By Ben Fritz
Succession planning at the world's largest media company fell
into disarray on Monday as Tom Staggs, Walt Disney Co.'s chief
operating officer and the heir apparent to Chief Executive Robert
Iger, unexpectedly said he would step down.
Mr. Staggs made the decision after learning recently that both
Mr. Iger, who is also Disney's chairman, and the company's board
had decided to broaden the search for Mr. Iger's successor to
include more candidates, said a person with knowledge of the
matter. The implication was that Mr. Staggs's odds of rising to the
CEO role had declined precipitously, this person said.
Mr. Iger, 65, has said he plans to retire in June 2018.
The 55-year-old Mr. Staggs had seemed Mr. Iger's most likely
successor since he was named operating chief in early 2015, beating
out his main internal rival, former Chief Financial Officer Jay
Rasulo, for the company's No. 2 post.
Mr. Staggs's announcement that he would leave effective May 6
shocked employees throughout the Disney empire, where the executive
was known as a longtime personal friend of Mr. Iger, with whom he
shared a similar leadership style. Though the board hadn't
confirmed him as the next CEO, many inside and outside the company
thought it was all but a sure thing.
Disney directors decided "in the past few weeks" that Mr. Staggs
was unlikely to get the CEO job, another knowledgeable person said,
declining to elaborate.
The decision was based on a review of the executive's
performance after one year as COO. As a result, the board "couldn't
give him any assurance" about succeeding Mr. Iger, this person
added.
Now, Disney's board will "broaden the scope of its
succession-planning process to identify and evaluate a robust slate
of candidates for consideration," the company said Monday.
The board is likely to focus in large part on outside CEO
candidates, said a person close to the process. For now at least,
none of the executives remaining at the company are well-positioned
to rise to the top. Many senior executives, including the heads of
Disney's television, parks, and consumer-products businesses, as
well as the company's CFO, took those jobs within the past two
years.
A CEO's expected successor rarely resigns so close to the
expected transfer of power, one succession expert said.
"It's fairly unusual when you're about to be handed the keys to
the kingdom to run away from the opportunity," said Jeffrey Cohn,
managing director for global CEO succession planning at recruiting
firm DHR International.
Before becoming operating chief, Mr. Staggs, who served as
Disney's CFO and as chairman of its parks and resorts business,
among other positions, during his 26 years at the company, was
well-regarded but had little experience in the company's creative
operations like film and television. Opinions were mixed among
employees of those divisions as to whether he had worked hard
enough to learn how they worked and to become a trusted leader.
Mr. Iger and his predecessor, Michael Eisner, grew up in
Disney's television and film businesses, respectively, before
taking the company's helm.
As parks chairman and operating chief, Mr. Staggs played a
critical role in one of the most significant projects in the
company's history: its long-in-the-works first theme park in China,
which is scheduled to open in June in Shanghai.
After stepping down from his executive role next month, Mr.
Staggs will stay on as a special adviser to Mr. Iger through the
current fiscal year, which ends around the beginning of October.
His compensation, which totaled $20 million last fiscal year, will
remain under the terms of his current contract.
Messrs. Staggs and Rasulo were long viewed as leading internal
candidates to succeed Mr. Iger and spent years in a bake-off for
the job of chief operating officer before Mr. Iger and the board
made their choice last year. In June 2015, Disney said Mr. Rasulo
would step down.
At a meeting of television staffers on March 10, Mr. Staggs had
fun with the fact that as a junior executive in 1995, he played a
role in the acquisition of Capital Cities/ABC that brought Mr. Iger
to Disney, according to a person who was present.
Some people close to the company believe Mr. Staggs's departure
means Mr. Iger could stay on past his announced retirement date,
but the CEO has given no indication he plans to do so. Disney's
board, which has been extremely supportive of Mr. Iger, would
likely welcome such a decision.
In after-hours trading, Disney shares fell 1.6% to $97.10. The
stock finished Monday's regular New York trading session down 39
cents at $98.68.
--Joann S. Lublin contributed to this article.
Write to Ben Fritz at ben.fritz@wsj.com
(END) Dow Jones Newswires
April 04, 2016 21:11 ET (01:11 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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