Disney Completes Update of Executive Compensation With Revision of Long-Term Incentive Program.

BURBANK, Calif. -- The Walt Disney Company (NYSE:DIS) announced today that it has completed an update of the Company's senior executive compensation program with the approval by the Company's Board of Directors and its Compensation Committee of a revised long term incentive program. Coupled with last September's revision of the annual management bonus program, Disney's new long term incentive program "will help the company continue to attract and retain the best employees while better aligning their interests with those of our shareholders to position Disney for long-term success," said Judith Estrin, chair of the Board's Compensation Committee.

The revised long-term incentive program, developed through a close collaboration between the Compensation Committee, its independent consultant and the Company's management, will:

--Introduce new performance-based vesting requirements on a portion of long-term equity compensation granted to senior executives,

--Increase the proportion of restricted stock units (RSUs) and reduce the proportion of stock options used in long term incentive awards,

--Establish new equity ownership requirements for top management,

--Establish new incremental holding requirements for stock options received by top management,

--Shorten the life of new stock option grants to seven years from 10 years, and

--Reaffirm the Company's commitment not to re-price options without shareholder approval.

Performance Vesting - Under the revised program, one half of restricted stock units (RSUs) granted to senior executives as long-term incentive compensation will be scheduled to vest only if the Company's "total shareholder return" (stock appreciation plus dividends reinvested on a pre-tax basis) at the time of measurement exceeds that of the S&P 500 Index over either the prior one-year or three-year time period. Provided that this test is met, the first half of these RSUs will be scheduled to vest on the second anniversary of the date of grant, with the remaining half vesting on the fourth anniversary of the grant date, subject to the same test. If the first half of the grant did not vest on the second anniversary of grant, it may still vest on the fourth anniversary if the performance test is met as of that date. For executives whose compensation is subject to Section 162(m) of the Internal Revenue Code, the vesting of all RSUs will also remain subject to additional performance-based requirements set by the Compensation Committee under the Company's 2002 executive performance plan.

Mix of Restricted Stock Units and Options - The revised program will shift emphasis toward awards of RSUs and reduce the proportion of value comprised by stock options. It is anticipated that the value of grants to senior executives under the new program will be comprised approximately 60% of RSUs and 40% of stock options.

Ownership Requirements - As part of the revised program, the Committee has established new stock ownership and holding requirements for Disney's top five executive officers. These officers will now be expected, over time, to acquire and hold Company stock equal in value to at least three to five times their base salary amounts, depending on their positions.

Holding Requirements -- For all stock option grants made beginning in 2005, Disney's top five executives will be required, as long as they remain employed by the Company, to retain ownership of shares representing at least 75% of the after-tax gain realized (100% in the case of the Chief Executive Officer) upon exercise of such options, for a minimum of 12 months.

Options - The term of new stock options will be reduced from 10 years to seven years to match current market practices. The Company also reaffirmed its position that it will not re-price stock options without shareholder approval.

The long term incentive program changes will take effect with the Company's annual grant awards to be made in January 2005.

"Our executive compensation program is evolving to better support the achievement of the Company's strategic goals and link our executives' compensation even more closely to performance," said Estrin. "These changes reflect the Company's continued commitment to strong corporate governance practices. We want to maintain our shareholders' confidence by creating a stronger alignment between the interests of our management teams and those of our investors. At the same time, we want to attract and retain experienced and highly qualified executives by offering real ownership and great long-term financial incentives. We feel that the modifications we have made will help achieve that balance."

For more information on the revised management bonus and long-term incentive programs, please visit www.disney.com/investors.