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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

 

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January 13, 2017

Dear Fellow Shareholder,

I am pleased to invite you to our 2017 Annual Meeting of shareholders, which will be held on Wednesday, March 8, 2017, at 10 a.m. at the Bellco Theatre at the Colorado Convention Center in Denver, Colorado.

At the meeting, we will be electing 11 members of our Board of Directors. We will also be considering ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accountants, an advisory vote to approve executive compensation, an advisory vote on the frequency of votes on executive compensation and two shareholder proposals.

You may vote your shares using the Internet or the telephone by following the instructions on page 66 of the proxy statement. Of course, you may also vote by returning a proxy card or voting 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 obtain an admission ticket in advance. You can obtain a ticket by following the instructions on page 67 of the proxy statement. If you cannot attend the meeting, you can still listen to the meeting, which will be webcast and available on our Investor Relations website.

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

Sincerely,

Robert A. Iger
Chairman and Chief Executive Officer

   

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​  The Walt Disney Company   Notice of 2017 Annual Meeting

The 2017 Annual Meeting of shareholders of The Walt Disney Company will be held:

Wednesday, March 8, 2017
10:00 a.m. Local Time
Bellco Theatre at the Colorado Convention Center
700 14^th Street
Denver, Colorado 80202

The items of business are:

1.

Election of the eleven nominees named in the proxy statement as Directors, each for a term of one year.

2.

Ratification of the appointment of PricewaterhouseCoopers LLP as the Company's independent registered public accountants for fiscal 2017.

3.

Consideration of an advisory vote to approve executive compensation.

4.

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

5.

Consideration of up to two shareholder proposals, if presented.

Shareholders of record of Disney common stock (NYSE: DIS) at the close of business on January 9, 2017, are entitled to vote at the meeting and any postponements or adjournments of the meeting. A list of these shareholders is available at the offices of the Company in Burbank, California.

January 13, 2017
Burbank, California

Alan N. Braverman
Senior Executive Vice President,
General Counsel and Secretary

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be Held on March 8, 2017

The proxy statement and annual report to shareholders and the means to vote by Internet are available at www.ProxyVote.com.

Your Vote is Important

Please vote as promptly as possible by using the Internet or telephone or by signing, dating and returning the Proxy Card mailed to those who receive paper copies of this proxy statement.

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The Walt Disney Company Notice of 2017 Annual Meeting and Proxy Statement

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​  Proxy Summary

Proposals to be Voted On

The following proposals will be voted on at the Annual Meeting of shareholders.

You may cast your vote in any of the following ways:

Attendance at the Meeting

   

Proxy Summary

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​  Proxy Summary

This summary provides highlights of certain information in this proxy statement. As it is only a summary, please review the complete proxy statement and 2016 annual report before you vote.

In fiscal 2016, the Company continued to deliver consistent strong growth in our key financial metrics. This growth was driven in part by the record-breaking performance of the relaunched Star Wars franchise, but also reflected continued strength across all our operating businesses.

This sustained strong performance has resulted in compounded annual growth rates (CAGR) between fiscal 2014 and fiscal 2016 of 16% in diluted earnings per share (EPS), 12% in net income, 10% in segment operating income, and 7% in revenue.

Growth Rates



*

For a reconciliation of segment operating income to net income, see Annex A.

   
    

Operating income increased dramatically in the Studio Segment, reflecting the extraordinarily successful relaunch of the Star Wars franchise along with continued strength of the rest of the slate. The Parks and Resorts segment saw continued strong growth, with more modest growth in the Consumer Products & Interactive Media segment. Results in the Media Networks Segment were comparable to fiscal 2015 as year-over-year comparisons were impacted by the benefit of an additional week of operating income in the prior year due to our fiscal calendar.

Change in Operating Income by Segment

  

Consistent strong financial performance has helped drive strong total shareholder return (TSR) over the last three-, five-, and ten-year periods relative to the S&P 500. Disney's one-year TSR lagged the S&P 500 in fiscal 2016 after outperforming the S&P 500 by 143 percentage points over the previous five years.

1-, 3-, 5- and 10-Year TSR, DIS vs. S&P 500

We also significantly outperformed our Media Industry Peers (used for benchmarking purposes as described on page 19) for the three-, five-, and ten-year periods.

  
    

1-, 3-, 5- and 10-Year TSR, DIS vs. Media Industry Peers

*

Market cap-weighted TSR for The Walt Disney Company, CBS, Twenty-First Century Fox, Time Warner, Viacom, and Comcast

This outperformance is even greater if Disney itself is excluded from the Media Industry Peers, as the TSR for the other companies was 16%, 163% and 139% for the three-, five-, and ten-year periods.

We summarize the Compensation Committee's compensation philosophy and address Mr. Iger's fiscal 2016 compensation below. We provide a more detailed explanation of our compensation program, Mr. Iger's compensation and the compensation of other named executive officers in the Compensation Discussion and Analysis beginning on page 19.

The Compensation Committee firmly believes in pay-for-performance. Over 90% of Mr. Iger's target annual total direct compensation depends on the Company's financial results and the performance of Disney stock.

Base salary is the only fixed element of Mr. Iger's annual compensation. Substantially all other annual compensation breaks into the following performance-based categories:

•

A performance-based annual cash bonus opportunity that is:

(a)

70% dependent on achievement of performance against four financial measures (segment operating income, adjusted EPS, after-tax free cash flow, and return on invested capital), all of which the Compensation Committee believes drive long-term shareholder value creation; and

(b)

30% dependent on the Compensation Committee's assessment of individual contributions toward achievement of qualitative goals tied to the Company's strategic priorities.

•

An annual equity award, which for the Chief Executive Officer is comprised of 50% options and 50% performance-based units. The realized option value depends on the performance of Disney stock and the realized performance-unit value depends on three-year achievement of relative TSR and EPS performance.

   
    

Over the course of his tenure as Chief Executive Officer, Mr. Iger has driven spectacular financial performance and created significant shareholder value, with Disney's market capitalization increasing 223% from $45.8 billion when Mr. Iger became Chief Executive Officer in October 2005 to $147.8 billion at the end of fiscal 2016. Since fiscal 2005, Disney has achieved exceptional financial performance highlighted by:

•

13% compounded annual growth in income from continuing operations attributable to Disney

•

15% compounded annual growth in diluted EPS

•

350% increase in total shareholder return, illustrating significant outperformance relative to the S&P 500 and Media Industry Peers, whose total returns increased 123% and 187% respectively, over this period

   
    

Income from Continuing Operations Attributable to Disney



Diluted EPS (Reported)



TSR from Sept. 30, 2005 — Sept. 30, 2016



*

Market cap-weighted TSR for The Walt Disney Company, CBS, Twenty-First Century Fox, Time Warner, Viacom, and Comcast

   
    

Against the backdrop of this track record of consistent strong performance, the Compensation Committee made the following decisions with respect to Mr. Iger's fiscal 2016 compensation.

Salary: The Compensation Committee left Mr. Iger's annual salary rate for fiscal 2016 unchanged, though the amount he received during the fiscal year decreased by a small amount because fiscal 2015 had 53 weeks whereas fiscal 2016 had 52 weeks.

Equity Awards: The Compensation Committee left the value of Mr. Iger's equity awards for fiscal 2016 approximately equal to the values in fiscal 2015, 2014, 2013 and 2012. Half of this equity award is in the form of performance-based stock units and half is in the form of stock options.

Non-Equity Incentive Plan Compensation: Mr. Iger's performance-based cash bonus of $20.0 million reflects performance against the four financial performance measures and qualitative goals as discussed below:

•

Financial Performance Measures:  The Compensation Committee sets aggressive performance ranges for the four financial performance measures that are used to determine 70% of each named executive officer's bonus award and which require overall growth in financial performance in order to maintain or exceed prior-year bonus levels.

In establishing these ranges for fiscal 2016, the Compensation Committee increased both the high and the low end of each range (by as much as 24% in the case of the high end of the EPS range) except for the after-tax free cash flow measure (which was relatively unchanged due to its broad range). Taken together, these ranges thus challenged management to continue achieving substantial growth in fiscal 2016 in order to maximize bonus opportunities.

The Company delivered strong financial performance against these financial measures:

o

Segment operating income grew 7% on top of 13% growth in fiscal 2015 and 21% growth in fiscal 2014.

o

Adjusted EPS grew 11% on top of 19% growth in fiscal 2015 and 27% growth in fiscal 2014.

o

Return on invested capital grew 60 basis points to 14.0% after growing 130 basis points in fiscal 2015.

o

After-tax free cash flow grew 16% to $10.3 billion, compared with growth of 17% in fiscal 2015 and growth of 1% in fiscal 2014.

   
    

This strong performance resulted in performance factors that ranged from 141% to 165% across the four measures. The weighted average of the four financial performance factors was 152%.



Reconciliations of segment operating income and adjusted EPS are set forth in Annex A. Return on invested capital and after-tax free cash flow are calculated as set forth on page 29.

   
    

•

Other Performance Factor:  In setting the other performance factor for Mr. Iger, the Compensation Committee considered Mr. Iger's outstanding leadership in accomplishing two key strategic objectives that are expected to contribute significantly to future growth: the exceptional success of the Company's relaunch of the Star Wars franchise and the historic and successful opening of Shanghai Disney Resort. In addition, the Compensation Committee considered Mr. Iger's continued strategic leadership of the Company in advancing synergies and creative successes across the entire Company, sustaining strong financial performance and positioning the Company for robust long-term growth. Key accomplishments demonstrating this leadership included overall record-breaking Studio performance, positioning the Company to respond to and capitalize on changing patterns of media consumption enabled by technology through delivery of programming on emerging platforms, and continued emphasis on diversity. In addition, the Company was recognized by Fortune as one of the world's most admired companies and continued to achieve the highest ranking among media and entertainment companies in several independent studies. Taking all this into account, the Compensation Committee applied a factor of 202% to Mr. Iger's qualitative performance in fiscal 2016 versus 186% in fiscal 2015.

Despite continued strong growth and record performance, and Mr. Iger's outstanding leadership and successful execution of two key long-term strategic priorities, Mr. Iger's bonus declined $2.3 million compared to fiscal 2015, because Company growth for fiscal 2016 was not quite as strong as the Company's growth in fiscal 2015, and the performance ranges set by the Compensation Committee required greater overall growth in fiscal 2016 to maximize bonus opportunities. The following chart shows how changes in Mr. Iger's bonus were driven by performance against the Compensation Committee's performance goals (reflected in the weighted average of the financial and other performance factors multiplied by the target bonus) over the last three years.

  
    

The rigor of the program and pay for performance alignment is further demonstrated in a comparison of the Company's performance and Mr. Iger's compensation over the last three years. As shown below, the Company's adjusted EPS grew at a compound annual growth rate of 15% from fiscal 2014 to fiscal 2016 and operating income grew at a compound annual growth rate of 10% over the period. Despite this strong growth, Mr. Iger's incentive bonus award decreased 6% and his total compensation decreased 3% on a compounded basis over this period.

Additional details on our compensation program and fiscal 2016 compensation can be found in the Executive Compensation section of this proxy statement beginning on page 19.

The Board recommends that shareholders approve the continued annual advisory vote on executive compensation. Regulations permit these votes to be held either every one, two or three years, but an annual vote is normal at most companies, and the Board believes that the annual vote continues to be appropriate at Disney as well.

In this year's proxy statement, you will find two shareholder proposals, one seeking additional disclosure regarding lobbying expenses and one requesting changes to our proxy access bylaw.

•

Lobbying Disclosure:  The proposal requests the Company to provide additional disclosure regarding its political activities, including information regarding its lobbying activities. The Company already provides substantial disclosure regarding our political activities, and the additional requested disclosure would exceed that provided by many other companies, putting the Company at a disadvantage without providing meaningful new information to shareholders. The Board therefore recommends that you vote against this proposal.

•

Proxy Access Amendments:  The proposal requests three changes to our proxy access bylaw: increasing the maximum number of directors that can be nominated to 25% of the Board; removing the limit on the number of shareholders that can be aggregated to reach the 3% threshold for submitting nominees; and removing the limitation on repeat nominations of candidates who receive less than a 25% favorable vote. The Board believes that these changes, which are outside the mainstream of current proxy access bylaws, are unnecessary and would disrupt the balanced approach reflected in our current bylaws (including the recent amendment setting the maximum number of nominees at the greater of two persons and 20% of the Board), and therefore recommends that you vote against this proposal.

You can read our detailed positions on these proposals on pages 61 to 65.

The Board of Directors has adopted Corporate Governance Guidelines, which set forth a flexible framework within which the Board, assisted by its Committees, directs the affairs of the Company. The Guidelines address, among other things, the composition and functions of the Board of Directors, director independence, stock ownership by and compensation of Directors, management succession and review, Board leadership, Board Committees and selection of new Directors.

The Company has Standards of Business Conduct, which are applicable to all employees of the Company, including the principal executive officer, the principal financial officer and the principal accounting officer. The Board has a separate Code of Business Conduct and Ethics for Directors, which contains provisions specifically applicable to Directors.

Each Committee on the Board of Directors is governed by a charter adopted by the Board of Directors.

The Corporate Governance Guidelines, the Standards of Business Conduct, the Code of Business Conduct and Ethics for Directors and each of the Committee charters are available on the Company's Investor Relations website under the "Corporate Governance" heading at www.disney.com/investors and in print to any shareholder who requests them from the Company's Secretary. If the Company amends or waives the Code of Business Conduct and Ethics for Directors or the Standards of Business Conduct with respect to the principal executive officer, principal financial officer or principal accounting officer, it will post the amendment or waiver at the same location on its website.

The current members of the Board of Directors are:

The Board met ten times during fiscal 2016. Each current Director attended at least 75% of all of the meetings of the Board and Committees on which he or she served that occurred while he or she served on the Board or the Committees. All current directors attended the Company's 2016 annual shareholders meeting. Under the Company's Corporate Governance Guidelines, each Director is expected to dedicate sufficient time, energy and attention to ensure the diligent performance of his or her duties, including by attending annual and special meetings of the shareholders of the Company, and meetings of the Board and Committees of which he or she is a member.

The Company's Corporate Governance Guidelines specify that the Chairman of the Board shall in the normal course be an independent Director, unless the Board determines that, in light of the circumstances then present when any such decision is made, a different structure would better serve the best interests of the shareholders. The Guidelines also provide that the Board will disclose in each proxy statement the reasons for a different arrangement and appoint an independent Director as Lead Director with duties and responsibilities detailed in the Corporate Governance Guidelines.

Mr. Iger has served as Chairman since March of 2012, when he assumed that position upon the retirement of John Pepper who had previously served as Chairman. In making Mr. Iger Chairman, the Board determined that doing so would promote a number of important objectives: it would add a substantial strategic perspective to the Chair position and put in place an effective plan for the future transition of leadership while at the same time providing important continuity to Board leadership. In making these judgments, the Board took into account its evaluation of Mr. Iger's performance as

Chief Executive Officer and President, his very positive relationships with the other members of the Board of Directors and the strategic vision and perspective he would bring to the position of Chairman. The Board was uniformly of the view that Mr. Iger would provide excellent leadership of the Board in the performance of its duties and that naming him as Chairman would serve the best interests of shareholders.

Mr. Iger's employment agreement provides that he will serve as Chief Executive Officer and Chairman through the end of its term. Each year, the independent members of the Board determine whether to elect Mr. Iger Chairman in accordance with the employment agreement. In doing so, the Board considers whether Mr. Iger's continuing to serve as both Chairman and Chief Executive Officer would be in the best interests of shareholders. Based on the demonstrated success of this structure to date, both in terms of the functioning of the Board and the growth of the Company, and the continued benefits of retaining Mr. Iger's strategic perspective in the position of Chairman, the Board has concluded that Mr. Iger's continuing service as Chairman remains in the best interests of shareholders and that, absent an unexpected change in circumstances, he should continue to serve in the role through the term of his agreement.

At the time Mr. Iger became Chairman, the Board unanimously elected Orin Smith as independent Lead Director. The duties of the independent Lead Director were expanded in connection with the appointment of Mr. Iger as Chairman, and were further expanded in 2013 based on feedback from investors regarding Lead Director duties. The duties of the Lead Director are as follows:

•

Preside at all meetings of the Board of Directors at which the Chairman is not present, including

executive sessions of non-management or independent Directors;

•

Call meetings of the independent or non-management Directors;

•

Serve as liaison between the Chairman and the independent and non-management Directors;

•

Advise as to the scope, quality, quantity and timeliness of information sent to the Board of Directors;

•

In collaboration with the Chief Executive Officer and Chairman, and with input from other members of the Board, develop and have final authority to approve meeting agendas for the Board of Directors, including assurance that there is sufficient time for discussion of all agenda items;

•

Organize and lead the Board's annual evaluation of the Chief Executive Officer;

•

Be responsible for leading the Board's annual self-assessment;

•

Be available for consultation and direct communication upon the reasonable request of major shareholders;

•

Advise Committee Chairs with respect to agendas and information needs relating to Committee meetings;

•

Provide advice with respect to the selection of Committee Chairs; and

•

Perform such other duties as the Board may from time to time delegate to assist the Board in the fulfillment of its responsibilities.

At the unanimous request of the Board, Mr. Smith, who has reached the Board's retirement age, has agreed to be renominated for re-election to the Board and to serve as a Director and independent Lead Director to provide continuity of leadership in light of the Board's ongoing CEO succession process.

The Board of Directors has four standing committees: Audit, Governance and Nominating, Compensation and

Executive. Information regarding these committees is provided below.

As noted in the Company's Corporate Governance Guidelines, the Board, acting directly or through Committees, is responsible for "assessing major risk factors relating to the Company and its performance" and "reviewing measures to address and mitigate such risks." In discharging this responsibility, the Board, either directly or through Committees, assesses both (a) risks that relate to the key economic and market assumptions that inform the Company's business plans and growth strategies and (b) significant operational

risks related to the conduct of the Company's day-to-day operations.

Risks relating to the market and economic assumptions that inform the Company's business plans and growth strategies are specifically addressed with respect to each business unit in connection with the Board's annual review of the Company's five-year plan. The Board also has the opportunity to address such risks at each Board

meeting in connection with its regular review of significant business and financial developments. The Board reviews risks arising out of specific significant transactions when these transactions are presented to the Board for review or approval.

Significant operational risks that relate to on-going business operations are the subject of regularly scheduled reports to either the full Board or one of its committees. The Board acting through the Audit Committee periodically reviews whether these reports appropriately cover the significant risks that the Company may then be facing.

Each of the Board's committees addresses risks that fall within the committee's areas of responsibility. For example, the Audit Committee periodically reviews the audit plan of the internal audit department, the international labor standards compliance program, the Company's information technology risks and mitigation strategies, the tax function, treasury operations (including insurance) and the Company's standards of

business conduct compliance program. In addition, the Audit Committee receives regular reports from: corporate controllership and the outside auditor on financial reporting matters; the internal audit department about significant findings; and the general counsel regarding legal and regulatory risks. The Audit Committee reserves time at each meeting for private sessions with the chief financial officer, general counsel, head of the internal audit department and outside auditors. The Compensation Committee addresses risks arising out of the Company's executive compensation programs as described at pages 24 to 25, below.

The independent Lead Director promotes effective communication and consideration of matters presenting significant risks to the Company through his role in developing the Board's meeting agendas, advising committee chairs, chairing meetings of the independent Directors and facilitating communications between independent Directors and the Chief Executive Officer.

Working closely with the full Board, the Governance and Nominating Committee develops criteria for open Board positions. In developing these criteria, the Committee takes into account a variety of factors, which may include: the current composition of the Board and expected retirements from the Board; the range of talents, experiences and skills that would best complement those already represented on the Board; the balance of management and independent Directors; and the need for financial or other specialized expertise. Applying these criteria, the Committee considers candidates for Board membership suggested by Committee members, other Board members, management, and shareholders. The Committee retains a third-party executive search firm to identify and review candidates upon request of the Committee from time to time.

Once the Committee has identified a prospective nominee — including prospective nominees recommended by shareholders — it makes an initial determination as to whether to conduct a full evaluation. In making this determination, the Committee takes into account the information provided to the Committee with the recommendation of the candidate, as well as the Committee's own knowledge and information obtained through inquiries to third parties to the extent the Committee deems appropriate. The preliminary determination is based primarily on the need for additional Board members and the likelihood that the prospective nominee can satisfy the criteria that the

Committee has established. If the Committee determines, in consultation with the Chairman of the Board and other Directors as appropriate, that additional consideration is warranted, it may request the third-party search firm to gather additional information about the prospective nominee's background and experience and to report its findings to the Committee. The Committee then evaluates the prospective nominee against the specific criteria that it has established for the position, as well as the standards and qualifications set out in the Company's Corporate Governance Guidelines, including:

•

the ability of the prospective nominee to represent the interests of the shareholders of the Company;

•

the prospective nominee's standards of integrity, commitment and independence of thought and judgment;

•

the prospective nominee's ability to dedicate sufficient time, energy and attention to the diligent performance of his or her duties, including the prospective nominee's service on other public company boards, as specifically set out in the Company's Corporate Governance Guidelines;

•

the extent to which the prospective nominee contributes to the range of talent, skill and expertise appropriate for the Board;

•

the extent to which the prospective nominee helps the Board reflect the diversity of the Company's shareholders, employees, customers and guests and the communities in which it operates; and

•

the willingness of the prospective nominee to meet the minimum equity interest holding guideline set out in the Company's Corporate Governance Guidelines.

If the Committee decides, on the basis of its preliminary review, to proceed with further consideration, members of the Committee, as well as other members of the Board as appropriate, interview the nominee. After completing this evaluation and interview, the Committee makes a recommendation to the full Board, which makes the final determination whether to nominate or appoint the new Director after considering the Committee's report.

In selecting nominees for Director, the Board seeks to achieve a mix of members who together bring experience and personal backgrounds relevant to the Company's strategic priorities and the scope and complexity of the Company's business. In light of the Company's current priorities, the Board seeks experience relevant to managing branded franchises, the creation of high-quality branded entertainment products and services, addressing the impact of rapidly changing technology and the management of a multi-national business. The Board also seeks experience in large, diversified enterprises and demonstrated ability to

manage complex issues that involve a balance of risk and reward and seeks Directors who have expertise in specific areas such as consumer and cultural trends, business innovation, growth strategies and financial oversight. The background information on current nominees beginning on page 55 sets out how each of the current nominees contributes to the mix of experience and qualifications the Board seeks.

In making its recommendations with respect to the nomination for re-election of existing Directors at the annual shareholders meeting, the Committee assesses the composition of the Board at the time and considers the extent to which the Board continues to reflect the criteria set forth above.

A shareholder who wishes to recommend a prospective nominee for the Board should notify the Company's Secretary or any member of the Governance and Nominating Committee in writing with whatever supporting material the shareholder considers appropriate. The Governance and Nominating Committee will also consider whether to nominate any person nominated by a shareholder pursuant to the provisions of the Company's Bylaws relating to shareholder nominations as described in "Shareholder Communications" below.

The provisions of the Company's Corporate Governance Guidelines regarding Director independence meet and in some areas exceed the listing standards of the New York Stock Exchange. These provisions are included in the Company's Corporate Governance Guidelines, which are available on the Company's Investor Relations website under the "Corporate Governance" heading at www.disney.com/investors.

Pursuant to the Guidelines, the Board undertook its annual review of Director independence in November 2016. During this review, the Board considered transactions and relationships between the Company and its subsidiaries and affiliates on the one hand and, on the other hand, Directors, immediate family members of Directors, or entities of which a Director or an immediate family member is an executive officer, general partner or significant equity holder. The Board also considered whether there were any transactions or relationships between any of these persons or entities and any members of the Company's senior management or their affiliates. As provided in the Guidelines, the purpose of this review was to determine whether any such relationships or transactions existed that were inconsistent with a determination that the Director is independent.

As a result of this review, the Board affirmatively determined that all of the Directors serving in fiscal

2016 or nominated for election at the 2017 Annual Meeting are independent of the Company and its management under the standards set forth in the Corporate Governance Guidelines, with the exception of Mr. Iger and Mr. Parker. Mr. Iger is considered an inside Director because of his employment as a senior executive of the Company. Mr. Parker is not deemed independent under the definition of independence required by the New York Stock Exchange and included in the Company's Corporate Governance Guidelines because payments received by a company wholly-owned by his brother through the beginning of June of 2014 preclude Mr. Parker from being deemed independent for three years following that date.

In determining the independence of each Director, the Board considered and deemed immaterial to the Directors' independence transactions involving the sale of products and services in the ordinary course of business between the Company, on the one hand, and, on the other, companies or organizations at which some of our Directors or their immediate family members were officers or employees during fiscal 2016. In each case, the amount paid to or received from these companies or organizations in each of the last three years was below the 2% of total revenue threshold in the Guidelines. The Board determined that none of the relationships it considered impaired the independence of the Directors.

The Board of Directors has adopted a written policy for review of transactions involving more than $120,000 in any fiscal year in which the Company is a participant and in which any Director, executive officer, holder of more than 5% of our outstanding shares or any immediate family member of any of these persons has a direct or indirect material interest. Directors, 5% shareholders and executive officers are required to inform the Company of any such transaction promptly after they become aware of it, and the Company collects information from Directors and executive officers about their affiliations and affiliations of their family members so the Company can search its records for any such transactions. Transactions are presented to the Governance and Nominating Committee of the Board (or to the Chairman of the Committee if the Committee delegates this responsibility) for approval before they are entered into or, if this is not possible, for ratification after the transaction has been entered into. The Committee approves or ratifies a transaction if it determines that the transaction is consistent with the best interests of the Company, including whether the transaction impairs independence of a Director. The policy does not require review of the following transactions:

•

Employment of executive officers approved by the Compensation Committee;

•

Compensation of Directors approved by the Board;

•

Transactions in which all shareholders receive benefits proportional to their shareholdings;

•

Ordinary banking transactions identified in the policy;

•

Any transaction specifically contemplated by the Company's Restated Certificate of Incorporation or Bylaws, or any action approved by the Board where the interest of the Director, executive officer, 5% shareholder or family member is disclosed to the Board prior to such action;

•

Commercial transactions in the ordinary course of business with entities affiliated with Directors,

executive officers, 5% shareholders or their family members if the aggregate amount involved during a fiscal year is less than the greater of (a) $1,000,000 and (b) 2% of the Company's or other entity's gross revenues and the related person's interest in the transaction is based solely on his or her position with the entity;

•

Charitable contributions to entities where a Director is an executive officer of the entity if the amount is less than the lesser of $200,000 and 2% of the entity's annual contributions; and

•

Transactions with entities where the Director, executive officer, 5% shareholder or immediate family member's sole interest is as a non-executive officer employee of, volunteer with, or director or trustee of the entity.

Entities affiliated with Vanguard Group, Inc., an investment management firm, manage investment funds that in the aggregate beneficially held more than 5% of the Company's shares during fiscal 2016. Funds managed by affiliates of Vanguard are included as investment options in defined contribution plans offered to Disney employees, and Vanguard received fees of approximately $745,000 in fiscal 2016 based on the amounts participants elected to invest in funds managed by Vanguard. These relationships were in place before Vanguard reported beneficial ownership of more than 5% of the Company's outstanding shares, though the Company did make two additional funds managed by Vanguard available as investment options during fiscal 2016 after Vanguard reported greater than 5% ownership. The ongoing relationship was reviewed and approved by the Governance and Nominating Committee under the Related Person Transaction Approval Policy in June and November 2016, and the addition of the investment options was approved by the Committee before the Company made these options available to employees.

Generally. Shareholders may communicate with the Company through its Transfer Agent, Broadridge Corporate Issuer Solutions, by writing to Disney Shareholder Services, c/o Broadridge Corporate Issuer Solutions, P.O. Box 1342, Brentwood, NY 11717, by calling Disney Shareholder Services care of Broadridge at 1-855-553-4763, or by sending an e-mail to disneyshareholder@broadridge.com. Additional information about contacting the Company is available on the Disney Shareholder Services website

(www.disneyshareholder.com) under the "Contact Us" tab.

Shareholders and other persons interested in communicating directly with the independent Lead Director or with the non-management Directors as a group may do so by writing to the independent Lead Director, The Walt Disney Company, 500 South Buena Vista Street, Burbank, California 91521-1030. Under a process approved by the Governance and Nominating

Committee of the Board for handling letters received by the Company and addressed to non-management members of the Board, the office of the Secretary of the Company reviews all such correspondence and forwards to Board members a summary and/or copies of any such correspondence that, in the opinion of the Secretary, deals with the functions of the Board or Committees thereof or that he otherwise determines requires their attention. The Governance and Nominating Committee reviews summaries of all correspondence from identified shareholders at each regular meeting of the Committee. Directors may at any time review a log of all correspondence received by the Company that is addressed to members of the Board and request copies of any such correspondence.

Concerns relating to accounting, internal controls or auditing matters are immediately brought to the attention of the Company's internal audit department and handled in accordance with procedures established by the Audit Committee with respect to such matters.

Shareholder Proposals for Inclusion in 2018 Proxy Statement. To be eligible for inclusion in the proxy statement for our 2018 Annual Meeting, shareholder proposals must be received by the Company's Secretary no later than the close of business on September 15, 2017. Proposals should be sent to the Secretary, The Walt Disney Company, 500 South Buena Vista Street, Burbank, California 91521-1030 and follow the procedures required by SEC Rule 14a-8.

Shareholder Director Nominations for Inclusion in 2018 Proxy Statement. Under our Bylaws, written notice of shareholder nominations to the Board of Directors that

are to be included in the proxy statement pursuant to the proxy access provisions in Article II, Section 11 of our Bylaws must be delivered to the Company's Secretary not later than 120 nor earlier than 150 days prior to the first anniversary of the preceding year's annual meeting. Accordingly any eligible shareholder who wishes to have a nomination considered at the 2018 Annual Meeting and included in the Company's proxy statement must deliver a written notice (containing the information specified in our bylaws regarding the shareholder and the proposed nominee) to the Company's Secretary between October 9, 2017 and November 8, 2017.

Shareholder Director Nomination and Other Shareholder Proposals for Presentation at the 2018 Annual Meeting Not Included in 2018 Proxy Statement. Under our Bylaws, written notice of shareholder nominations to the Board of Directors or any other business proposed by a shareholder that is not to be included in the proxy statement must be delivered to the Company's Secretary not later than 90 nor earlier than 120 days prior to the first anniversary of the preceding year's annual meeting. Accordingly, any shareholder who wishes to have a nomination or other business considered at the 2018 Annual Meeting but not included in the Company's proxy statement must deliver a written notice (containing the information specified in our bylaws regarding the shareholder and the proposed action) to the Company's Secretary between November 8, 2017 and December 8, 2017. SEC rules permit management to vote proxies in its discretion with respect to such matters if we advise shareholders how management intends to vote.

The elements of annual Director compensation for fiscal 2016 were as follows.

1

Per committee.

2

This is in addition to the annual committee retainer the Director receives for serving on the committee.

3

This is in addition to the annual Board retainer, committee fees and the annual deferred stock unit grant.

Effective October 1, 2016, the annual board retainer was increased to $110,000, the annual committee chair retainer for the Audit Committee was increased to $25,000, and the annual deferred stock unit grant was increased to $185,000.

To encourage Directors to experience the Company's products, services and entertainment offerings personally, each non-employee Director may receive Company products and services up to a maximum of $15,000 in fair market value per calendar year plus reimbursement of associated tax liabilities. Director's spouses, children and grandchildren may also participate in this benefit within each Director's $15,000 limit.

The Company reimburses Directors for the travel expenses of, or provides transportation on Company aircraft for, immediate family members of Directors if the family members are specifically invited to attend events for appropriate business purposes. Family members (including domestic partners) may accompany Directors traveling on Company aircraft for business purposes on a space-available basis.

Directors participate in the Company's employee gift matching program on the same terms as senior executives. Under this program, the Company matches contributions of up to $15,000 ($50,000 effective in December 2016) per calendar year per Director to charitable and educational institutions meeting the Company's criteria.

Directors who are also employees of the Company receive no additional compensation for service as a Director.

Under the Company's Corporate Governance Guidelines, non-employee Director compensation is determined annually by the Board of Directors acting on the recommendation of the Governance and Nominating Committee. In formulating its recommendation, the Governance and Nominating Committee receives input from the third-party compensation consultant retained by the Compensation Committee regarding market practices for Director compensation.

The following table sets forth compensation earned during fiscal 2016 by each person who served as a non-employee Director during the year.

Fees Earned or Paid in Cash.    "Fees Earned or Paid in Cash" includes the annual Board retainer and annual committee and committee-chair retainers, whether paid currently or deferred by the Director to be paid in cash or shares after service ends. Directors are permitted to elect each year to receive all or part of their retainers in Disney stock and, whether paid in cash or stock, to defer all or part of their retainers until after service as a Director ends. Directors who elect to receive deferred compensation in cash receive a credit each quarter, and the balance in their deferred cash account earns interest at an annual rate equal to the Moody's Average Corporate (Industrial) Bond Yield, adjusted quarterly. For fiscal 2016, the average interest rate was 4.29%.

The following table sets forth the form of fees received by each Director who elected to receive compensation in a form other than currently paid cash. The number of

stock units awarded is equal to the dollar amount of fees accruing each quarter divided by the average over the last ten trading days of the quarter of the average of the high and low trading price for shares of Company common stock on each day in the ten-day period. Stock units distributed currently were accumulated throughout the year and distributed as shares following December 31, 2016.

Stock Awards.    "Stock Awards" sets forth the market value of the deferred stock unit grants to Directors and the amount reported is equal to the market value of the Company's common stock on the date of the award times the number of shares underlying the units. Units are awarded at the end of each quarter and the number of units is determined by dividing the amount payable with respect to the quarter by the average over the last ten trading days of the quarter of the average of the high and low trading price for shares of the Company common stock on each day in the ten-day period. Each Director other than Ms. Lagomasino, Ms. Lozano and Mr. Parker was awarded 1,823 units in fiscal 2016. Ms. Lagomasino was awarded 1,545 units, Ms. Lozano was awarded 735 units, and Mr. Parker was awarded 1,349 units in fiscal 2016.

Unless a Director elects to defer receipt of shares until after his or her service as a Director ends, shares with respect to annual deferred stock unit grants are normally distributed to the Director on the second anniversary of the award date, whether or not the Director is still a Director on the date of distribution.

At the end of any quarter in which dividends are distributed to shareholders, Directors receive additional stock units with a value (based on the average of the high and low trading prices of the Company common stock averaged over the last ten trading days of the quarter) equal to the amount of dividends they would have received on all stock units held by them at the end of the prior quarter. Shares with respect to these additional units are distributed when the underlying units

are distributed. Units awarded in respect of dividends are included in the fair value of the stock units when the units are initially awarded and therefore are not included in the tables above, but they are included in the total units held at the end of the fiscal year in the table below.

Prior to fiscal 2011, each Director serving on March 1 of any year received an option on that date to acquire shares of Company stock. The exercise price of the options was equal to the average of the high and low prices reported on the New York Stock Exchange on the date of grant.

The following table sets forth all stock units and options held by each Director as of the end of fiscal 2016. All stock units are fully vested when granted, but shares are distributed with respect to the units only later, as described above. Stock units in this table are included in the share ownership table on page 68 except to the extent they may have been distributed as shares and sold prior to January 9, 2017.

The Company's Corporate Governance Guidelines encourage Directors to own, or acquire within three years of first becoming a Director, shares of common stock of the Company (including stock units received as Director compensation) having a market value of at least five times the amount of the annual Board retainer for the Director. Unless the Board exempts a Director, each Director is also required to retain stock representing no less than 50% of the after-tax value of exercised options and shares received upon distribution of deferred stock units until he or she meets the stock holding guideline described above. Based on the holdings of units and shares on January 9, 2017, each Director complied with the minimum holding requirement on that date except Mr. Parker, who is within the three-year period following the date on which he first became a Director.

All Other Compensation.    "All Other Compensation" includes:

•

Reimbursement of tax liabilities associated with the product familiarization benefits. The value of the product familiarization benefits themselves and travel benefits are not included in the table as permitted by SEC rules because the aggregate incremental cost to the Company of providing these benefits did not exceed $10,000 for any Director. The reimbursement of associated tax liabilities was less than $10,000 for each Director other than Mr. Langhammer, Mr. Matschullat, and Ms. Sandberg for whom the reimbursement was $13,813, $18,860, and $10,735 respectively.

•

Interest earned on deferred cash compensation, which was less than $10,000 for each Director except for Ms. Lozano, for whom interest earned totaled $25,310.

•

The matching charitable contribution of the Company, which was less than $10,000 for each Director other than Ms. Arnold, Mr. Langhammer, Mr. Matschullat, and Mr. Smith, for each of whom the amount was $15,000.

Peer Groups

Establishing Compensation Levels

The Compensation Committee believes that the pool of talent with the set of creative and organizational skills needed to run a global creative organization like the Company is quite limited and that, accordingly, the market for executive talent to lead the Company is best reflected by the five other major media companies who compete for this talent — CBS, Comcast, Twenty-First Century Fox, Time Warner and Viacom (with Disney, the "Media Industry Peers"). Disney has more employees and a more extensive global footprint than any of the Media Industry Peers as well as a greater market capitalization and greater revenue, more diverse business segments and greater operating income than all but one of the Media Industry Peers.

The Committee believes that executives with the background needed to manage companies such as ours have career options with compensation opportunities that normally exceed those available in most other industries and that compensation levels within the peer group are driven by the dynamics of compensation in the entertainment industry and not the ownership structure of a particular company.

Establishing Compensation Structure, Policies and Practice

The Committee believes that the features of the Company's overall compensation structure, policies and practices should normally be consistent for all executives. Because the four distinct segments of our operations span multiple industries, the Committee believes that a consistency of approach across the breadth of the Company's operations with respect to such features is best achieved by reference to a broader general industry group.

The peer group used for establishing compensation structure, policies and practices consists of companies that have:

•

A consumer orientation and/or strong brand recognition;

•

A global presence and operations;

•

Annual revenue no less than half and no more than twice our annual revenue; and

•

A market capitalization no less than one-quarter and no more than four times our market capitalization;

•

Plus companies that do not meet the revenue test, but that are included in the peer groups used by one or more of the Media Industry Peers.

Advised by its independent consultant, the Committee reviewed the criteria for selecting members of this peer group during fiscal 2016 and determined that the criteria remained appropriate. In connection with this review, Hewlett-Packard was removed because it split into two companies, neither of which satisfies the size criteria, and EMC Corp. was removed following its acquisition by Dell Technologies in September 2016. In addition, Time Warner Cable merged with Charter Communications in May 2016; Charter Communications replaced Time Warner Cable as a peer at that time because it satisfies the general industry peer criteria.

Evaluating Performance

The overall financial performance of the Company is driven by the sum of the individual performances of the Company's four segments — Media Networks, Parks and Resorts, Studio Entertainment and Consumer Products & Interactive Media — each of which competes in different sectors of the overall market. The Committee believes that, given the span of the

Company's businesses, the best measure of relative performance is how the Company's diverse businesses have fared in the face of the economic trends that impact companies in the overall market and that the best benchmark for measuring such success is the Company's relative performance compared to that of the companies comprising the S&P 500. Accordingly, the Committee — like the other media companies and many other businesses — has selected the S&P 500 to set the context for evaluating the Company's performance and to measure relative performance for performance-based restricted stock unit awards.

Summary of Peer Groups

The following table summarizes the three distinct peer groups we use for the three distinct purposes described above:

Compensation at Risk

The Committee believes that most of the compensation for named executive officers should be at risk and tied to a combination of long-term and short-term Company performance. Approximately 90% of the target compensation for the CEO, and approximately 80% of the target compensation for other named executive officers, varies with either short or long-term Company performance.

In establishing a mix of fixed to variable compensation, the mix of various equity awards, target bonus levels, grant date equity award values and performance ranges, the Committee seeks to maintain its goal of making compensation overwhelmingly tied to performance while

at the same time affording compensation opportunities that, in success, would be competitive with alternatives available to the executive. In particular, the Committee expects that performance at the high end of ranges will result in overall compensation that is sufficiently attractive relative to compensation available at successful competitors and that performance at the low end of ranges will result in overall compensation that is less than that available from competitors who are more successful.

In determining the mix between options and restricted stock units, the Committee also considers the number of shares required for each of these types of award to deliver the appropriate value to executives.

The following chart shows the percentage of the target total direct compensation (constituting base salary and performance-based bonus plus the grant-date fair value of regular annual equity awards) for Mr. Iger that is variable with performance (performance-based bonus and equity awards) versus fixed (salary).

2016 Target Total Direct Compensation Mix for CEO

92% of CEO target compensation is considered performance-based

For the other NEOs (excluding Mr. Staggs) 80% of average target compensation is considered performance-based; for Mr. Staggs, 87% of his fiscal 2016 target compensation was performance based.

Employment Agreements

We enter into employment agreements with our senior executives when the Compensation Committee determines that it is appropriate to attract or retain an executive or where an employment agreement is consistent with our practices with respect to other similarly situated executives.

We have employment agreements with each of the named executive officers that extend to the dates shown below:

Mr. Staggs had an employment contract whose stated termination date was June 30, 2018. He left his position