As Iger’s Exit Nears, Disney Takes Quiet Approach to SuccessionBy and
Top executive recruiting firms say they haven’t been hired
Staggs’s departure left company without heir apparent
As Walt Disney Co. Chief Executive Officer Bob Iger’s scheduled retirement date looms closer, the entertainment giant’s search for his replacement remains low-profile, a departure from the open process it previously employed.
It’s been seven months since heir apparent Tom Staggs’s abrupt departure left Iger without a clear-cut successor. The top executive recruiting firms say they haven’t been hired by Disney, and Iger hasn’t moved members of his executive team into newer or more prominent roles to audition them for the top spot. The company has said only that there is a process in place that the board is following which will include evaluating internal and external candidates.
While there’s still time to conduct a search before Iger’s contract ends in June 2018, the quiet nature of the current succession planning stands in sharp contrast to the widely watched, five-year bake-off from which Staggs emerged as the leading contender for the job. That’s fueling speculation that the board could request that Iger, 65, stay on longer than his scheduled retirement date, something it has already asked of him twice before.
“I don’t think anyone -- employee, investor or director -- would be hesitant in granting him a new contract,” said Anthony DiClemente, an analyst at Nomura Securities in New York. “That could happen quickly and easily. Why hasn’t it happened already? That’s a fair question.”
Iger said on a May conference call with investors that he didn’t have any plans to stick around past the current date.
“The board is very actively engaged in a succession process, as it has been actually for some time,” he said. “It believes that it has ample time to identify a successor under timing circumstances that will be just fine for the company.”
A spokeswoman for Disney declined to comment further. Disney board members on the governance and nominating committee, including former Starbucks Corp. CEO Orin Smith, Twitter Inc. CEO Jack Dorsey, Facebook Inc. Chief Operating Officer Sheryl Sandberg and former Clorox Co. Chairman Robert Matschullat, didn’t respond or declined to comment.
Typically it takes a big public company six to seven months to complete a search once the board begins to contact and interview prospective candidates, though additional time is required before that, said Peter Crist, chairman of Crist Kolder Associates, a boutique search firm outside Chicago. “We do lots of mapping projects with the company that take months” about the qualities it wants and needs in a new CEO, Crist said.
At Wal-Mart Stores Inc., executive recruiter Spencer Stuart began consulting with directors about what the company needed in a new leader and who they should consider about a year before Doug McMillon was named the retailer’s CEO in November 2013, according to people familiar with the situation who asked not to be identified because they aren’t authorized to talk publicly. The board narrowed its search to two internal candidates, McMillon and former head of U.S. operations Bill Simon, about six months before making its final decision.
At Procter & Gamble Co., directors first started talking about replacing then-CEO Bob MacDonald in July 2012 and then asked A.G. Lafley to return as CEO and chairman in May 2013. Lafley, who’d already served as CEO at P&G from 2000 until 2009, immediately reorganized the company into four businesses, each headed by a president who was considered a contender for the CEO post. One of the four, David Taylor, was named global president of home care and subsequently also took charge of P&G’s beauty business.
In July 2015, Lafley and P&G’s other directors named Taylor the consumer giant’s new CEO, concluding the two-year process.
Iger himself was promoted in 2005 after a six-month search by the board. The executive, who had led Disney’s TV operations and international business and had served as president for five years, was evaluated against external candidates with help from Heidrick & Struggles, directors said at the time. He got the top job only after a high-profile campaign by some shareholders to oust then-CEO Michael Eisner. Former directors in a long-running feud with the company still criticized Iger’s selection as hasty, but the board said it had been thorough and careful.
Until this year, it looked as if Disney’s choice for Iger’s successor would be more orderly, with a seasoned executive waiting in the wings in the COO position. Staggs had risen to the No. 2 spot at the company after a five-year period in which he and another senior manager, Jay Rasulo, competed with each other to become Iger’s successor, even switching jobs to give Staggs more experience operating a business and Rasulo exposure to the executive suite. Rasulo, then serving as chief financial officer, left the company last year after Staggs’s promotion to COO.
Staggs’s exit, after failing to gain the full backing of Iger and the board, left no other internal candidate with both operational experience and a corporate role.
Of the six CEOs since Disney’s founding in 1923, only Eisner came from the outside. Eisner, who served from 1984 to 2005, joined the company from Paramount Pictures, where he was president.
While the board contemplates who will lead the company after June 2018, Iger remains active in planning how to shape Disney’s future. In recent weeks, he considered buying Twitter, but decided to pass, partly because of price and partly because of concern about bullying on the social-media site, people familiar with the matter said last month.
At an October event in Boston, Iger said it wasn’t enough for the company to own key brands like ABC, ESPN and Pixar. Disney needs to have a direct connection to consumers through mobile devices, he said.
“What we’re thinking about a lot is what role does technology have in distributing from us to the consumer?” he said. “How must we invest in that?”
In its search for Iger’s replacement, Disney’s board should be casting a wide net, looking for candidates inside and outside the company, particularly ones with high-tech chops, said Paul Winum, a senior partner at the management consulting firm RHR International and co-author of “Inside CEO Succession.”
“The landscape is changing so rapidly, technology is opening up new distribution platforms, overseas markets will be a huge opportunities,” he said. “The leadership skills have changed dramatically just in the last two years.”
When a CEO succession plan unravels, as it did at Disney, the company usually starts thinking about the next, younger generation of executives inside, giving them bigger and different kinds of experience to prepare them for the top job, said Joseph L. Bower, a Harvard Business School professor who has studied succession planning. Disney hasn’t made any major changes recently to suggest it’s grooming anyone internally, however.
“Disney isn’t in trouble and currently has a strong CEO in place,” Bower said. “But you don’t want someone to come in at the last minute to take over.”