Stephen Desaulniers | TBEN
The disney The board’s decision to trade Bob Chapek for Bob Iger as the company’s CEO may well be the right one for the company’s future. But the process of arriving at this choice doesn’t make everyone involved look great.
No sudden CEO change is easy, but the details that led to Iger replacing his hand-picked successor are filled with missteps, deceit and clumsiness.
The Disney board extended Chapek’s contract for another three years on June 28.
“Disney was dealt a heavy hand by the pandemic, but with Bob at the helm, our businesses – from parks to streaming – not only weathered the storm, they emerged in a strong position,” Disney Chairman Susan Arnold wrote in a statement. statement on time. “At this important time of growth and transformation, the Board of Directors is committed to keeping Disney on the successful path it has embarked on today, and Bob’s leadership is key to achieving that goal. Bob is the right leader at the right time for The Walt Disney Company, and the Board has full confidence in him and his leadership team.”
Disney Chief Executive Officer Bob Chapek speaks at the 2022 Disney Legends Awards at Disney’s D23 Expo in Anaheim, California, September 9, 2022.
Mario Anzuoni | Reuters
Less than five months later, the board has decided that none of the above is correct. The board could have let Chapek’s contract expire in February. Instead, having extended his contract, the company is about to pay Chapek tens of millions in severance pay.
Furthermore, the board will have to tell employees and investors what has changed. Either the Disney board was not honest in its trust in June, or something so drastic happened between now and then that it changed its mind. Disney’s fourth-quarter fiscal results were not good, but Chapek also told investors streaming losses had eased and reaffirmed that the company’s direct-to-consumer products would be profitable in 2024. Achieving profitability by 2024 on streaming has been his message for the past three years.
Chapek can also validly claim that he was dealt a losing hand. He took over as CEO in February 2020, just as the coronavirus pandemic began, bringing theme park attendance to a halt. He successfully brought about a full recovery in park attendance, so much so that he began devising ways to limit crowds to increase consumer happiness.
Disney+ has consistently grown subscribers over the past year, often exceeding 10 million in a quarter, while Netflix‘s additions reached a plateau. But investors deployed the streaming story of growth at any cost in January, making Disney+’s subsequent growth less attractive.
Arguably Chapek’s biggest mistake was getting rid of Iger rather than making him a trusted adviser. During Chapek’s tenure, he could not help but be compared to the man he replaced. Three times before, Iger has postponed retirement to stay on as CEO of Disney. In that sense, it’s no surprise that he would come back again, despite his other words.
Pushing Iger away instead of embracing his help was always risky. It appears that this contributed to Chapek’s premature demise as CEO.
WATCH: TBEN’s Jim Cramer and David Faber exchange notes on Bob Iger’s return to Disney