Status Quo Atop the Matterhorn: Disney Extends Iger

2 Oct, 2014 By: Erik Gruenwedel

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Bob Iger extends Disney CEO contract through 2018; possible successors Jay Rasulo, Bob Chapek and Tom Staggs put on hold

The Walt Disney Co. board Oct. 2 announced it extended Bob Iger’s contract as chairman and CEO through June 30, 2018. Iger, who became CEO in 2005, was initially set to retire in March 31, 2015, before extending his contract last year to June 30, 2016.

The board, in a statement, said that since Iger's stint as chief executive began, total shareholder return has increased to 311%, compared with just 92% for the S&P 500; Disney’s market capitalization has risen to $150 billion from $48.4 billion.

“[Iger] has transformed Disney’s culture and empowered its businesses to effectively capitalize on evolving markets and new technologies, making Disney a company that doesn’t merely embrace change, but leads it,” Orin Smith, independent lead director of the Disney board, said in a statement. 

Interestingly, Iger’s extended contract maintains the same annual compensation, which includes a base salary of $2.5 million. He will have the opportunity to earn a performance-based retention bonus if certain financial performance goals are met over a five-year period, ending with fiscal-year 2018.

While executive change at the top of a mega corporation like Disney could be disruptive, Iger fields a team of senior executives eminently qualified to assume the top spot.

CFO Jay Rasulo, who assumed the position after former CFO Tom Staggs took over control of Disney parks and resorts — which had been headed by Rasulo — is often the corporate voice at investor events.

At some of those events, Rasulo has lavished praise upon Bob Chapek, the former head of Walt Disney Studios Home Entertainment, who became president of Disney consumer products — the world’s largest licensor — in 2011.

Specifically, Rasulo cites Chapek’s ability to meld Disney’s myriad IP brands across multiple product lines, including packaged media, as key to the unit upping nine-month operating income 28% to $977 million on revenue of $2.9 billion, which was up 16% from the prior-year period.

If nothing else, Disney is one of the biggest consumer brands in the world with its Pixar, Marvel, Lucasfilm and Disney properties a mainstay at retail, home entertainment and digital channels — all areas of expertise for Chapek.

“I think there are two things that I would call [Chapek’s] heretofore hallmarks … franchises and product licensing,” Rasulo told an investor event in May.

Indeed, Chapek has expanded Disney’s licensing arm beyond traditional third-party licensees creating and selling Disney products, to exclusive relationships with major retails, including a recent deal with J.C. Penny creating wholesale stores-within-a-store.

“[Chapek] wants to explore and is pushing his team to … take off the blinders and look at alternative business models in the consumer products business,” Rasulo said. “Before, we really kind of had blinders on, and said, ‘OK, we have the Disney Store and we have licensing and those are our two speeds.’”

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