Quick tangent: Lasseter was always a wild card, and his narcissism led to strange decisions. He oversaw WDI, but only led vanity projects such as Cars Land and upgrades to DL’s Jungle Cruise. He also hyped Mermaid a bit. The rest of P&R didn’t interest him much.
In animation, he spearheaded the return to hand-drawn with PATF, yet dropped it without qualms when the movie was mis-marketed and underperformed. He was devoted to Studio Ghibli and oversaw excellent American dubs, yet didn’t attempt to address the company’s concerns and let the contract pass to GKids.
I suspect Iger and the board knew Lasseter was driven too much by personal passion projects to be considered for the CEO position over divisions that Lasseter couldn’t care less about.