectiveimmediately prior to the Triggering Event:

(i) each outstanding Stock Option andStock Appreciation Right, to the extentthat it shall not otherwise have becomevested and exercisable, shallautomatically become fully andimmediately vested and exercisable,without regard to any otherwise appli-cable vesting requirement;

(ii) each Restricted Stock Award shallbecome fully and immediately vestedand all forfeiture and transferrestrictions thereon shall lapse; and

(iii) each outstanding Stock Unit Awardshall become immediately and fullyvested and payable;

provided, however, that with respect toStock Unit Awards and any other Awardsthat are subject to Section 409A of theCode and the guidance issued thereunder(“Section 409A”), the Common Stock,securities, cash or other considerationpayable with respect to the Award shall bepayable immediately following (and in noevent more than 90 days following) theParticipant’s “separation from service” (asdefined under Section 409A), except that,to the extent that such Awards are held bya Participant who is a “specified employ-

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ee” (as determined under Section 409A),the delivery of the Common Stock, secu-rities, cash or other consideration payablewith respect to such Awards shall bedelayed to the date that is six months andone day following the Participant’s“separation from service” solely to theextent necessary to avoid the additionaltaxes imposed by Section 409A(a)(i)(B) ofthe Code.

11.2 Definitions.

(a) Cause. For purposes of this Sec-tion 11, the term “Cause” shall meanthat a Participant (i) has been con-victed of, or entered a plea of nolocontendere to, a crime that constitutesa felony under Federal or state law,(ii) has engaged in willful gross mis-conduct in the performance of the Par-ticipant’s duties to the Company or anAffiliate or (iii) has committed a materialbreach of any written agreement withthe Company or any Affiliate withrespect to confidentiality, non-competition, nonsolicitation or similarrestrictive covenant. Subject to the firstsentence of Section 11.1 hereof, in theevent that a Participant is a party to anemployment agreement with theCompany or any Affiliate that definestermination on account of “Cause” (ora term having similar meaning), suchdefinition shall apply as the definitionof a termination on account of “Cause”for purposes hereof, but only to theextent that such definition provides theParticipant with greater rights. A termi-nation on account of Cause shall becommunicated by written notice to theParticipant, and shall be deemed tooccur on the date such notice is deliv-ered to the Participant.

(b) Change in Control. For purposes ofthis Section 11, a “Change in Control”shall occur upon:

(i) the acquisition within any12-month period by any individual,entity or group (within the meaningof Section 13(d)(3) or 14(d)(2) of theExchange Act) (a “Person”) of bene-ficial ownership (within the meaningof Rule 13d-3 promulgated underthe Exchange Act) of thirty percent(30%) or more of the total voting

power of the then outstanding stockof the Company entitled to votegenerally in the election of direc-tors, but excluding the followingtransactions (the “ExcludedAcquisitions”):

(1) any acquisition directly fromthe Company (other than anacquisition by virtue of theexercise of a conversion privilegeof a security that was notacquired directly from theCompany),

(2) any acquisition by the Com-pany, and

(3) any acquisition by anemployee benefit plan (or relatedtrust) sponsored or maintained bythe Company);

(ii) any time during a period of 12months or less, individuals who atthe beginning of such period con-stitute the Board (and any newdirectors whose election by theBoard or nomination for election bythe Company’s shareholders wasapproved by a vote of at least amajority of the directors then still inoffice who either were directors atthe beginning of the period orwhose election or nomination forelection was so approved) ceasingfor any reason to constitute amajority thereof:

(iii) an acquisition (other than anExcluded Acquisition) by any Per-son of fifty percent (50%) or more ofthe voting power or value of theCompany’s stock;

(iv) the consummation of a merger,consolidation, reorganization or sim-ilar corporate transaction, whether ornot the Company is the survivingcompany in such transaction, otherthan a merger, consolidation, orreorganization that would result in thePersons who are beneficial owners ofthe Company’s stock outstandingimmediately prior thereto continuingto beneficially own, directly orindirectly, in substantially the sameproportions, at least fifty percent(50%) of the combined voting poweror value of the Company’s stock (or

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the stock of the surviving entity) out-standing immediately after suchmerger, consolidation or reorganiza-tion; or

(v) the sale or other dispositionduring any 12 month period of all orsubstantially all of the assets of theCompany, provided that such saleis of assets having a total gross fairmarket value equal to or greaterthan 40% of the total gross fairmarket value of the assets of theCompany immediately prior to suchsale or disposition.

The foregoing definition of “Change inControl” is intended to comply with therequirements of Section 409A of the Codeand the guidance issued thereunder andshall be interpreted and applied by theCommittee in a manner consistent there-with.

(c) Constructive Termination. For pur-poses of this Section 11, a“Constructive Termination” shall meana termination of employment by a Par-ticipant within sixty (60) days followingthe occurrence of any one or more ofthe following events without the Partic-ipant’s written consent (i) any reductionin position, title (for Vice Presidentsand above), overall responsibilities,level of authority, level of reporting (forVice Presidents and above), basecompensation, annual incentive com-pensation opportunity, aggregateemployee benefits or (ii) a request thatthe Participant’s location of employ-ment be relocated by more than fifty(50) miles. Subject to the first sentenceof Section 11.1 hereof, in the event thata Participant is a party to an employ-ment agreement with the Company oran Affiliate (or a successor entity) thatdefines a termination on account of“Constructive Termination,” “GoodReason” or “Breach of Agreement” (ora term having similar meaning), suchdefinition shall apply as the definitionof “Constructive Termination” for pur-poses hereof in lieu of the foregoing,but only to the extent that such defi-nition provides the Participant withgreater rights. A Constructive Termi-nation shall be communicated by writ-ten notice to the Committee, and shall

be deemed to occur on the date suchnotice is delivered to the Committee,unless the circumstances giving rise tothe Constructive Termination are curedwithin five (5) days of such notice.

(d) Triggering Event. For purposes ofthis Section 11, a “Triggering Event”shall mean (i) the termination of Serviceof a Participant by the Company or anAffiliate (or any successor thereof)other than on account of death, Dis-ability or Cause or (ii) the occurrence ofa Constructive Termination.

11.3 Excise Tax Limit. Except to the extentan Award Agreement provides for a differ-ent result (in which case the AwardAgreement will govern and this Sec-tion 11.3 shall not be applicable), in theevent that the vesting of Awards togetherwith all other payments and the value ofany benefits received or to be received bya Participant (the “Total Payments”) wouldresult in all or a portion of such TotalPayments being subject to the excise taxunder Section 4999 of the Code (the“Excise Tax”), then the Participant’s TotalPayments shall be either (i) the full amountof such payments and benefits or (ii) suchlesser amount that would result in no por-tion of the Total Payments being subjectto excise tax under Section 4999 of theCode, whichever of the foregoingamounts, taking into account the appli-cable Federal, state, and local employ-ment taxes, income taxes and the ExciseTax, results in the receipt by the Partic-ipant, on an after-tax basis, of the greatestamount of payments and benefitsnotwithstanding that all or some portion ofsuch payments and benefits may be tax-able under Section 4999 of the Code.Solely to the extent that the Participant isbetter off on an after-tax basis as a resultof the reduction of Total Payments, suchpayments and benefits shall be reduced oreliminated, as determined by the Com-pany, in the following order: (i) any cashpayments, (ii) any taxable benefits, (iii) anynontaxable benefits, and (iv) any vesting oraccelerated delivery of equity awards ineach case in reverse order beginning withthe payments or benefits that would havebeen paid, in the ordinary course, the far-thest in time from the date that triggersthe applicable Excise Tax.

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All determinations required to be madeunder this Section 11 shall be made by theaccounting firm which is the Company’soutside auditor immediately prior to theevent triggering the payments that aresubject to the Excise Tax (the “AccountingFirm”). The Company shall cause theAccounting Firm to provide detailed sup-porting calculations of its determinationsto the Company and the Participant. Allfees and expenses of the Accounting Firmshall be borne solely by the Company. TheAccounting Firm’s determinations must bemade with substantial authority (within themeaning of Section 6662 of the Code). Forthe purposes of all calculations underSection 280G of the Code and the applica-tion of this Section 11.3, all determinationsas to the present value shall be made inaccordance with the regulations promul-gated under Section 280G of the Code.

12. Forfeiture Events.

12.1 General. The Committee may specifyin an Award Agreement at the time of theAward that the Participant’s rights, pay-ments and benefits with respect to anAward shall be subject to reduction, can-cellation, forfeiture or recoupment uponthe occurrence of certain specified events,in addition to any otherwise applicablevesting or performance conditions of anAward. Such events shall include, but shallnot be limited to, termination of Service forcause, violation of material Company poli-cies, breach of noncompetition, con-fidentiality or other restrictive covenantsthat may apply to the Participant, or otherconduct by the Participant that is detri-mental to the business or reputation of theCompany.

12.2 Termination for Cause. Unless other-wise provided by the Committee and setforth in an Award Agreement, if a Partic-ipant’s employment with the Company orany Affiliate shall be terminated for cause,the Company may, in its sole discretion,immediately terminate such Participant’sright to any further payments, vesting orexercisability with respect to any Award inits entirety. The Company shall, in its solediscretion, determine whether the con-duct, actions, omissions or nonfeasanceof a Participant give rise to cause toterminate such Participant’s employment;

provided that, if a Participant is party to anemployment (or similar) agreement withthe Company or any Affiliate that definesthe term “cause,” such definition shallapply for purposes of the Plan. TheCompany shall have the power todetermine whether the Participant hasbeen terminated for cause and the dateupon which such termination for causeoccurs. Any such determination shall befinal, conclusive and binding upon theParticipant. In addition, if the Companyshall reasonably determine that a Partic-ipant has committed or may have commit-ted any act which could constitute thebasis for a termination of such Partic-ipant’s employment for cause, the Com-pany may suspend the Participant’s rightsto exercise any option, receive any pay-ment or vest in any right with respect toany Award pending a determination by theCompany of whether an act has beencommitted which could constitute thebasis for a termination for “cause” as pro-vided in this Section 12.2. Notwithstandinganything in this Section 12.2 to the con-trary, following a Change in Control,whether cause exists with respect to thetermination of a Participant’s employmentshall be determined exclusively by apply-ing the provisions of Section 11.

13. General Provisions.

13.1 Award Agreement. To the extentdeemed necessary by the Committee, anAward under the Plan shall be evidencedby an Award Agreement in a written orelectronic form approved by the Commit-tee setting forth the number of shares ofCommon Stock or units subject to theAward, the exercise price, base price, orpurchase price of the Award, the time ortimes at which an Award will becomevested, exercisable or payable and theterm of the Award. The Award Agreementmay also set forth the effect on an Awardof termination of Service under certaincircumstances. The Award Agreementshall be subject to and incorporate, byreference or otherwise, all of the appli-cable terms and conditions of the Plan,and may also set forth other terms andconditions applicable to the Award asdetermined by the Committee consistentwith the limitations of the Plan. AwardAgreements evidencing Incentive Stock

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Options shall contain such terms andconditions as may be necessary to meetthe applicable provisions of Section 422 ofthe Code. The grant of an Award under thePlan shall not confer any rights upon theParticipant holding such Award other thansuch terms, and subject to such con-ditions, as are specified in the Plan asbeing applicable to such type of Award (orto all Awards) or as are expressly set forthin the Award Agreement. The Committeeneed not require the execution of anAward Agreement by a Participant, inwhich case, acceptance of the Award bythe Participant shall constitute agreementby the Participant to the terms, conditions,restrictions and limitations set forth in thePlan and the Award Agreement as well asthe administrative guidelines of the Com-pany in effect from time to time.

13.2 Treatment of Awards upon Death. Inthe event of the death of a Participantwhile employed by the Company or any ofits Affiliates, except as otherwise providedby the Committee in an Award Agreement,an outstanding Award may be exercisedby or shall become payable to the Partic-ipant’s beneficiary as designated by theParticipant in the manner prescribed bythe Committee or, in the absence of anauthorized beneficiary designation, by thea legatee or legatees of such Award underthe Participant’s last will, or by suchParticipant’s executors, personal repre-sentatives or distributees of such Award inaccordance with the Participant’s will orthe laws of descent and distribution (a“Beneficiary”). In the case of StockOptions, except as otherwise provided inan Award Agreement, any outstandingStock Options of a Participant who dieswhile in Service may be exercised by suchBeneficiary in respect of all or any part ofthe total number of shares subject to suchoptions at the time of such Participant’sdeath (whether or not, at the time of death,the deceased Participant would have beenentitled to exercise such options to theextent of all or any of the shares coveredthereby). However, except as otherwiseprovided by the Committee in an AwardAgreement, in the event of the death of theParticipant after the date of termination ofService while an Option remains out-standing, then such deceased Partic-ipant’s Options shall expire in accordance

with their terms at the same time theywould have expired if such Participant hadnot died, and may be exercised prior totheir expiration by a Beneficiary in respectto the same number of shares, in the samemanner and to the same extent as if suchParticipant were then living. In the case ofAwards other than Stock Options, exceptas otherwise provided in an AwardAgreement, any outstanding Awards of aParticipant who dies while in Service shallbecome fully vested and, in the case ofStock Appreciation Rights, exercisable asprovided above with respect to stockoptions, and in the case of all other typesof Awards, payable to the Beneficiarypromptly following the Participant’s death.

13.3 No Assignment or Transfer; Beneficia-ries. Except as provided in Sections 6.7and 13.2 hereof, Awards under the Planshall not be assignable or transferable bythe Participant, and shall not be subject inany manner to assignment, alienation,pledge, encumbrance or charge. Notwith-standing the foregoing, the Committeemay provide in the terms of an AwardAgreement or in any other manner pre-scribed by the Committee that the Partic-ipant shall have the right to designate abeneficiary or beneficiaries who shall beentitled to any rights, payments or otherbenefits specified under an Award follow-ing the Participant’s death. During the life-time of a Participant, an Award shall beexercised only by such Participant or suchParticipant’s guardian or legal representa-tive.

13.4 Deferrals of Payment. The Committeemay in its discretion permit a Participantto defer the receipt of payment of cash ordelivery of shares of Common Stock thatwould otherwise be due to the Participantby virtue of the exercise of a right or thesatisfaction of vesting or other conditionswith respect to an Award. If any suchdeferral is to be permitted by the Commit-tee, the Committee shall establish rulesand procedures relating to such deferral ina manner intended to comply with therequirements of Section 409A of the Code,including, without limitation, the time whenan election to defer may be made, the timeperiod of the deferral and the events thatwould result in payment of the deferredamount, the interest or other earnings

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attributable to the deferral and the methodof funding, if any, attributable to thedeferred amount.

13.5 Employment or Service. Nothing in thePlan, in the grant of any Award or in anyAward Agreement shall confer upon anyEligible Person or any Participant any rightto continue in the Service of the Companyor any of its Affiliates, or interfere in anyway with the right of the Company or anyof its Affiliates to terminate the employ-ment or other service relationship of anEligible employee or a Participant for anyreason at any time.

13.6 Rights as Shareholder. A Participantshall have no rights as a holder of sharesof Common Stock with respect to anyunissued securities covered by an Awarduntil the date the Participant becomes theholder of record of such securities. Exceptas provided in Section 4.3 hereof, noadjustment or other provision shall bemade for dividends or other shareholderrights, except to the extent that the AwardAgreement provides for dividend pay-ments or dividend equivalent rights. TheCommittee may determine in its discretionthe manner of delivery of Common Stockto be issued under the Plan, which may beby delivery of stock certificates, electronicaccount entry into new or existingaccounts or any other means as theCommittee, in its discretion, deemsappropriate. The Committee may requirethat any stock certificates that may beissued be held in escrow by the Companyfor any shares of Common Stock or causethe shares to be legended in order tocomply with the securities laws or otherapplicable restrictions, or should theshares of Common Stock be representedby book or electronic account entry ratherthan a certificate, the Committee may takesuch steps to restrict transfer of theshares of Common Stock as the Commit-tee considers necessary or advisable.

13.7 Securities Laws. No shares of Com-mon Stock will be issued or transferredpursuant to an Award unless and until allthen applicable requirements imposed byFederal and state securities and otherlaws, rules and regulations and by anyregulatory agencies having jurisdiction,and by the Applicable Exchange, have

been fully met. As a condition precedentto the issuance of shares pursuant to thegrant or exercise of an Award, the Com-pany may require the Participant to takeany reasonable action to meet suchrequirements. The Committee may imposesuch conditions on any shares of CommonStock issuable under the Plan as it maydeem advisable, including, without limi-tation, restrictions under the Securities Actof 1933, as amended, under the require-ments of any exchange upon which suchshares of the same class are then listed,and under any blue sky or other securitieslaws applicable to such shares. TheCommittee may also require the Partic-ipant to represent and warrant at the timeof issuance or transfer that the shares ofCommon Stock are being acquired onlyfor investment purposes and without anycurrent intention to sell or distribute suchshares.

13.8 Tax Withholding. The Participant shallbe responsible for payment of any taxes orsimilar charges required by law to be paidor withheld from an Award or an amountpaid in satisfaction of an Award. Anyrequired withholdings shall be paid by theParticipant on or prior to the payment orother event that results in taxable incomein respect of an Award. The AwardAgreement may specify the manner inwhich the withholding obligation shall besatisfied with respect to the particular typeof Award.

13.9 Unfunded Plan. The adoption of thePlan and any reservation of shares ofCommon Stock or cash amounts by theCompany to discharge its obligationshereunder shall not be deemed to create atrust or other funded arrangement. Exceptupon the issuance of Common Stockpursuant to an Award, any rights of a Par-ticipant under the Plan shall be those of ageneral unsecured creditor of the Com-pany, and neither a Participant nor theParticipant’s permitted transferees orestate shall have any other interest in anyassets of the Company by virtue of thePlan. Notwithstanding the foregoing, theCompany shall have the right to implementor set aside funds in a grantor trust, sub-ject to the claims of the Company’s cred-itors or otherwise, to discharge itsobligations under the Plan.

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13.10 Other Compensation and BenefitPlans. The adoption of the Plan shall notaffect any other share incentive or othercompensation plans in effect for theCompany or any Affiliate, nor shall thePlan preclude the Company fromestablishing any other forms of shareincentive or other compensation or benefitprogram for employees of the Company orany Affiliate. The amount of anycompensation deemed to be received by aParticipant pursuant to an Award shall notconstitute includable compensation forpurposes of determining the amount ofbenefits to which a Participant is entitledunder any other compensation or benefitplan or program of the Company or anAffiliate, including, without limitation,under any pension or severance benefitsplan, except to the extent specificallyprovided by the terms of any such plan.

13.11 Plan Binding on Transferees. ThePlan shall be binding upon the Company,its transferees and assigns, and the Participant, the Participant’s executor, admin-istrator and permitted transferees andbeneficiaries.

13.12 Severability. If any provision of thePlan or any Award Agreement shall bedetermined to be illegal or unenforceableby any court of law in any jurisdiction, theremaining provisions hereof and thereofshall be severable and enforceable inaccordance with their terms, and all provi-sions shall remain enforceable in any otherjurisdiction.

13.13 Foreign Jurisdictions. The Committeemay adopt, amend and terminate sucharrangements and grant such Awards, notinconsistent with the intent of the Plan, asit may deem necessary or desirable tocomply with any tax, securities, regulatoryor other laws of other jurisdictions withrespect to Awards that may be subject tosuch laws. The terms and conditions ofsuch Awards may vary from the terms andconditions that would otherwise berequired by the Plan solely to the extentthe Committee deems necessary for suchpurpose. Moreover, the Board mayapprove such supplements to or amend-ments, restatements or alternative ver-sions of the Plan, not inconsistent with theintent of the Plan, as it may consider

necessary or appropriate for such pur-poses, without thereby affecting the termsof the Plan as in effect for any other pur-pose.

13.14 Substitute Awards in Corporate Trans-actions. Nothing contained in the Plan shallbe construed to limit the right of theCommittee to grant Awards under the Planin connection with the acquisition,whether by purchase, merger, con-solidation or other corporate transaction,of the business or assets of any corpo-ration or other entity. Without limiting theforegoing, the Committee may grantAwards under the Plan to an employee ordirector of another corporation whobecomes an Eligible Person by reason ofany such corporate transaction in sub-stitution for awards previously granted bysuch corporation or entity to such person.The terms and conditions of the substituteAwards may vary from the terms andconditions that would otherwise berequired by the Plan solely to the extentthe Committee deems necessary for suchpurpose.

13.15 Coordination with 2002 ExecutivePerformance Plan. For purposes ofRestricted Stock Awards, Stock UnitAwards and Stock Awards granted underthe Plan that are intended to qualify as“performance-based” compensationunder Section 162(m) of the Code, suchAwards shall be granted in accordancewith the provisions of the Company’s 2002Executive Performance Plan (or any suc-cessor plan) to the extent necessary tosatisfy the requirements of Section 162(m)of the Code.

13.16 Section 409A Compliance. To theextent applicable, it is intended that thePlan and all Awards hereunder complywith the requirements of Section 409A ofthe Code, and the Plan and all AwardAgreements shall be interpreted andapplied by the Committee in a mannerconsistent with this intent in order to avoidthe imposition of any additional tax underSection 409A of the Code. In the eventthat any provision of the Plan or an AwardAgreement is determined by the Commit-tee to not comply with the applicablerequirements of Section 409A of the Code,the Committee shall have the authority to

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take such actions and to make suchchanges to the Plan or an Award Agree-ment as the Committee deems necessaryto comply with such requirements, pro-vided that no such action shall adverselyaffect any outstanding Award without theconsent of the affected Participant. Not-withstanding the foregoing or anythingelsewhere in the Plan or an Award Agree-ment to the contrary: (a) unless the Com-mittee shall otherwise expressly provide,the term “disability” shall have the mean-ing given to such term under Section 409Aand the regulations and guidance issuedthereunder with respect to any Awards(other than Stock Options), and (b) if aParticipant is a “specified employee” asdefined in Section 409A of the Code at thetime of termination of Service with respectto an Award, then solely to the extentnecessary to avoid the imposition of anyadditional tax under Section 409A of theCode, the commencement of any pay-ments or benefits under the Award shallbe deferred until the date that is sixmonths following the Participant’s termi-nation of Service (or such other period asrequired to comply with Section 409A).

13.17 Governing Law. The Plan and allrights hereunder shall be subject to andinterpreted in accordance with the laws ofthe State of Delaware, without reference tothe principles of conflicts of laws, and toapplicable Federal securities laws.

14. Effective Date; Amendment andTermination.

14.1 Effective Date. The Plan shall becomeeffective immediately following its appro-val by the shareholders of the Company.

14.2 Amendment. The Board may at anytime and from time to time and in anyrespect, amend or modify the Plan. TheBoard may seek the approval of anyamendment or modification by theCompany’s shareholders to the extent itdeems necessary or advisable in its dis-cretion, including for purposes of com-pliance with Section 162(m) or Section 422of the Code or the listing or governancerequirements of the Applicable Exchange.No amendment or modification of the Planshall adversely affect any Award there-

tofore granted without the consent of theParticipant or the permitted transferee ofthe Award.

14.3 Termination. The Plan shall terminateon the tenth anniversary of the date thePlan is approved by the Board. The Boardmay, in its discretion and at any earlierdate, terminate the Plan. Notwithstandingthe foregoing, no termination of the Planshall adversely affect any Award there-tofore granted without the consent of theParticipant or the permitted transferee ofthe Award.

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January 28, 2011 Dear Fellow Shareholder, · 2019-09-29 · January 28, 2011 Dear Fellow Shareholder, I am pleased to invite you to our 2011 Annual Meeting of shareholders, which

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