This Is Not Michael Eisner's Pay Stub...
By Reporter Associate Elizabeth Smith

(FORTUNE Magazine) – But it's a close approximation based on publicly available data, and it offers a hint of the frisson that comes from gazing at a pay document bearing seven-figure amounts. We chose what will probably be Eisner's best week of the year, since it includes his 1997 bonus of $9.9 million.

Eisner's standard-issue weekly check doesn't reveal the real deal, the mountain of stock options that may make him the highest-paid hired hand in history. Few begrudge the chairman and CEO of Walt Disney Co. his $229 million gained from exercising options in 1987 and 1992. After all, he took loads of them in lieu of a high salary, betting that he could sprinkle fairy dust on the Magic Kingdom. And he succeeded. Between his 1984 arrival and last month, the company's share price mightily outperformed the S&P 500, and the wealth of Disney shareholders increased more than $80 billion.

Now Eisner has notched another huge gain, $551.6 million pretax, from options exercised last December; options worth about $68 million will vest later this year. The contract he signed in 1997 grants him a further eight million option shares if he hits easy price targets. It may take a massive injection of risk, or still more of the qualities of pride and enterprise he's shown over the years that are independent of pay, to motivate this billion-dollar baby.

WHAT HE TAKES HOME

$14 423 76 REGULAR EARNINGS Eisner's annual salary hasn't gone up since he became CEO on Oct. 1, 1984. He gets paid weekly.

$9 900 000 00 ANNUAL BONUS PAYMENT Disney's executive performance subcommittee awarded Eisner a $9.9 million cash bonus for 1997 based on Disney's net income. But the proxy statement doesn't explain the relationship between the size of the bonus and income growth. Beginning Oct. 1, to be eligible for a bonus, Eisner must increase Disney's earnings per share at a compound annual rate of better than 7.5%.

$3 730 233 21 FEDERAL INCOME TAX Most of Eisner's income--no surprise--is taxed at the top rate of 39.6%. (The figure given doesn't reflect any deductions or exemptions Eisner may be taking.)

$918 817 51 STATE TAXES All except the first $65,832 of income is taxed at 9.3%, California's top rate.

$143 759 14 MEDICARE TAX This grabs 1.45% of Eisner's gross pay.

$4 240 80 SOCIAL SECURITY Contributions stop when 6.2% of the first $68,400 has been paid, so by mid-January he's paid up for the year.

WHAT REALLY MAKES HIM RICH

Unexercised options: $645.5 million estimated value

NUMBER STRIKE OF SHARES PRICE GRANTED VESTS EXPIRES EST. VALUE

500,000 $17.14 1989 1998 1999 $51.1 million 166,664 $19.64 1989 1998 1999 $16.6 million 5 million $63.31 1996 2003 2008 $382.0 million 1 million $79.14 1996 2004 2011 $73.0 million 1 million $94.97 1996 2005 2011 $66.9 million 1 million $126.62 1996 2006 2011 $55.9 million

Exercised options: $780.2 million realized value

NUMBER PRETAX EXERCISED OF SHARES GAIN REALIZED

1987 684,000 $31.1 million 1992 5.4 million $197.5 million 1997 7.3 million $551.6 million

OPTIONS' TOTAL VALUE

(exercised and unexercised) $1.43 billion

Estimates based on Black-Scholes options-pricing model.

REPORTER ASSOCIATE Elizabeth Smith