Disney Delays CEO Succession by Extending Iger Term to Mid-2016
Walt Disney Co. (DIS) extended Robert Iger’s tenure as chief executive officer of the world’s largest entertainment company to June 2016, a move that delays his planned succession for 15 months.
Iger, 62, will now continue in both the chairman and CEO positions until mid-2016, Burbank, California-based Disney said yesterday in a statement. He was scheduled to relinquish the CEO title on April 1, 2015.
The company cited a need for continuity and Iger’s record of success. Analysts have long cited Chief Financial Officer Jay Rasulo and Tom Staggs, who leads the parks and resorts division, as probable replacements. The two swapped roles in January 2010. This year, Disney amended its compensation plan to allow for the creation of new senior positions, such as chief operating officer or president.
“Either the company does not believe that its current CEO candidates are ready to take the helm or that Iger is not ready to step down,” said Janna Sampson, co-chief investment officer of Lisle, Illinois-based OakBrook Investments LLC, which reported owning about 441,000 Disney shares as of June 28. “I doubt the Disney board would force Iger to retire at this point anyway.”
The company credits Iger’s leadership for total shareholder return of 193 percent during his tenure, beating the 54 percent return for the Standard & Poor’s 500 Index, said Orin Smith, Disney’s independent lead director. Iger was named CEO in September 2005.
“Now, Disney will continue to have the full benefit of Mr. Iger’s leadership as CEO and chairman for the duration of his tenure,” Smith said in the statement, adding that the board remains focused on finding a successor when his term ends.
Disney rose 1.2 percent to $63.93 yesterday in New York. The shares have risen 28 percent this year, compared with 13 percent for the S&P 500.
The company said there will be no change to the terms of Iger’s compensation. He earned $40.2 million in 2012 in total compensation last year, based on regulatory reporting rules, a 20 percent increase from the previous year. The company says 92 percent of his 2012 pay was performance based.
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