Recalculating Eisner's big score

In December Disney CEO Michael Eisner cashed in stock options to boost his pay to more than $575 million. But what if the stock's meteoric rise was tied to earnings statements that were based on Mickey Mouse accounting practices?

In a March 23 story for Barron's, accountant Abraham Briloff contends that Disney used creative accounting following its $19 billion purchase of Capital Cities/ABC to form a $2.5 billion slush fund. Disney then plowed these funds into its balance sheets as "profits," Briloff contends, creating the false impression that the company saw a 25 percent earnings gain in 1997 (where normal accounting would have yielded less than 10 percent), and a double-digit growth in the quarter ending in December, when the real growth was more like zero.

These figures helped the stock to soar, presumably inflating the stock that boosted Eisner's net worth. Difference between the actual exercised stock value and an estimated $75 per share price (a figure midway between the $58 of two years ago and the $108 of today): $110 million.

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