The Walt Disney Co. can unwell afford one other succession implosion.
The final time Chief Government Bob Iger handed over the reins, the plan backfired, executives revolted, his substitute received bounced and Iger returned to steer the storied leisure large for one more 4 years.
Iger will shut out his two-decade tenure at Disney on the finish of this yr when his contract expires. The board is getting ready to make a pivotal management transfer at a deadly time for the business.
This time, Disney has entrusted a take-charge outsider to supervise its CEO transition, which is predicted to unfold within the coming weeks.
James P. Gorman, former head of Morgan Stanley, turned Disney’s chairman a yr in the past with succession on the high of his to-do listing. The 67-year-old Australia native comes with robust opinions and sterling credentials: He helped stabilize, then revitalize the Wall Avenue financial institution throughout his 14 years within the C-suite, retiring in December 2024 after orchestrating a seamless baton move.
“I don’t know that there’s anybody who might have navigated these sorts of management transitions higher than James,” Wharton Faculty Dean Erika H. James mentioned in an interview. “He’s not afraid to do the exhausting issues.”
Disney has stored a lid on its deliberations. The corporate declined to make Gorman out there for this story.
Disney Chief Government Bob Iger is predicted to step down on the finish of this yr.
(Jay L. Clendenin/Los Angeles Occasions)
4 inner candidates have been vying for the job and lots of consider the parks boss, Josh D’Amaro, is the doubtless successor. Wall Avenue is rooting for the charismatic 27-year Disney veteran and quarterback of the corporate’s bold five-year, $60-billion parks and cruise line growth.
Hollywood insiders, nevertheless, aren’t counting out high tv and streaming government Dana Walden, who might turn into the primary girl to steer the 102-year-old firm. Film studio head Alan Bergman and ESPN chairman Jimmy Pitaro spherical out the sector.
In contrast to the final go-round, Disney’s board tightened up the method by establishing a succession committee. The group — comprising Gorman, Normal Motors CEO Mary Barra, Lululemon Athletica CEO Calvin McDonald and Sir Jeremy Darroch, the previous head of Sky broadcasting in Britain — have been evaluating the smarts, stamina and public attraction of every candidate. Additionally they should contemplate the intangibles wanted to steer Disney by its steep enterprise challenges.
And people challenges are quite a few — together with the erosion of conventional TV channels, the shift to streaming, the growth of synthetic intelligence, the unsure U.S. economic system and a caustic political surroundings.
“There’s a lot volatility — financial, geopolitical and cultural volatility,” James mentioned. “Individuals have plenty of nervousness, [which] makes it so troublesome for leaders to achieve a strong footing. Every single day, you might be confronted with one thing that’s deemed a disaster.”
Selecting a brand new chief for a corporation that’s adored by hundreds of thousands and employs 230,000 folks is a high-wire act. Elevating one inner candidate additionally might spark an exodus by the others, placing strain on the board to plan methods to retain Disney’s completed runners-up.
Josh D’Amaro, chairman of Disney parks, experiences and merchandise, speaks on the Avengers Campus dedication ceremony at Disney’s California Journey Park in 2021.
(Chris Pizzello/Chris Pizzello/Invision/AP)
Gorman earned the deep respect of Wall Avenue throughout his tenure at Morgan Stanley, which included deftly steering the funding agency out of the Nice Recession and bolstering its companies and office tradition.
A local of Melbourne, Gorman earned a regulation diploma however didn’t like being a lawyer so, within the mid-Nineteen Eighties, he moved to the U.S. and obtained an MBA at Columbia College. He has joked that he needed to keep within the U.S. to earn sufficient cash to pay his pupil mortgage, which carried a 24% rate of interest.
When he retired, Gorman was approached to hitch quite a few company boards.
“He selected Disney as a result of it was essentially the most difficult,” mentioned James, who serves on Morgan Stanley’s board. “He felt he might be that change agent in service to Disney … given all that was happening with the corporate.”
Disney was enmeshed in turmoil, together with heading off a proxy problem from two billionaire shareholders, who had aimed their wrath at Iger and Disney’s stalled inventory value. Iger had exited the Burbank large on the finish of 2021 after almost two years as government chairman. He returned 11 months later when Disney’s board dumped his successor, Bob Chapek.
Chapek had been promoted to CEO in February 2020 simply weeks earlier than the world acknowledged the magnitude of the COVID-19 pandemic. Theme parks, theaters and sporting occasions — Disney’s enterprise pillars — went darkish.
On the time, the board envisioned a power-sharing association between the 2 Bobs, however it in the end fueled bitterness.
By early 2022, Iger had exited and upheaval on the firm intensified. Disney turned a punching bag for Florida’s Republican Gov. Ron DeSantis and Chapek’s stutter-step response to Florida’s so-called “Don’t Say Homosexual” schooling invoice gave DeSantis ammunition. He labeled Disney as “woke,” then yanked the corporate’s improvement authority round Disney World — a blow to the corporate’s huge Central Florida empire.
Senior executives carped about Chapek to Disney board members. Streaming losses mounted, alarming Wall Avenue. Disney’s board gave Chapek a brand new contract and, 5 months later, shoved him out the door.
“There have been all of those begins and stops with succession,” David F. Larcker, director of the Stanford Graduate Faculty of Enterprise Company Governance Analysis Initiative, mentioned. “It’s been a bit embarrassing for such a giant firm.”
Larcker famous that, years in the past, Disney introduced that Iger would retire in 2015, which Larcker referred to as “odd” as a result of Iger then was in his early 60s, producing stellar outcomes and was not prepared to go away. (Iger now could be 74 and has been actively mentoring the candidates in preparation for the handoff, folks near the corporate mentioned.)
CEO succession has lengthy been Disney’s Achilles’ heel. Michael Eisner famously held onto energy till tensions with shareholders and Pixar Animation’s co-founder, the late Steve Jobs, mounted right into a boardroom disaster. Iger was appointed in 2005, and shortly made savvy strikes to shore up the corporate’s artistic engines, together with shopping for Pixar Animation, Marvel Leisure and Lucasfilm, the studio behind “Star Wars.”
In 2015, Disney put in Tom Staggs as chief working officer to finally take over for Iger. Staggs left in frustration the next yr with Iger nonetheless firmly in management.
“They’ve put folks able the place they’re sort of doomed and Iger retains coming again for one more two years, one other 5 years,” Larcker mentioned. “That’s not the way in which it’s imagined to work.”
By the point Iger returned to Disney in November 2022, the world had modified.
Wall Avenue now not was cheering on Disney or different leisure corporations to spend massive to draw streaming subscribers to compete with Netflix. Buyers started demanding earnings at a time when Disney and different conventional leisure firms had been bleeding billions on their streaming ventures.
Disney inventory had climbed to almost $200 a share in March 2021. Shares closed final week at $111.20.
“Disney is at a novel second in time,” mentioned Robert Fishman, a media analyst with MoffettNathanson Analysis, mentioned.
“They need to show to traders that the worth of their premium content material and theme parks is significant,” Fishman mentioned. “Buyers want confidence that their streaming pivot, which is effectively underway, may have a giant payoff — greater than what traders can admire at present.”
Dana Walden on the Disney 2025 Upfront Crimson Carpet held at North Javits Middle on Might 13 in New York.
(Kristina Bumphrey/Selection by way of Getty Photographs)
Disney’s subsequent CEO should navigate an unsure future and fortify Disney+ as a number one streaming service. The corporate should strengthen the film studio and its blockbuster franchises, Marvel, Pixar and “Star Wars,” whereas concurrently refreshing theme parks and overseeing development of a brand new Abu Dhabi resort. The CEO and their group should stability advances in synthetic intelligence with out permitting it to destroy the worth of such beloved characters as Moana and Winnie the Pooh.
Every of the 4 contenders is liable for a serious Disney enterprise unit, heightening fears that a number of of the unsuccessful candidates will depart — leaving a giant void. When Chapek was named CEO six years in the past, Disney’s streaming technique chief, Kevin Mayer, exited.
“Successions are multi-person occasions,” Larcker mentioned. “It’s not simply in regards to the CEO.”
At Morgan Stanley, Gorman led a multi-year course of with a disciplined “framework in thoughts,” mentioned board member Erika James.
The Morgan Stanley candidates spent appreciable time with board members, which has additionally been the case at Disney.
Gorman “led the succession by remembering these are actual people who find themselves at stake,” James mentioned. “Shareholders are actual folks, the staff who will get a brand new chief are actual folks and the contenders for this function are actual folks.”
Gorman, in a Morgan Stanley interview, mentioned he’s been requested for the key of that agency’s clean succession.
“It begins with a really fundamental precept: Do you, because the boss, wish to depart the job?” Gorman mentioned. “And I did. … What that does is frees you up in order that your successor has each alternative to succeed.”
In October 2023, Morgan Stanley named Ted Choose to succeed Gorman as CEO. The 2 different candidates got sizable portfolios and elevated to co-president. Every acquired a one-time bonus of about $20 million to remain put.
Hypothesis is rampant that Gorman and the board will make related chess strikes at Disney.
Whereas D’Amaro is aware of each nook of Disney’s parks and oversees the corporate’s online game unit and vaunted Imagineers, he doesn’t have Hollywood expertise creating motion pictures or tv — two areas which can be essential to Disney’s success.
Walden, who joined Disney in 2019 from Fox, has spent her profession in tv and extra just lately streaming — removed from the park’s revenue facilities in Anaheim and Orlando. Amongst her specialties is expertise relations, working intently with brokers, producers and writers.
Hollywood insiders marvel how Disney will strike its management stability and whether or not it is going to appoint co-presidents reporting to the brand new CEO.
“The Board is dedicated to not solely discovering the best chief, but in addition centered on …. positioning the brand new CEO for long-term success,” Disney’s board informed traders in 2024. That features “surrounding the brand new CEO with a group of senior executives who can work collectively to steer the corporate into the longer term.”
Disney is predicted to call Iger’s successor subsequent month.
“Organizations develop as a result of you could have change,” Gorman informed Bloomberg in 2023. “You’re not going to develop by doing the identical factor, many times.”
