The Walt Disney Co. can in poor health afford one other succession implosion.
The final time Chief Govt Bob Iger handed over the reins, the plan backfired, executives revolted, his alternative bought bounced and Iger returned to guide the storied leisure big for an additional 4 years.
Iger will shut out his two-decade tenure at Disney on the finish of this 12 months when his contract expires. The board is making ready to make a pivotal management transfer at a deadly time for the business.
This time, Disney has entrusted a take-charge outsider to supervise its CEO transition, which is anticipated to unfold within the coming weeks.
James P. Gorman, former head of Morgan Stanley, grew to become Disney’s chairman a 12 months in the past with succession on the high of his to-do record. The 67-year-old Australia native comes with sturdy opinions and sterling credentials: He helped stabilize, then revitalize the Wall Avenue financial institution throughout his 14 years within the C-suite, retiring in December 2024 after orchestrating a seamless baton move.
“I don’t know that there’s anyone who could have navigated these kinds of leadership transitions better than James,” Wharton College Dean Erika H. James mentioned in an interview. “He’s not afraid to do the hard things.”
Disney has saved a lid on its deliberations. The corporate declined to make Gorman out there for this story.
Disney Chief Govt Bob Iger is anticipated to step down on the finish of this 12 months.
(Jay L. Clendenin/Los Angeles Occasions)
4 inner candidates have been vying for the job and lots of imagine the parks boss, Josh D’Amaro, is the seemingly successor. Wall Avenue is rooting for the charismatic 27-year Disney veteran and quarterback of the corporate’s formidable five-year, $60-billion parks and cruise line enlargement.
Hollywood insiders, nevertheless, aren’t counting out high tv and streaming govt Dana Walden, who might change into the primary lady to guide the 102-year-old firm. Film studio head Alan Bergman and ESPN chairman Jimmy Pitaro spherical out the sector.
Not like the final go-round, Disney’s board tightened up the method by establishing a succession committee. The group — comprising Gorman, Common Motors CEO Mary Barra, Lululemon Athletica CEO Calvin McDonald and Sir Jeremy Darroch, the previous head of Sky broadcasting in Britain — have been evaluating the smarts, stamina and public enchantment of every candidate. In addition they should take into account the intangibles wanted to steer Disney via its steep enterprise challenges.
And people challenges are quite a few — together with the erosion of conventional TV channels, the shift to streaming, the enlargement of synthetic intelligence, the unsure U.S. financial system and a caustic political atmosphere.
“There’s so much volatility — economic, geopolitical and cultural volatility,” James mentioned. “People have a lot of anxiety, [which] makes it so difficult for leaders to gain a solid footing. Every day, you can be confronted with something that’s deemed a crisis.”
Choosing a brand new chief for an organization that’s adored by thousands and thousands and employs 230,000 individuals is a high-wire act. Elevating one inner candidate additionally might spark an exodus by the others, placing strain on the board to plot methods to retain Disney’s achieved runners-up.
Josh D’Amaro, chairman of Disney parks, experiences and merchandise, speaks on the Avengers Campus dedication ceremony at Disney’s California Journey Park in 2021.
(Chris Pizzello/Chris Pizzello/Invision/AP)
Gorman earned the deep respect of Wall Avenue throughout his tenure at Morgan Stanley, which included deftly steering the funding agency out of the Nice Recession and bolstering its companies and office tradition.
A local of Melbourne, Gorman earned a legislation diploma however didn’t like being a lawyer so, within the mid-Eighties, he moved to the U.S. and obtained an MBA at Columbia College. He has joked that he needed to keep within the U.S. to earn sufficient cash to pay his pupil mortgage, which carried a 24% rate of interest.
When he retired, Gorman was approached to affix quite a few company boards.
“He chose Disney because it was the most challenging,” mentioned James, who serves on Morgan Stanley’s board. “He felt he could be that change agent in service to Disney … given all that was going on with the company.”
Disney was enmeshed in turmoil, together with heading off a proxy problem from two billionaire shareholders, who had aimed their wrath at Iger and Disney’s stalled inventory worth. Iger had exited the Burbank big on the finish of 2021 after almost two years as govt chairman. He returned 11 months later when Disney’s board dumped his successor, Bob Chapek.
Chapek had been promoted to CEO in February 2020 simply weeks earlier than the world acknowledged the magnitude of the COVID-19 pandemic. Theme parks, theaters and sporting occasions — Disney’s enterprise pillars — went darkish.
On the time, the board envisioned a power-sharing association between the 2 Bobs, however it finally fueled bitterness.
By early 2022, Iger had exited and upheaval on the firm intensified. Disney grew to become a punching bag for Florida’s Republican Gov. Ron DeSantis and Chapek’s stutter-step response to Florida’s so-called “Don’t Say Gay” schooling invoice gave DeSantis ammunition. He labeled Disney as “woke,” then yanked the corporate’s growth authority round Disney World — a blow to the corporate’s huge Central Florida empire.
Senior executives carped about Chapek to Disney board members. Streaming losses mounted, alarming Wall Avenue. Disney’s board gave Chapek a brand new contract and, 5 months later, shoved him out the door.
“There have been all of these starts and stops with succession,” David F. Larcker, director of the Stanford Graduate College of Enterprise Company Governance Analysis Initiative, mentioned. “It’s been a bit embarrassing for such a big company.”
Larcker famous that, years in the past, Disney introduced that Iger would retire in 2015, which Larcker known as “odd” as a result of Iger then was in his early 60s, producing stellar outcomes and was not prepared to depart. (Iger now could be 74 and has been actively mentoring the candidates in preparation for the handoff, individuals near the corporate mentioned.)
CEO succession has lengthy been Disney’s Achilles’ heel. Michael Eisner famously held onto energy till tensions with shareholders and Pixar Animation’s co-founder, the late Steve Jobs, mounted right into a boardroom disaster. Iger was appointed in 2005, and shortly made savvy strikes to shore up the corporate’s artistic engines, together with shopping for Pixar Animation, Marvel Leisure and Lucasfilm, the studio behind “Star Wars.”
In 2015, Disney put in Tom Staggs as chief working officer to ultimately take over for Iger. Staggs left in frustration the next 12 months with Iger nonetheless firmly in management.
“They’ve put people in a position where they are kind of doomed and Iger keeps coming back for another two years, another five years,” Larcker mentioned. “That’s not the way it’s supposed to work.”
By the point Iger returned to Disney in November 2022, the world had modified.
Wall Avenue not was cheering on Disney or different leisure companies to spend large to draw streaming subscribers to compete with Netflix. Traders started demanding income at a time when Disney and different conventional leisure firms had been bleeding billions on their streaming ventures.
Disney inventory had climbed to just about $200 a share in March 2021. Shares closed final week at $111.20.
“Disney is at a unique moment in time,” mentioned Robert Fishman, a media analyst with MoffettNathanson Analysis, mentioned.
“They must prove to investors that the value of their premium content and theme parks is meaningful,” Fishman mentioned. “Investors need confidence that their streaming pivot, which is well underway, will have a big payoff — more than what investors can appreciate today.”
Dana Walden on the Disney 2025 Upfront Purple Carpet held at North Javits Heart on Could 13 in New York.
(Kristina Bumphrey/Selection by way of Getty Photographs)
Disney’s subsequent CEO should navigate an unsure future and fortify Disney+ as a number one streaming service. The corporate should strengthen the film studio and its blockbuster franchises, Marvel, Pixar and “Star Wars,” whereas concurrently refreshing theme parks and overseeing development of a brand new Abu Dhabi resort. The CEO and their crew should steadiness advances in synthetic intelligence with out permitting it to destroy the worth of such beloved characters as Moana and Winnie the Pooh.
Every of the 4 contenders is accountable for a significant Disney enterprise unit, heightening fears that a number of of the unsuccessful candidates will depart — leaving an enormous void. When Chapek was named CEO six years in the past, Disney’s streaming technique chief, Kevin Mayer, exited.
“Successions are multi-person events,” Larcker mentioned. “It’s not just about the CEO.”
At Morgan Stanley, Gorman led a multi-year course of with a disciplined “framework in mind,” mentioned board member Erika James.
The Morgan Stanley candidates spent appreciable time with board members, which has additionally been the case at Disney.
Gorman “led the succession by remembering these are real people who are at stake,” James mentioned. “Shareholders are real people, the employees who will get a new leader are real people and the contenders for this role are real people.”
Gorman, in a Morgan Stanley interview, mentioned he’s been requested for the key of that agency’s easy succession.
“It starts with a very basic principle: Do you, as the boss, want to leave the job?” Gorman mentioned. “And I did. … What that does is frees you up so that your successor has every opportunity to succeed.”
In October 2023, Morgan Stanley named Ted Choose to succeed Gorman as CEO. The 2 different candidates got sizable portfolios and elevated to co-president. Every obtained a one-time bonus of about $20 million to remain put.
Hypothesis is rampant that Gorman and the board will make related chess strikes at Disney.
Whereas D’Amaro is aware of each nook of Disney’s parks and oversees the corporate’s online game unit and vaunted Imagineers, he doesn’t have Hollywood expertise creating motion pictures or tv — two areas which might be essential to Disney’s success.
Walden, who joined Disney in 2019 from Fox, has spent her profession in tv and extra lately streaming — removed from the park’s revenue facilities in Anaheim and Orlando. Amongst her specialties is expertise relations, working intently with brokers, producers and writers.
Hollywood insiders surprise how Disney will strike its management steadiness and whether or not it can appoint co-presidents reporting to the brand new CEO.
“The Board is committed to not only finding the right leader, but also focused on …. positioning the new CEO for long-term success,” Disney’s board informed traders in 2024. That features “surrounding the new CEO with a team of senior executives who can work together to lead the company into the future.”
Disney is anticipated to call Iger’s successor subsequent month.
“Organizations grow because you have change,” Gorman informed Bloomberg in 2023. “You’re not going to grow by doing the same thing, again and again.”
