Earlier than Bob Iger returned to the helm of Disney, the leisure big signed him to a $10 million deal to advise his successor Bob Chapek—despite the fact that the 2 executives had been hardly talking.
Iger, who rejoined the corporate as CEO final week after Chapek’s ousting, was on a $2 million a yr contract till 2026 to advise “on such issues as his successor as chief government officer could request sometimes,” based on phrases disclosed in Disney company filings reported by the Monetary Occasions. The settlement got here into pressure when Iger left his position as government chairman on the finish of 2021.
The much-loved Iger had hand-picked Chapek to take over the Home of Mouse after he had led the corporate for 15 years. However as soon as Chapek took over as CEO of Disney in February 2020, his relationship with Iger soured quickly, and the ballooning losses of Disney’s streaming Direct-To-Shopper (DTC) division, which includedDisney+, Hulu and ESPN+, ultimately led to requires Chapek’s head.
In accordance with Disney’s SEC submitting, the five-year consulting deal enabled the corporate and Chapek “to have entry to Mr. Iger’s distinctive abilities, data and expertise with regard to the media and leisure enterprise” and included month-to-month and yearly “most time commitments” of unspecified size. Disney was additionally paying Iger’s safety prices as an ex-employee which totaled round $750,000 a yr, the FT reported.
Iger’s return rocked Hollywood and despatched shares in Disney surging greater than 6% after the announcement was made. Disney didn’t reply to Fortune‘s request for remark.
How the connection between the Bobs fell aside
Iger and Chapek’s relationship started to deteriorate quickly after Chapek took the highest place at Disney. In accordance with a CNBC report, the connection between the outgoing and incoming Disney leaders soured after Iger introduced he wasn’t going to completely depart from the corporate in March 2020, with the intention to assist it climate the pandemic.
Chapek was mentioned to be “livid” with Iger sticking round. Having expressed little need for assist, Chapek felt that Iger was suspending his retirement as soon as once more and lowering him to second-in-command.
Tensions inside Disney had been additional exacerbated in Marck 2022 when Chapek stayed quiet over Florida’s “Don’t Say Homosexual” invoice — the laws that will prohibit classroom dialogue of sexual orientation or gender identification in main colleges within the state the place Chapek had simply ordered 2,000 of its Disney workers to maneuver to reap the benefits of profitable tax credit.
Chapek later apologized for his muted response on the invoice, but it surely marked a robust deviation away from Iger’s model, the place most of Disney’s stances on political and social points would come instantly from him.
Chapek then determined to strategically reorganize the corporate’s media and leisure companies by stripping funds energy from content material creators and as a substitute centralizing it below his right-hand man, former Goldman Sachs banker Kareem Daniel. This transfer took away the profit-and-loss energy from lots of Disney’s veteran division leaders and consolidated that management below Daniel, a shift that was met with sturdy backlash from longtime Disney workers.
One other nail in Chapek’s coffin got here when he abruptly fired Peter Rice — the top of the corporate’s TV division — for being an in poor health match with Disney’s company tradition. Whereas Disney’s board threw its help behind Chapek and his ousting of Rice, staffers inside Disney mentioned the transfer tanked morale and additional divided the CEO from Disney veterans and Iger.
Because the tensions surrounding Chapek elevated, the connection between the Bobs received worse, the FT reported, with Iger reportedly complaining to mates that his recommendation was not sought by his successor at key moments.
“Iger by no means forgave Chapek for the way in which Chapek distanced himself and took management of the corporate,” a Disney government instructed the FT. “In some methods, Iger thought he would nonetheless be the coach. Chapek was not prepared.”
Iger’s return after a bit day without work
Religion in Chapek’s management collapsed when the CEO introduced earlier this month that “robust and uncomfortable selections”, together with workers cuts, had been coming to the corporate after its Direct-To-Shopper division reported that losses greater than doubled to $4 billion for the fiscal yr ending Oct. 1.
Iger then acquired a name on Nov. 18 from board chair Susan Arnold and two days later agreed to return to Disney for one more two years to steer the ship again on target.
Iger is returning to Disney on a slimmed-down pay bundle, which features a $1 million base wage, a $1 million goal bonus, and inventory awards valued at $25 million. This compares to a mean pay bundle of round $47 million throughout his final 5 years as chief government, the FT reported.
“Basically he’s taken a pay minimize of 40%. . . to return again,” Tom Gosling, an government fellow on the London Enterprise Faculty who established PwC’s government pay observe, instructed the FT. “He should love the job, love the corporate, or see a variety of upside within the share value. Perhaps all three.”
The primary strikes taken by Iger after being reinstated as CEO this week had been to stroll again Chapek’s technique, return revenue and loss energy to content material creators, and hearth Kareem Daniel.
Our new weekly Influence Report publication will study how ESG information and traits are shaping the roles and duties of right now’s executives—and the way they’ll greatest navigate these challenges. Subscribe right here.