Walt Disney Extends Robert Iger's Contract Through June 2016
UPDATED: The CEO will add the chairman title when John Pepper Jr. retires next year, with a new CEO set to be named to take over that role after March 31, 2015.
NEW YORK - The Walt Disney Co. has extended Robert Iger’s employment contract through June 2016, the entertainment conglomerate said Friday, putting in motion a longer-term succession process.
Under the new agreement, effective Oct. 1, Iger, 60, will add the role of chairman following current chairman John Pepper Jr.’s retirement from the board at Disney’s 2012 annual shareholder meeting in March. Until then, Iger will remain president and CEO, Disney said.
Iger, who was named president and CEO on Sept. 30, 2005, will then hold the positions of chairman and CEO through March 31, 2015, at which time a new CEO will be named. Iger will retain the title of executive chairman until his term ends, the company said. The contract calls for his retirement at the end of the term.
Iger’s previous employment contract was set to expire on Jan. 31, 2013.
"The Disney board took action at this time to secure the benefit of Iger’s leadership through 2016, provide for an effective, seamless succession and management transition and a continuity of the company’s corporate strategy to create long-term value for shareholders," Disney said in a statement.
Wall Street observers say theme parks unit head Tom Staggs and CFO Jay Rasulo, who previously swapped jobs to give them exposure to new roles, are likely internal candidates for the CEO role once it opens up, but they also mention other strong executives as possible candidates.
"I expect Jay Rasulo or Tom Staggs to be named the subsequent CEO - or president first," said Miller Tabak analyst David Joyce, who highlighted Disney's deep management bench. "Anne Sweeney or George Bodenheimer, who currently co-run the TV properties, could likely be shifted into the parks or CFO role then."
Meanwhile, Iger's annual salary will rise from $2 million to $2.5 million under his new contract. He is not receiving any up-front equity award in connection with the new contract agreement, and his annual bonus - whose target increases by $2 million to $12 million - will be based on the company’s performance, including operating profit, return on invested capital, earnings per share and after-tax free cash flow. His annual long-term equity incentive award of options and restricted stock units will be "entirely dependent on the company’s future financial performance," Disney said.
Disney highlighted that Iger "has led the company to record operating results while positioning Disney for the future in the global, dynamic multi-media industry." It added that Disney’s total shareholder return since his elevation to the president and CEO roles is five times higher than that of the broad-based S&P 500 stock index.
“As one of the most iconic brands and preeminent companies in the world, The Walt Disney Company requires a leader with the proven ability to drive creative and financial success in a dynamic world," Pepper said in a statement.
Said Iger: “I’m committed to increasing long-term value for shareholders and am confident we will continue to do so through the successful execution of our core strategic priorities: the creation of high quality, branded content and experiences, the use of technology, and creating growth in numerous and exciting international markets."