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🏰 Disney: Legendary CEO Returns (Wild New Changes)

Old CEO & 2 Executives removed asap. A lesson in “governance”

This is The Level Ups. Modern business news for the future business leader (in plain-Jane English).

Disney isn’t playing around anymore.

Hope you had a great Thanksgiving!

Today:

  • Bob Iger returns as CEO.

  • The “mess” he’ll have to clean up.

  • How did this even happen?

  • Where’s the Board of Directors?

Let's get into it. 

Estimated Reading Time: 4 minutes & 30 seconds. 

Return of the legend.

There’s no other way to describe Iger. He’s a legend (and the ultimate deal guy). I’m saying this based on what I know about his business history.

He could be an awful guy (I have no idea), but he did great things at Disney, and it seems like he’ll do more now that he’s returning.

Under his leadership, Disney acquired:

  • Pixar in 2006

  • Marvel in 2009

  • 21st Century Fox in 2019

And, it opened the first Disney theme park in Mainland China, along with much more.

The man gets it done.

He’s back to do it again after the company went straight into the dumpster since Bob Chapek took over for Iger in 2020.

How Did Disney Get Here?

Chapek was the head of their Parks division, and the pandemic hit right after he was appointed CEO.

Tough spot when the division that earned you the CEO spot drops like a sack of bricks. But Chapek is not the victim of difficult circumstances. He messed up too.

Disney blindsided Wall Street with quarterly earnings that they lost $1.5B. That’s a crazy amount. The original report is here.

Year-to-date, Disney is down 36.93%.

Aside from the pandemic, Disney has been screwed by the overall market tanking, and while “Disney +” is growing, it’s expensive.

It looks like the Board of Directors (more on this later) is pointing fingers at new CEO Bob Chapek.

Good news is that you can clearly see the Disney stock price shoot up by 10% as soon as Iger’s return was announced.

Investors must be happy. It makes me wonder if it’s a good time to buy shares in Disney, but that’s not what this is about.

Was It Really The New CEO’s Fault?

I say no. It’s not just the new guy and the market.

They lost a lot of money, but there’s more to the story. Why was he there in the first place? That decision created many problems.

One of the CEO's key responsibilities is finding the best replacement when it’s time to retire or leave.

Disney’s issues are on Iger too. He made a seemingly bad call.

For a little more clarity, Chapek was *ousted.* Meaning it was a big surprise.

These days you can’t fire someone unless you go through several steps. Layoffs should never be a surprise.

When the CEO of a massive company like Disney is suddenly fired (without warning), it’s a big deal.

But Iger’s not the only one who made a mistake.

While Iger’s choice may not have been the wisest, the issue starts above him.

Disney’s Board of Directors has dropped the ball.

What is Disney’s Board of Directors Doing?

Most people don’t talk about Boards enough.

Ever seen a CEO change their mind out of nowhere and make sweeping changes? It’s probably caused by pressure from above.

The ownership (shareholders) often creates that pressure. The change isn’t “out of nowhere” most people don’t see the source nor consider the CEO's bosses.

In Disney’s case, the Board is appointed by the shareholders because it's a publicly traded company.

Iger is one of the top five shareholders. Rough when the person you replace has that kind of power and is still around.

Even if Iger recommended Chapek, the Board accepted and made the appointment.

It blows my mind that they didn’t have the foresight to nail this. See who’s on the board below.

Know what’s worse? The same Board that just ousted Chapek also voted to extend his agreement by three years.

They did that less than six months ago.

What a disaster.

The Board’s Job:

A Board has both a hard job and an easy job. It depends on how you look at it.

They have no job descriptions, and most of their time is spent reading reports and making decisions.

They handle approvals for big mergers, acquisitions, appointing the CEO, and “supporting” senior executives.

Directors on a Board talk a lot, bring valuable relationships to the business, and have a big responsibility.

I find Boards (especially at companies like Disney) to focus more on politics than actual business.

A lot of what they do is ceremonial, but sometimes Boards play a crucial role. Maybe I’m a cynic.

Regardless, they messed this up.

Don’t be surprised if Disney’s board “suddenly” sees new changes once the dust settles.

So, Who is On the Board?

And how could they get this so wrong?

Let me give you a little insight on Disney’s Board of Directors:

  • Susan E. Arnold. Chairman of the Board. Former President - Global Business Units at Procter & Gamble, Vice Chair of P&G Beauty and Health, and so much more.

  • Mary T. Barra. Former Chair of General Motors Company. Former CEO as well. The list goes on.

  • Safra A. Catz. Former CEO of Oracle. President, CFO, and more before that.

  • Amy L. Chang. On the Board of Procter & Gamble and advisor to over a dozen companies.

  • Francis A. Desouza. Former President and CEO of Illumina, Inc (biotech company). He has a long resume in senior leadership.

  • Carolyn Everson. President of Instacart and former VP of Global Marketing Solutions at Meta. On the board of Coca-Cola, Villanova University and more.

  • Michael B.G. Forman. Former VP and President of Strategic Growth at Mastercard. Served as US Trade Representative in the Executive Office of the President.

  • Mark G. Parker. Current Executive Chairman at NIKE, Inc. Former CEO and President of Nike as well.

There are more on the full list, but this makes the point.

With these people steering the ship, what could go wrong?

A lot, apparently.

Aside from Iger, they don’t know much about the work. An issue among most boards.

Legend Makes The First Move:

Immediately, Iger announced changes and made his focus clear.

First, he got rid of Chapek and his right-hand man, the Chairman of Disney Media and Entertainment Distribution. Most recently, Arthur Bochner, VP of Strategic Communications, was also let go.

Next, he announced a “restructuring” intending to place the creative teams back at the “heart and soul” of the company.

Looks like creative work might take front and centre. A welcome change if you want my opinion. Disney + can only ride the Marvel train so far.

Wrapping Up:

Don’t feel too bad for Bob Chapek. He walks away with $23M.

Exciting to see how Disney will change things up.

Good news is the market should improve over the next two years (Iger's term). Will that be the reason Bob Iger will be a hero, or will he make it happen again?

Time will tell.

Thanks for reading!

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