Breaking News

Home Depot Names Craig Menear CEO, Frank Blake to Remain as Chairman
Tweet TWEET

Disney’s Iger Named Chairman, Will Step Down as CEO in 2015

Walt Disney Co. (DIS) said Chief Executive Officer Robert Iger will take on the added role of chairman next year at the theme-park and entertainment company, part of a plan to appoint a new CEO in 2015.

Iger, 60, will succeed John E. Pepper at the annual meeting in March, Burbank, California-based Disney said today in a statement. Pepper, 73, a former chairman and CEO of Procter & Gamble Co., has led the board since 2007.

Disney didn’t name a successor for Iger, who oversaw the acquisitions of Pixar and Marvel in the past five years and will become executive chairman in 2015. The company will combine the top roles for the first time since 2004, when CEO Michael Eisner was stripped of the chairmanship after a failed proxy fight waged by Roy Disney, Walt’s nephew. The company wanted to keep Iger and have a smooth transition, Pepper said.

“I’m totally surprised that they would do this again,” said Charles Elson, director of the University of Delaware’s John L. Weinberg Center for Corporate Governance. “Why stick your head in a blender? An executive just shouldn’t be in charge of the board that monitors him.”

Two of Disney’s top executives, Tom Staggs and Jay Rasulo, swapped roles at the end of 2009, with Chief Financial Officer Staggs assuming the job of parks chief and Rasulo becoming CFO, in a move designed to bolster the experience of both men.

Race to the Top?

Iger “set up a race between the two by having them switch jobs that ought to help him make that decision,” said David Joyce, a Miller Tabak & Co. analyst in New York who recommends buying Disney shares. “They are both 20-year veterans at the company and have strong operational backgrounds.”

Disney’s largest business is media networks, led by Anne Sweeney and George Bodenheimer, co-chairmen. The division, which includes ESPN, ABC and the Disney Channel, had $17.2 billion in fiscal 2010 sales and contributed two-thirds of Disney’s $7.6 billion in operating income.

Disney fell 33 cents to $31.70 at the close in New York and has declined 15 percent this year.

The company also extended Iger’s contract through 2016 and is increasing his salary to $2.5 million annually from $2 million now. The new agreement includes a $12 million annual cash bonus target, as well as options and restricted stock valued at $15.5 million, Disney said. His current agreement ends in 2013.

‘Strong Performer’

“Iger has made some forward thinking moves that have made the company a strong performer,” Joyce said in an interview. “He was the first to embrace digital technology and positioned the company well with the Pixar and Marvel acquisitions.”

The bonus is based on performance yardsticks that include operating income, return on capital, after-tax free cash flow and earnings per share, the company said. The stock awards will be based on total shareholder return and earnings per share, relative to the S&P 500.

In the announcement, Disney said total shareholder return under Iger is five times higher than the S&P 500 index since he took over as CEO.

“The board is delighted that the company has been able to secure the longer-term continuation of Bob’s unique blend of experience and leadership skills,” Pepper said. Iger “will continue to serve the long-term interests of shareholders.”

As part of the transition, Disney will appoint an independent lead director when Iger becomes chairman, according to the statement.

Iger was named president of Disney in 2000 and succeeded Eisner as CEO in October 2005. He led the $8.06 billion purchase of the Pixar animation studio in 2006 and the $4.2 billion acquisition of Marvel Entertainment in 2010. He previously headed Disney’s ABC television unit.

To contact the reporter on this story: Ronald Grover in Los Angeles at rgrover5@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.