Thursday, March 23, 2017
Bob Iger extends his contract as CEO of the Walt Disney Company Until 2019 as search for his successor continues. Excerpts from the L.A Times article and Deadline article:
Walt Disney Co. Chairman and Chief Executive Robert Iger has extended his contract by one year, underscoring the challenges the company’s board of directors has faced in finding a successor to lead Hollywood’s iconic entertainment giant. Iger, 66, previously was expected to leave the company at the end of June 2018. His new deal ends July 2, 2019. The extension, Iger’s third since he became CEO in 2005, had been widely expected. It gives Disney’s board more time to search for a successor — a process that has been closely watched by investors who’ve expressed concern over the apparent lack of progress on the issue.
With few obvious internal candidates, the board seems increasingly likely to look outside Disney for its next CEO. Replacing Iger will not be a simple task: the company has enjoyed an extended run of success under Iger, and seen its stock price more than quadruple on his watch.
Iger, 66, says he plans to “build on our proven strategy for growth while working with the Board to identify a successor as CEO and ensure a successful transition.” Iger is one of the nation’s highest paid CEOs; he made $43.9 million in the fiscal year that ended in September. His new deal will extend the current terms, and give him an additional $5 million bonus if he stays to mid-2019, according to an SEC filing.
In addition, the board changed the standards it will use to determine his bonus. It says that Disney’s stake in Hulu is “projected to continue to have a net adverse impact” on the company’s operating profits — one of the benchmarks to determine Iger’s success.
As a result, the board will “make such adjustments as it deems appropriate” to make sure the losses don’t hurt Iger’s pay. That’s to ensure that the Iger doesn’t feel “an unintended incentive or disincentive” when making decisions.
The CEO agreed to serve as a consultant for three years after the term expires. He’ll be paid $2 million a year for two years, and $1 million for the third year.
Disney will continue his security services when he becomes a consultant, but won’t let him continue to use the corporate jet for personal trips.
If the company decides to end his tenure before the end of the new contract — except for cause — then Iger would still be able to collect the bonus, and begun the consulting term immediately.
In an appearance just hours after the contract news was announced Thursday, Iger said he was “serious this time around” about this being his last extension, and acknowledged the complexities of finding his successor.
“Succession is a complicated thing and we felt, meaning the board and I, [that] we could use more time to not only to spend on succession but to create a better transition so we mutually agreed to add another year,” Iger said at the SCALE technology and entertainment conference.
Read the full L.A Times article HERE and Deadline article HERE.