Disney Extends CEO Robert Iger's Tenure to 2019 -- 4th Update
March 23 2017 - 4:57PM
Dow Jones News
By Ben Fritz
Walt Disney Co. has given itself another year to find a new
chief executive.
With no clear candidate to take the helm at the world's largest
media company, Robert Iger has extended his contract for a third
time and will stay on at least one additional year as chairman and
CEO, Disney said Thursday.
Mr. Iger's new contract runs through July 2, 2019, versus the
previous expiration date of June 30, 2018.
The search process remains in an early stage, according to
people familiar with the matter, making it unlikely that Disney
will name a successor until sometime next year. That could give the
next CEO less than a year to prepare for the job, one reason Mr.
Iger has agreed to stay on as a consultant for three years
following his departure, during which he will not be allowed to
work at another major media company.
Disney in early 2015 named former chief financial officer and
parks chairman Tom Staggs chief operating officer, making him the
strongest candidate to replace Mr. Iger, people within the company
believed. With few clear responsibilities, he spent a rocky first
year on the job. Last March, he decided to leave after learning
that Mr. Iger and the board had lost confidence in him, people
close to Disney said.
That experience ended with public embarrassment for the company,
which now appears loathe to repeat it. Given how close Mr. Iger's
new retirement is, the company won't be in a position to offer its
next CEO the years of on-the-job training that Mr. Staggs began
before his abrupt departure.
No internal executives currently stand out as obvious candidates
to take over Disney, people who work at the company said. The
highest-profile outside candidates, such as producer and former
News Corp. executive Peter Chernin, Steve Burke, CEO of Comcast
Corp.'s NBCUniversal, and Facebook Inc. COO and Disney board member
Sheryl Sandberg are unlikely to be offered or take the post, people
with knowledge of the matter said.
Initially set to retire in 2015 and then in 2016, Mr. Iger said
when his contract was extended to 2018: "This time I really mean
it." But his efforts to work with a National Football League
expansion team in Los Angeles didn't pan out and no successor was
identified, making it less likely he would be able to step down in
2018.
"Succession is a complicated thing and the board and I felt we
could use more time to not only spend on succession but to create a
better transition," Mr. Iger said Thursday at a conference
sponsored by the University of Southern California.
"I'm serious this time around," about retiring when his contract
expires, the 66-year-old added with a laugh.
The Wall Street Journal reported last month that Disney's board
was considering extending Mr. Iger's contract. Investors appeared
to shrug off Thursday's announcement; shares closed Thursday up
about 0.1% at $112.24.
Also at the USC conference, Mr. Iger discussed several
initiatives he said could set up the next CEO for success,
including plans for new Star Wars movies for the next decade-plus
and work on augmented-reality technology, which the CEO said he
prefers to virtual reality because it mixes digital images with
physical objects. That technology will be deployed in Disney parks,
he said, along with work on new lands inspired by "Star Wars."
Much of Mr. Iger's time is also currently devoted to developing
direct-to-consumer offerings that could help boost ESPN and other
television networks that are losing momentum as young consumers
defect from costly pay television packages.
Mr. Iger's contract extension calls for his compensation in
fiscal 2019 to be determined on the same basis as fiscal 2016,
which ended Oct. 1. However, he will also receive a $5 million
bonus if he stays until July 2, 2019. The extension also calls for
Mr. Iger to earn $2 million for each of the first two years of his
consulting term and $1 million for the third.
Since being named CEO in 2005, Mr. Iger has led Disney through a
period of sustained growth, including acquisitions of Pixar
Animation Studios, Marvel Entertainment and Lucasfilm, the studio
behind the Star Wars films. Those acquisitions have helped make
Disney's movie studio the most successful in Hollywood, and have
also provided material for its consumer products business and theme
parks around the world.
Disney says total shareholder return during Mr. Iger's tenure
has been nearly twice as high as other large media
conglomerates.
"It is obvious that the Company and its shareholders will be
best served by [Mr. Iger's] continued leadership as the Board
conducts the robust process of identifying a successor and ensuring
a smooth transition," Orin C. Smith, Disney's independent lead
director, said in a statement.
--Joann S. Lublin contributed to this article.
Write to Ben Fritz at ben.fritz@wsj.com
(END) Dow Jones Newswires
March 23, 2017 16:42 ET (20:42 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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