Before Bob Iger returned to the helm of Disney, the entertainment giant hired him for $10 million to advise his successor, Bob Chapek, though the two executives hardly spoke to each other.
Iger, who rejoined the company as chief executive last week after Chapek’s ouster, had a $2 million-a-year contract through 2026 to advise “on such matters as his successor as chief executive may request from time to time.” ”, according to the terms disclosed in Disney corporate files reported by the financial times. The deal took effect when Iger stepped down as CEO at the end of 2021.
The much loved Iger had handpicked Chapek to take over House of Mouse after running the company for 15 years. But once Chapek took over as Disney’s CEO in February 2020, his relationship with Iger quickly soured and the mounting losses of Disney’s direct-to-consumer (DTC) streaming division, which included Disney+, Hulu and ESPN+ eventually led to calls for Chapek. head.
According to Disney filing with the SEC, the five-year consulting agreement allowed the company and Chapek “to have access to Mr. Iger’s unique skills, knowledge, and experience with respect to the media and entertainment business” and included monthly “maximum time commitments” and years of unspecified duration. Disney was also paying for Iger’s security costs as a former employee that totaled about $750,000 a year, the FOOT informed.
Iger’s return rocked Hollywood, sending Disney shares up more than 6% after the announcement was made. Disney did not respond to Fortunerequest for comments.
How the relationship between the Bobs fell apart
Iger and Chapek’s relationship began to deteriorate soon after Chapek assumed the top job at Disney. according to a CNBC reportThe relationship between outgoing and incoming Disney leaders soured after Iger announced he would not be leaving the company entirely in March 2020, to help it weather the pandemic.
Chapek was said to be “furious” at Iger staying. Having expressed little desire for help, Chapek felt that Iger was postponing his retirement yet again and reducing him to second-in-command.
Tensions within Disney were further exacerbated in March 2022 when Chapek remained silent on 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 had just ordered 2,000 of his Disney employees to move to take advantage of lucrative tax credits.
Chapek later apologized for his muted response on the bill, but it marked a strong departure from Iger’s style, where most of Disney’s stances on political and social issues would come directly from him.
Chapek then decided to strategically reorganize the company’s media and entertainment businesses by taking budgeting power away from content creators and instead centralizing it under his right-hand man, former Goldman Sachs banker Kareem Daniel. This move took profit-and-loss power away from many of the Disney division’s veteran leaders and cemented that control under Daniel, a change that was met with a strong reaction from longtime Disney employees.
Another nail in Chapek’s coffin came when he abruptly fired Peter Rice, the head of the company’s television division, for not fitting in well with Disney’s corporate culture. While the Disney board supported Chapek and Rice’s ouster, employees inside Disney said the move brought down morale and further divided the CEO of Disney veterans and Iger.
As tensions grew around Chapek, the relationship between the Bobs worsened, the FOOT reported, with Iger allegedly complaining to friends that his successor failed to seek his advice at key moments.
“Iger never forgave Chapek for the way Chapek distanced himself and took control of the company,” a Disney executive told the outlet. FOOT. “Somehow, Iger thought that he would continue to be the coach. Chapek was not willing.
The return of Iger after a little free time
Faith in Chapek’s leadership collapsed when the CEO announced earlier this month that “difficult and uncomfortable decisions”, including staff cuts, were coming to the company after its Direct-To-Consumer division reported that losses more than doubled to $4 billion for the fiscal year ending October 1.
Iger then received a call on November 18 from board chair Susan Arnold, and two days later agreed to return to Disney for another two years to get the ship back on track.
Iger returns to Disney with a reduced pay package, which includes a base salary of $1 million, a target bonus of $1 million and stock awards valued at $25 million. This compares to an average salary package of around $47 million over his last five years as CEO, the FOOT informed.
“Essentially, you have taken a 40% pay cut. . . come back,” Tom Gosling, an executive fellow at the London Business School who established PwC’s executive pay practice, said. FOOT. “You have to love the job, love the company, or see a lot of upside in the stock price. Maybe all three.
The first moves Iger made after being reinstated as CEO this week were to reverse Chapek’s strategy, return profit-and-loss power to content creators and fire Kareem Daniel.
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