Before Bob Iger returned to the helm of the Disneythe entertainment giant signed him to a $10 million deal to advise his successor Bob Chapek—even though the two executives barely spoke.
Iger, who returned to the company as CEO last week after Chapek’s ouster, is under a $2 million a year contract through 2026 to advise “on matters that his successor as chief executive officer may request.” from time to time,” according to terms disclosed by Disney corporate filings reported by the Financial Times. The agreement begins when Iger leaves his post as executive chairman at the end of 2021.
The much-loved Iger chose Chapek to take over the House of Mouse after he led the company for 15 years. But when Chapek took over as Disney’s CEO in February 2020, his relationship with Iger deteriorated sharply, and the growing loss of Disney’s streaming Direct-To-Consumer (DTC) division, which includes Disney+, Hulu and ESPN+, eventually leading to calls for Chapek’s head.
According to Disney’s SEC Filingthe five-year consulting deal enabled the company and Chapek to “have access to the unique skills, knowledge and experience of Mr. Disney also paid Iger’s security costs as a former employee totaling nearly $750,000 in a year, the FT reported.
Iger’s return sent shockwaves through Hollywood and sent Disney shares surging more than 6% after the announcement. Disney did not respond luckThis is a request for comment.
How the relationship between the Bobs broke down
Iger and Chapek’s relationship began to deteriorate shortly after Chapek took the top position at Disney. According to a CNBC reportsThe relationship between the outgoing and future leaders of Disney worsened after Iger announced that he will not leave the company completely in March 2020, to help it cope with the pandemic.
Chapek is said to be “angry” with Iger. Having expressed little desire for help, Chapek felt that Iger was postponing his retirement once more and demoted him to second in command.
Tensions within Disney escalated significantly in March 2022 when Chapek remained silent Florida’s “Don’t Say Gay” bill — legislation that would ban classroom discussion of sexual orientation or gender identity in elementary schools in the state where Chapek ordered 2,000 of Disney’s employees to move to take advantage of beneficial tax credits.
Chapek later apologized for his muted response to the bill, but it marked a sharp departure from Iger’s style, where most of Disney’s stances on political and social issues came directly from him.
Chapek then decided to strategically reorganize the company’s media and entertainment businesses by removing budget power from content creators and instead centralizing it under his right-hand man, ex. Goldman Sachs banker Kareem Daniel. The move removed profit-and-loss power from many of Disney’s veteran division leaders and consolidated control under Daniel, a move that was met with strong backlash from longtime employees. at Disney.
Another nail in Chapek’s coffin came when he Peter Rice was suddenly fired — the head of the company’s TV division — because it didn’t fit Disney’s corporate culture. While Disney’s board threw its support behind Chapek and his firing of Rice, Disney insiders said the action stifled morale and further split the CEO from Disney veterans and Iger.
As the tension surrounding Chapek grows, the relationship between the Bobs worsens, the FT reports, that Iger reportedly complained to friends that his advice was not sought by his successor at key moments.
“Iger never forgave Chapek for the way Chapek distanced himself and controlled the company,” a Disney executive said. FT. “In some ways, Iger thinks he’s still going to be the coach. Chapek doesn’t want to.”
Iger’s return after a little time off
Faith in Chapek’s leadership was shattered when the CEO announced earlier this month that “difficult and uncomfortable decisions”, including staff cuts, came to the company after its Direct-To-Consumer division reported that losses more than double to $4 billion for the fiscal year ending Oct.
Iger then received a call on Nov. 18 from board chair Susan Arnold and two days ago agreed to return to Disney for another two years to get the ship back on track.
Iger returned to Disney with a slimmed-down pay package, which included a $1 million base salary, a $1 million target bonus, and stock awards worth $25 million. This compares to an average pay package of nearly $47 million in his last five years as chief executive, the FT reported.
“He actually got a pay cut of 40%. . . to go back,” Tom Gosling, an executive fellow at the London Business School who founded PwC’s executive pay practice, told FT. “He has to love the job, love the company, or see a big increase in the share price. Maybe all three.”
The first steps Iger took after returning as CEO this week were walking back Chapek’s strategy, returning to profitability and disempowering content creators, and firing Kareem Daniel.
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