As the Sun Valley “summer camp for moguls” got underway in central Idaho in July, The Walt Disney Company Board of Directors announced the extension of Robert A. Iger’s contract as chief executive officer through 2026.
That well-timed news release was a forward-looking way for Bob Iger to enjoy several days at the Gulfstream fly-in with corporate leaders, investors and a few celebrities.
“Time and again, Bob has shown an unparalleled ability to transform Disney to drive future growth and financial returns successfully,” said Mark Parker, Disney Board chair.
While Bob Iger is adding two years to his previously agreed-upon 24-month term, which began in November 2022, many CEOs are leaving. Challenger, Gray, and Christmas Inc., a global outplacement and executive coaching firm, reported that 1,425 CEOs left in the first nine months of 2023, up 47% from the 969 CEO changes during the same period in 2022.
Problems vary for different businesses, but turnover at the top puts everyone in the same crowded boat — how to prepare for and implement leadership succession. According to the Society for Human Resource Management, only 54% of boards were actively engaged in developing a successor to the CEO, and 39% had no viable manager to step in to replace the CEO in an emergency.
Why is CEO succession so hard to accomplish?
The Disney Sun Valley announcement didn’t mention that the company’s worth of $160 billion is less than half what it had been when Bob Iger left in 2021. What must have caught the Board’s attention is that one year into Iger’s return, they were running into Murphy’s Third Law — everything takes longer than you think it will. And another law says that whenever you set out to do something, something else must be done first.
By Bob Iger’s admission, the company’s problems were “greater than anticipated.” A Hollywood script with the complexities facing Disney (streaming; cable; film studios; a clash with Nelson Peltz and Isaac Perlmutter, former head of Marvel Entertainment) was never likely to materialize.
When Disney shared its full-year and fourth-quarter 2023 financial results last Wednesday, the role of balancing assets so that any decline in one area can be countered by success in another was on full display. This performance caused the entertainment giant to exceed analysts’ expectations, achieving a 5% increase in quarterly revenue and 7% annual growth.
“Our results this quarter reflect the significant progress we’ve made over the past year,” Bob Iger said. “While we still have work to do, these efforts have allowed us to move beyond this period of fixing and begin building our businesses again,” he added.
Iger’s priorities are making streaming a profitable business, building ESPN for a digital future, expanding its live experiences business (investing $60 billion in parks and cruises over the next ten years), and improving the output and economics of Disney film studios.
There’s one crucial item missing from that list — CEO succession.
This omission brings us back to Disney’s new board chair—Mark Parker, a former president and chief executive officer at Nike, Inc., and its current executive chairman. Perhaps Parker’s most important responsibility is chairing the newly formed Disney Succession Planning Committee. That group is tasked with advising the Disney Board on possible successors.
The critical questions for Disney governance — what lessons, if any, has the Board learned from the biggest failure of Bob Iger’s previous tenure, recommending Bob Chapek as his successor? And where was the breakdown in Board due diligence?
There are reports that Iger will name a Disney president at some point, but how well did that turn out before?
Of all the challenges facing The Walt Disney Company longer-term, none is greater than finding a qualified internal or external successor or successors (think Michael Eisner and Frank Wells) to Bob Iger.
A CEO gets most of the attention. But when it comes to a change at the top or a different look for this creative but complex enterprise, keep an eye on the Disney Board chair, Mark Parker.
Russ Bredholt Jr. is president of Bredholt and Co., Winter Springs.
