Disney vote is a referendum on Bob Iger’s many CEO contract extensions

Disney CEO Bob Iger in 2019. PHOTO: TIFFANY HAGLER-GEARD/BLOOMBERG NEWS
Disney CEO Bob Iger in 2019. PHOTO: TIFFANY HAGLER-GEARD/BLOOMBERG NEWS

Summary

The entertainment giant’s past handling of Iger’s succession is a key criticism that Trian Partners has raised in pushing for board seats.

Succession is top of mind for investors casting votes in Disney’s proxy battle with Nelson Peltz.

As the campaign enters its final lap ahead of the entertainment giant’s annual meeting on Wednesday, with Disney ahead as of Monday night, some investors are still deciding whether to back the company’s slate of directors or to back candidates put forth by activist investors.

Disney’s past handling of succession is a key criticism that Peltz’s Trian Partners has raised in pushing for board seats for the billionaire investor and former Disney CFO Jay Rasulo.

Disney repeatedly extendedBob Iger’s contract during his first stint as CEO, which ended in 2020. When he returned to succeedBob Chapek in 2022, Iger said he would return for two years. Months later, the board pushed his exit date to 2026.

Here is a look at the many announced and revised contracts Disney forged with Iger to extend his stay as CEO.

 

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For some investors, Iger’s many contract extensions are evidence that the board was letting the CEO stay, rather than encouraging him to sharpen his focus on finding a strong replacement. Critics of Disney’s succession-planning failures also point to the appointment and abrupt ousting of Bob Chapek, months after his contract was extended.

Disney last month told shareholders that its succession-planning committee and board are engaged in a “diligent and thorough succession-planning process." Finding a new CEO and surrounding that person with a strong team of senior leaders is a priority, the company said.

A decade ago, when Iger’s departure date was extended for the third time in four years, he said he was serious about the end date. “This time I really mean it," Iger said in an interview at the time.

The board extended Iger’s contract in early 2017 as internal candidates to succeed him departed, and again later that year after Disney’s purchase of some of 21st Century Fox Inc.’s entertainment assets.

In 2019, Iger told investors he planned to leave two years later when his then-contract expired. “I was going to say, ‘This time I mean it,’ but I’ve said that before," Iger joked.

Shareholder advisory firm Glass Lewis acknowledged flaws in Disney’s earlier efforts to name a new CEO but said its current succession-planning committee is composed of credible members and encouraged shareholders to support the company’s slate.

Institutional Shareholder Services, meanwhile, recommended that Disney vote to add Peltz to its board and support all but one of Disney’s nominees, pointing to the board’s prior failings at succession planning. It didn’t endorse Rasulo, Trian’s other nominee.

Robbie Whelan contributed to this article.

Write to Sarah Krouse at sarah.krouse@wsj.com and Nate Rattner at nate.rattner@wsj.com

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