Flops, streaming and succession: Challenges for Bob Iger in his additional years at Disney

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Bob Iger has form when it comes to maximizing his time as chief executive of Walt Disney.

During his original 15-year tenure as chief, Iger delayed his retirement several times, increasing his salary as his tenure extended. Now, just seven months after returning to Disney for a two-year mission to stabilize the company, he has been given more time. Under a new arrangement announced on Wednesday, he will step down in 2026 at the age of 75.

Iger’s commitment to staying at Disney for the long term comes at a difficult time for the company, which is still losing money on its streaming services while its traditional TV business is in decline. Adding two more years means he will have to face any number of chronic problems, jeopardizing his reputation as one of the entertainment industry’s most successful leaders.

“It’s not ideal (that Iger is extending his tenure) but it is sometimes necessary in times of rapid change,” said Jeffrey Sonnenfeld, a professor at the Yale School of Management who has known Iger for years.

By the end of his new contract, Iger will have run the world’s biggest entertainment conglomerate for a total of 19 years. If he achieves the performance targets, he will earn five times his basic salary in annual bonus, which was one times the salary earlier. The company said the board voted unanimously to extend his term.

The expansion would give Disney’s board more time to find a successor — a task that Iger himself said was his “top priority” when he returned to the company in November. But it would also give Iger more leeway to tackle a wider range of problems at Disney, including a lack of luster at its movie studios.

“The reality is that once he came back, he realized the number of challenges Disney was facing,” said Lightshade Partners analyst Rich Greenfield. “Some of these problems were of Iger’s own making, but I think he wants to figure out how to fix them. You can’t change these things in 24 months.”

Iger returned to Disney last autumn to replace his chosen successor, Bob Chapek, whose tumultuous tenure ended with his ouster after less than three years. Iger has since launched a $5.5 billion cost-cutting plan that will eliminate approximately 7,000 jobs. He has also led a reorganization aimed at handing over more control to creative executives, reversing one of Chapek’s initiatives.

In a statement on Wednesday, Iger said he had to make “difficult decisions to address some current structural and efficiency issues”, adding that Disney’s “long-term future is incredibly bright”.

He has also faced some unexpected challenges this year, including an escalation of a legal battle with Florida Governor Ron DeSantis over control of property surrounding Disney’s Orlando theme park. Last month, longtime chief financial officer Christine McCarthy announced she would be stepping down, creating a more senior position.

And after some disappointing box-office returns this summer, concerns have intensified about Disney’s movie studios, including the three powerhouses that Iger acquired during his first term: Pixar, Marvel and Lucasfilm. .

“He’s moved into a company where the content engines are in need of some revamping,” said Michael Nathanson, an analyst with research group MoffetNathanson. “Pixar has misfired, Marvel has misfired.”

Greenfield said that the challenge at the studio justified Iger’s contract extension. “You cannot change these things in 24 months. Content just takes time,” he said. “It seems like the content cycle is very broken right now.”

Some analysts and former employees attributed the difficulties of the Chapek era to Iger’s failure to develop and retain potential successors. These people said well-known executives including Tom Staggs and Kevin Mayer left the company as Iger’s tenure continued.

Nathanson said, “It’s a shame the bench was much thinner than it should have been.” “He has to get people in to lead this company over the next three years.”

In January, the board formed a succession planning committee to find a replacement for Iger. The four-person group is led by former Nike chief Mark Parker, who took over as Disney’s chairman of the board in April. Other members are General Motors Chief Executive Mary Barra, former Illumina chief Francis D’Souza and Lululemon Chief Executive Calvin MacDonald.

Sonnenfeld said extending Iger’s contract would give potential internal successors time to learn about the group’s diverse assets.

Iger appeared to hint this week that he is considering possible internal replacements. He traveled to Sun Valley for the annual Allen & Company convention in Idaho with executives seen as possible successors: Disney Entertainment co-chairman Dana Walden, film chief Alan Bergman and theme park chief Josh D’Amaro.

Sonnenfeld said, “It’s good (Iger) to have a voice in succession but the selection of a successor should never be done at the CEO’s feet because that’s the job of the board.” “It’s the duty of the board, not the CEO.”