Disney’s board needs some magic
NEW YORK, Dec 6 (Reuters Breakingviews) - Bob Iger has a knack for head-faking his way out the door. Last month he returned to lead Walt Disney (DIS.N) with a primary task: find a replacement. Keeping him on point is going to require a stronger board.
Iger served as chief executive of the $175 billion media giant from 2005 until 2020. He, like all CEOs, was meant to groom a successor. Instead, he postponed his exit four times as potential replacements Tom Staggs and Kevin Mayer left the building. The job ultimately went to Bob Chapek, who had oversight of the theme parks under Iger. Chapek’s tenure was short, marred by widening operating losses at Disney+ and some high-profile public spats.
Iger in some ways is a fine enough interim choice. Since settling in the C-suite on Nov. 21, Disney added over $7 billion to its market value. Still, the relative performance during his previous tenure doesn’t lend confidence to where Disney needs to go. The company’s stock increased nearly sixfold when he was around, multiples more than the S&P 500 Index. But returns pale in comparison to the likes of Netflix (NFLX.O).
The worry is that Iger will drag his feet again, and no one is around to hurry him along. Eight out of 11 directors – excluding Iger – were appointed during Iger’s first term as the company’s leader. It includes Mary Barra, the boss of General Motors (GM.N) and Nike (NKE.N) Chairman Mark Parker. Susan Arnold, a former executive at Carlyle (CG.O), has served on the board since 2007. She replaced Iger as chair this year even though she is bumping up against Disney’s corporate governance guidelines for length of service.
Activists are circling. Third Point’s Dan Loeb struck a standstill agreement in September after Meta Platforms (META.O) executive Carolyn Everson was named director. Nelson Peltz also has a stake, according to the Wall Street Journal. They could agitate for further changes including nominating directors with media expertise. Only Everson and Iger have that qualification.
That stands in contrast to Netflix’s board, where more than half of the directors come from the entertainment sector including former Disney executive Anne Sweeney. Some fresh talent is coming off Twitter’s board, and potential CEO candidates like Salesforce (CRM.N) ex-boss Bret Taylor are kicking around. A refresh gives Disney its best shot at finally finding the next big cheese to take over the House of Mouse.
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(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)
CONTEXT NEWS
Walt Disney on Nov. 20 said Bob Iger is returning as chief executive officer, effective immediately. He replaces Bob Chapek, who was named chief executive officer in February 2020, replacing Iger.
Iger has agreed to serve as CEO for two years with a mandate from the board to set the strategic direction of Disney and work closely with directors to name a successor. Iger, 71, served as chief executive from 2005 until 2020.
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