News The Walt Disney Company Board of Directors Extends Robert A. Iger’s Contract as CEO Through 2026

[WoundedDreamer]

I understood his role of Creative Lead was to be an interface to Hollywood, Disney movie studios, and D+ creatives. An area that Chapek had little experience. It was supposed to be Iger's mentoring of Chapek in those areas.

And then Chapek picks a fight with Scarlett Johansson.

Definitely, it included those roles. I think also he mentioned some work with theme parks too.

In Chapek's defense on the ScarJo incident, that was definitely a symptom of the breakdown of the relationship between Iger and Chapek. Blaming Chapek for that singularly is a little unfair. It seems like both Iger and Chapek struggled to be decisive on that issue. They each deferred to each other creating a train wreck that resulted in a catastrophic letter that Iger and Chapek both signed that only inflamed things more.

Neither of the two came out looking great after that. But at least Chapek had the excuse of being a Hollywood novice. And to Chapek's credit, he did manage to restore the relationship. He messed up, and then fixed it.

I'll criticize him as much as the next guy for the terrible guest experience he has inflicted on Disney Parks. But he wasn't all bad all the time. As CEO, was he the right man for the job? No. He did aggravate problems that emerged in the Iger era. But he's not the moron or villain that some people think he is.

 

[BrianLo]

One of the weird things about Iger stepping down was him staying involved in creative decisions. His cultivated image up until then had largely been as someone who delegated to creatives.

I wonder if he didn't quite trust Chapek had that specific skillset to be left alone. He wasn't actually wrong on that account.

 

[Tha Realest]

Unlike Iger, Chapek didn’t “play the Hollywood game.” You know, like turning a blind eye to highly problematic film producers for decades.

 

[BrianLo]

I respect this objection. There are a few things that vacating the role of CEO gets you that just hiring a COO doesn't. While it's true that COO can take on certain responsibilities, there are others that are just stuck with being CEO. Among them are the shareholder meetings, meeting with the financial press, answering quarterly earnings calls, etc. Iger had tried the COO thing with Staggs. While I'm sure it made his life somewhat easier, he never bothered to find another strong COO after that point.

The Executive Chairman position would provide Iger with the access he desired, without those accompanying responsibilities. I've described Iger as "the founder of the modern Walt Disney Company." What I mean by this is that Walt and Roy's Disney essentially got totally rebuilt from the inside out. Today, the definition of "Disney" is divorced from the past. When someone said "Disney" in the past, they were referring to a studio and parks business that made family-friendly content.

Now, "Disney" means something entirely different. It's a corporate conglomerate, not a unique entity with its own identity. "Disney" content includes A New Hope, Rise of the Planet of the Apes, Aliens, the Simpsons, ABC News, Avengers Endgame, Poor Things, Shogun, Grey's Anatomy, and Sunday Night Football. If I described some of the violent and disturbing "Disney" content on this Disney message board, I would probably get banned for violating the terms of service. The definition of "Disney" has changed to mean... It's hard to say.


Eisner was instrumental in this transformation. But no one moved the needle more than Iger. With his five massive acquisitions (Pixar, Marvel, LucasFilm, Bamtech, Fox), he remade the company into a corporate conglomerate.

Iger loves The Walt Disney Company. Not Walt Disney's Disney, but Iger's Walt Disney Company. And like any founder, he wanted to remain a part of the company he essentially founded. An example of something similar occurring is how Jeff Bezos handled his retirement as CEO from Amazon. He remains Executive Chair, so he still has all the access he desires. He can still participate in corporate decisions. But he doesn't have to worry about the boring stuff. Bezos could have just kept Jassy on as a COO, but the distinct advantages of the "Executive Chair" role were too enticing. You get to define the position.

But ultimately, I understand taking a less speculative take.

People question that report? I'm not sure I realized that. I guess that explains where the animosity comes from. The details in that report were so specific, that I don't see how someone contests it. No one comes out looking good in that report (except one person who I suspect was the source!). Both Chapek and Iger ultimately appear to be immature leaders.

And who do I think was the source of that piece? Christine McCarthy... She's the hero who circumvented Chapek and went directly to the board and other investors. She's the one who set in motion the plot to bring Iger back. However, she subsequently was betrayed by Iger, and decided to dish out all the things she knows. She might have been vying for the CEO job, and was irritated by Iger's extension. Then she started dishing out all of the secrets.

I think my other major quibble with your account is glossing over his actual departure.

People are painting an image that he left Chapek high and dry in the Pandemic, but he did not actually. There was actually a rather slow transition of power over that nearly 2 years.

When he actually left Chapek, the stock was at a near all time high and sentiments were generally positive. The pandemic was by no means 'over', but Iger hardly left things in complete disarray.

There are many, many reasons, but Chapek crashed the stock price mostly on his own. Call it a 9 month sabbatical if we must, but Iger doesn't exactly have a crystal ball. His departure date in December 2021 was set and adhered to. If the theory is that this was all carefully crafted as his master plan, it is hard to align that theory along with the theory that Iger is an idiot as some would portray. It is a master class on something almost unnecessary if the end goal was just to retain power. Iger could have just retained power, the only reason a succession plan was needed was because he was going to retire. Wall Street would have happily let him stick around for another decade circa 2019 if he said that was his long term wish and vision. No one was trying to actually push Iger out.



Now on the flip side, I truly think the announcement was odd, ill timed and likely weirdly rushed because of the Pandemic. I more so surmise it was always the plan, Chapek was clearly the heir apparent. But Iger became flustered (because he intended to leave) and pushed the announcement anyways.

I think Iger (in his brain) was actually mildly considering two departures. The one was post 2016 era and the other was post 2019. I say that because he structured his legacy builders to cap his departure announcements. 2016 had a strong film slate and Shanghai. This he moved on from when he became excited about another acquisition and need to start a streaming service. 2019 had another strong film slate (Frozen 2, Endgame, Lion King, etc etc) Galaxy's Edge launches and the D+ launch. Iger just became quite flustered when the Pandemic came out of seemingly no where and started to ruin his ability to leave on top, like he clearly wanted to.


I really, really question that he actually intended and planned to return in 2022. It's way too far fetched.

 

[WoundedDreamer]

I think my other major quibble with your account is glossing over his actual departure.

People are painting an image that he left Chapek high and dry in the Pandemic, but he did not actually. There was actually a rather slow transition of power over that nearly 2 years.

When he actually left Chapek, the stock was at a near all time high and sentiments were generally positive. The pandemic was by no means 'over', but Iger hardly left things in complete disarray.

There are many, many reasons, but Chapek crashed the stock price mostly on his own. Call it a 9 month sabbatical if we must, but Iger doesn't exactly have a crystal ball. His departure date in December 2021 was set and adhered to. If the theory is that this was all carefully crafted as his master plan, it is hard to align that theory along with the theory that Iger is an idiot as some would portray. It is a master class on something almost unnecessary.



Now on the flip side, I truly think the announcement was odd, ill timed and likely weirdly rushed because of the Pandemic. I more so surmise it was always the plan, Chapek was clearly the heir apparent. But Iger became flustered (because he intended to leave) and pushed the announcement anyways.

I think Iger (in his brain) was actually mildly considering two departures. The one was post 2016 era and the other was post 2019. I say that because he structured his legacy builders to cap his departure announcements. 2016 had a strong film slate and Shanghai. This he moved on from when he became excited about another acquisition and need to start a streaming service. 2019 had another strong film slate (Frozen 2, Endgame, Lion King, etc etc) Galaxy's Edge launches and the D+ launch. Iger just became quite flustered when the Pandemic came out of seemingly no where and started to ruin his ability to leave on top, like he clearly wanted to.


I really, really question that he actually intended and planned to return in 2022. It's way too far fetched.

Fair points, and I actually agree with most everything you said here. I should have addressed the points you brought up in the original post. Like you, I believe that when Iger left the Executive Chairman role that he never expected to return. Within this scenario, Chapek had ruined his plan to have a long retirement as Executive Chairman and point person for creative matters. He left with no contract extension and in bitterness.

Had Chapek succeeded in keeping the share price high, it's almost certain that Iger would never have returned. Iger's return plan only started to take shape after Disney's share price faltered. The opportunity to conduct a coup became possible only once Disney was in a weakened state. That's why Iger saw his opportunity and struck.

Iger is a smart guy, but he's not a genius thinking moves out many steps ahead. You're exactly right that Iger could not have foreseen the Wall Street sentiment changes that tanked the share price. Nothing would prove Iger's own inability to see ahead, than his decision to choose Chapek as CEO. Chapek is many things, but he was not malleable to Iger's demands. So in that way I do agree Iger's return was as much (if not more) about luck and opportunity than it was about planning.

As to your point on the 2016 date, I also totally agree. The thing that made Iger reconsider was the ESPN subscriber collapse. I remember that even as Iger was trying to bask in the success of Shanghai Disneyland's triumphant opening, the results were clouded by ESPN's decline. Being the guy who left the streaming issue unresolved is not a good legacy.

And as you say, Disney+ became the focus of the next few years. That also corresponds with Staggs' departure in early 2016. It's a little unclear whether Staggs was pushed out or left of his own accord. With Iger's contract extension, it would make sense for him to jump ship. He didn't want to be like past CEO candidates waiting in the wings forever. He'd been doing the bake off thing since the late 2000s. I could see him just packing his things and going.

 

[BrianLo]

Fair points, and I actually agree with most everything you said here. I should have addressed the points you brought up in the original post. Like you, I believe that when Iger left the Executive Chairman role that he never expected to return. Within this scenario, Chapek had ruined his plan to have a long retirement as Executive Chairman and point person for creative matters. He left with no contract extension and in bitterness.

Had Chapek succeeded in keeping the share price high, it's almost certain that Iger would never have returned. Iger's return plan only started to take shape after Disney's share price faltered. The opportunity to conduct a coup became possible only once Disney was in a weakened state. That's why Iger saw his opportunity and struck.

Iger is a smart guy, but he's not a genius thinking moves out many steps ahead. You're exactly right that Iger could not have foreseen the Wall Street sentiment changes that tanked the share price. Nothing would prove Iger's own ability to see ahead, than his decision to choose Chapek as CEO. Chapek is many things, but he was not malleable to Iger's demands. So in that way I do agree Iger's return was as much (if not more) about luck and opportunity than it was about planning.

As to your point on the 2016 date, I also totally agree. The thing that made Iger reconsider was the ESPN subscriber collapse. I remember that even as Iger was trying to bask in the success of Shanghai Disneyland's triumphant opening, the results were clouded by ESPN's decline. Being the guy who left the streaming issue unresolved is not a good legacy.

And as you say, Disney+ became the focus of the next few years. That also corresponds with Staggs' departure in early 2016. It's a little unclear whether Staggs was pushed out or left of his own accord. With Iger's contract extension, it would make sense for him to jump ship. He didn't want to be like past CEO candidates waiting in the wings forever. He'd been doing the bake off thing since the late 2000s. I could see him just packing his things and going.

Yes, exactly. He really wants to leave on top. For those who want Disney free of Iger, I think it's counter productive to cheer against Disney company. If the Disney company is doing well and facing minimal criticisms, he will happily go.

Now I do very much think disdain from a few corners for Iger is so high, they'd much prefer Iger leave in ruins than in glory, even if that means ruining the company to get there.

I'm certainly not in that camp.

 

[mikejs78]

I respect this objection. There are a few things that vacating the role of CEO gets you that just hiring a COO doesn't. While it's true that COO can take on certain responsibilities, there are others that are just stuck with being CEO. Among them are the shareholder meetings, meeting with the financial press, answering quarterly earnings calls, etc. Iger had tried the COO thing with Staggs. While I'm sure it made his life somewhat easier, he never bothered to find another strong COO after that point.

The Executive Chairman position would provide Iger with the access he desired, without those accompanying responsibilities. I've described Iger as "the founder of the modern Walt Disney Company." What I mean by this is that Walt and Roy's Disney essentially got totally rebuilt from the inside out. Today, the definition of "Disney" is divorced from the past. When someone said "Disney" in the past, they were referring to a studio and parks business that made family-friendly content.

Now, "Disney" means something entirely different. It's a corporate conglomerate, not a unique entity with its own identity. "Disney" content includes A New Hope, Rise of the Planet of the Apes, Aliens, the Simpsons, ABC News, Avengers Endgame, Poor Things, Shogun, Grey's Anatomy, and Sunday Night Football. If I described some of the violent and disturbing "Disney" content on this Disney message board, I would probably get banned for violating the terms of service. The definition of "Disney" has changed to mean... It's hard to say.


Eisner was instrumental in this transformation. But no one moved the needle more than Iger. With his five massive acquisitions (Pixar, Marvel, LucasFilm, Bamtech, Fox), he remade the company into a corporate conglomerate.

Iger loves The Walt Disney Company. Not Walt Disney's Disney, but Iger's Walt Disney Company. And like any founder, he wanted to remain a part of the company he essentially founded. An example of something similar occurring is how Jeff Bezos handled his retirement as CEO from Amazon. He remains Executive Chair, so he still has all the access he desires. He can still participate in corporate decisions. But he doesn't have to worry about the boring stuff. Bezos could have just kept Jassy on as a COO, but the distinct advantages of the "Executive Chair" role were too enticing. You get to define the position.

But ultimately, I understand taking a less speculative take.

People question that report? I'm not sure I realized that. I guess that explains where the animosity comes from. The details in that report were so specific, that I don't see how someone contests it. No one comes out looking good in that report (except one person who I suspect was the source!). Both Chapek and Iger ultimately appear to be immature leaders.

And who do I think was the source of that piece? Christine McCarthy... She's the hero who circumvented Chapek and went directly to the board and other investors. She's the one who set in motion the plot to bring Iger back. However, she subsequently was betrayed by Iger, and decided to dish out all the things she knows. She might have been vying for the CEO job, and was irritated by Iger's extension. Then she started dishing out all of the secrets.

Also worth mentioning that the date Iger left was the date specified that he had to stick around until from the Fox acquisition. I actually think he was ready to retire in 2020... But out this plan in place so he could honor the fox contract, while moving his successor in place, and doing the stuff he really enjoyed until he could sail off into the sunset. He came back because Chapek's quick fall was a dent in his legacy.

 

[Jrb1979]

Also worth mentioning that the date Iger left was the date specified that he had to stick around until from the Fox acquisition. I actually think he was ready to retire in 2020... But out this plan in place so he could honor the fox contract, while moving his successor in place, and doing the stuff he really enjoyed until he could sail off into the sunset. He came back because Chapek's quick fall was a dent in his legacy.

I believe some of that. I also believe Chapek was there to implement things that Iger always wanted to do but didn't want it ruin his legacy. I.E. Genie+ and the changes towards AP holders

 

[MisterPenguin]

Unlike Iger, Chapek didn’t “play the Hollywood game.” You know, like turning a blind eye to highly problematic film producers for decades.

ScarJo wasn't a 'highly problematic film producer.'

So, why does it seem like you're giving Chapek a pass on the ScarJo breach of contract?

 

[el_super]

There are many, many reasons, but Chapek crashed the stock price mostly on his own.

Not sure of the reasons you are alluding to, but generally Chapek didn't crash the stock. It had a massive run up due to excitement over Disney+ and a crash (really back to normal) when Wall Street realized streamers needed to be profitable. There wasn't any single action you can point to that sent the stock tumbling. It was all just gut punch reaction to Netflix.

Which is also to say if Iger, or really anyone else was around as CEO, the same thing would have happened.

Iger could have just retained power, the only reason a succession plan was needed was because he was going to retire. Wall Street would have happily let him stick around for another decade circa 2019 if he said that was his long term wish and vision. No one was trying to actually push Iger out.

Yep. It's silly to keep perpetuating this weird fantasy where Iger, being all powerful and ruling the board with an iron fist, had to keep begging to stay on the board and pretend they kept asking him to stay. Why the charade? Who was he trying to impress? Reality is everyone wanted him to stay.

Now on the flip side, I truly think the announcement was odd, ill timed and likely weirdly rushed because of the Pandemic. I more so surmise it was always the plan, Chapek was clearly the heir apparent. But Iger became flustered (because he intended to leave) and pushed the announcement anyways.

This is probably close to the truth as well. All indications are that Iger wanted Staggs to take over when he left. Staggs, as a parks person, was the neutral option that wouldn't bruise the Hollywood egos. The board refused Staggs, said they wanted to look outside the company and Iger was salty about it afterwards. Chapek, being the next parks chair, was the logical replacement to Staggs while still following the plan. The board wouldn't have said yes if not for the pandemic (although wasn't there rumblings they still didn't want Chapek?)

I actually do think Iger wanted out but couldn't get a consensus from the board. He still can't and that's a problem.

 

[BrianLo]

Not sure of the reasons you are alluding to, but generally Chapek didn't crash the stock. It had a massive run up due to excitement over Disney+ and a crash (really back to normal) when Wall Street realized streamers needed to be profitable. There wasn't any single action you can point to that sent the stock tumbling. It was all just gut punch reaction to Netflix.

Which is also to say if Iger, or really anyone else was around as CEO, the same thing would have happened.

Mostly the stock's complete detachment from reality was Chapek driven to begin with. That streaming detachment all came down to Chapek absolutely pumping it with outlandish subscriber projections and empty India subscribers. It definitely worked, the stock price had nothing to do with the underlying metrics of the company in 2021. Which were a mess with both Studios and Parks essentially out of business at the time, ESPN still 'unfixed' and linear shrinking. There's pretty good documentation that Iger and Chapek seriously butted heads over his decision to make those projections.

So I guess you can more say he faked it and the rug was pulled out from under him the subsequent year.

I guess you can say a version of it may have happened under Iger, but I don't think the over-inflated high would have been matched with the frankly undervalued low. Iger also was never so keen on the massive streaming content spend that caused the depths of the loses that Chapek really got the boot over.


Other decisions I'm not sure Iger would have reached were content shovelling to D+, creative re-orgs, talent fights, ?political fights (though that may have been an excuse waiting to happen) or showing enough weakness to invite activist investors in the first place.

 

[el_super]

There's pretty good documentation that Iger and Chapek seriously butted heads over his decision to make those projections.

Which projections specifically?

Just to make sure I wasn't misremembering, I double checked the first quarterly results call Bob was leading (Q2FY2020) and in that call it was suggested profitability would be in 2024, which is where it has been as far as I can remember. They specifically asked if Chapek was willing to change that guidance and he declined.

Was there something else Chapek did to pump the streaming? I honestly just saw it at the time as speculators thinking Disney was a discount Netflix and pumping it up just based on the success they saw in subscriber numbers. It wasn't until later they realized neither Disney or Netflix were all that profitable.

Iger also was never so keen on the massive streaming content spend that caused the depths of the loses that Chapek really got the boot over.

This I'm not so sure about. I think Chapek did revise up content spend, in part because Disney+ was pulling excellent subscriber numbers and they felt it was warranted. And at the time Wall Street had no objections to reaching profitability in FY24. So Chapek put all his chips on Disney+ because it was winning.

Would Iger have done the same? Absolutely. In fact he did when he said he would invest twice as much into the parks. That $60B investment is the same basic plan Chapek was following: put the money on the winner.

Other decisions I'm not sure Iger would have reached were content shovelling to D+, creative re-orgs, talent fights, ?political fights (though that may have been an excuse waiting to happen) or showing enough weakness to invite activist investors in the first place.

I've seen a couple of articles from years ago indicating a lot of the content re-orgs were coming from Iger initially. He conferred with Google on how to structure a tech company and the final outcome was eventually what Chapek got his name on.

Would it have gone over far more smoothly if it came from Iger instead of Chapek? Absolutely. Iger had, and still has a gravitas that demands respect.

Personalities are different to be sure, but the basic fundamental decision making that goes into running Disney is generally the same. It's the same because it's the same group of people actually making the decisions for the CEO.

 

[BrianLo]

Which projections specifically?

Just to make sure I wasn't misremembering, I double checked the first quarterly results call Bob was leading (Q2FY2020) and in that call it was suggested profitability would be in 2024, which is where it has been as far as I can remember. They specifically asked if Chapek was willing to change that guidance and he declined.

Was there something else Chapek did to pump the streaming? I honestly just saw it at the time as speculators thinking Disney was a discount Netflix and pumping it up just based on the success they saw in subscriber numbers. It wasn't until later they realized neither Disney or Netflix were all that profitable.

Sorry, subscriber projections, not profitability. Iger originally projected 60-90 million (all inclusive for 2024). The stock took major jumps when Chapek projected D+ would have 230-260 million subscribers by 2024. This projection he made in late 2020. Apparently there was quite a lot of disagreement on his decision to do this. Iger strongly advocated for something much more moderate and achievable.

In hindsight, that was where most of the frothy run up occurred from. This was subsequently adjusted downwards to 215-245 in August of 2022 with the HotStar loses. Of which they still said 135-165 would be core subscribers by the end of 2024. For reference we are sitting at 111 core and India is being now written away.

Netflix pulled the rug out from market sentiment, but Chapek really whiffed on his projections.


The CNBC article might be helpful to review the DMED reorg drama.

 

[Brian]

Trian gains another endorsement.

In Disney Proxy Battle, A Second Advisory Firm Backs Activist Investor Nelson Peltz​

In Disney Proxy Battle, A Second Advisory Firm Backs Activist Investor Nelson Peltz

Proxy advisory firm Egan-Jones on Wednesday became the second one to support activist Nelson Peltz's effort to win seats on the Disney board.

deadline.com

 

[Brian]

Gad got his compensation for his endorsement of Iger.

 

[JoeCamel]

Gad got his compensation for his endorsement of Iger.

Note he didn't get to drive the choo choo

 

[Brian]

Note he didn't get to drive the choo choo

He'd have to do an in-person event for Iger to get driving privileges.

 

[peng]

Sorry, subscriber projections, not profitability. Iger originally projected 60-90 million (all inclusive for 2024). The stock took major jumps when Chapek projected D+ would have 230-260 million subscribers by 2024. This projection he made in late 2020. Apparently there was quite a lot of disagreement on his decision to do this. Iger strongly advocated for something much more moderate and achievable.

In hindsight, that was where most of the frothy run up occurred from. This was subsequently adjusted downwards to 215-245 in August of 2022 with the HotStar loses. Of which they still said 135-165 would be core subscribers by the end of 2024. For reference we are sitting at 111 core and India is being now written away.

Netflix pulled the rug out from market sentiment, but Chapek really whiffed on his projections.


The CNBC article might be helpful to review the DMED reorg drama.

A lot of the streamers imploding on themselves can be blamed on streaming as a whole being a money eating machine. Chapek also made some really bad decisions in giving up cricket rights in India, which kneecapped their India operations and his doubling down on the "sacrifice everything for Disney+" strategy Iger started hurt all of their divisions hard creatively (Marvel's struggles can be linked to the endless glut of mid shows they made for Disney+ for example). That and the market pivoted from subscriber numbers to how much money they were making, hence the streamers gutting themselves.

 

[WoundedDreamer]

Trian gains another endorsement.

In Disney Proxy Battle, A Second Advisory Firm Backs Activist Investor Nelson Peltz​

In Disney Proxy Battle, A Second Advisory Firm Backs Activist Investor Nelson Peltz

Proxy advisory firm Egan-Jones on Wednesday became the second one to support activist Nelson Peltz's effort to win seats on the Disney board.

deadline.com

Wow. While not the most influential like ISS, this is another big win for Peltz. He's getting closer. The Murdochs might end up deciding Peltz's fate. It's going to be interesting!

 

[TalkingHead]

From Hollywood Reporter: Bob Iger’s Invincible Era Is Over

Bob Iger’s Invincible Era Is Over

After a major Wall Street firm sides with activist Nelson Peltz ahead of an April 3 shareholders meeting, investors are questioning how the CEO plans to plot out growth — and his own succession.

www.hollywoodreporter.com