The FT reports that Bob Iger never left Disney entirely when he retired. He grabbed a consultancy agreement worth $10 million. It was to advise a new CEO, which he despised and eventually helped the company to dispose of. It is another example of how Disney’s board never entirely supported its recently departed CEO, Bob Chapek. While Iger walked around the entertainment industry as Disney’s retired CEO, he undermined its new one. The action by both Iger and the board is contemptible. It also helped create a situation that was not in Disney’s best interests.
The Iger deal was laid out in an SEC document. “These post-employment arrangements will be tolled during his period of employment, with the parties commitments under these arrangements to be fulfilled for the remaining term when his employment ends.” It is a ridiculously favorable deal and will be, even after he retires again.
Iger returned as Disney CEO after the board decided to skip a CEO search. Instead, last Friday, Iger was contacted about his return. He was back by Sunday, and Chapek was out. As fiduciaries, the board should have taken more time to consider its options.
Iger is the author of much of the Disney financial disaster, which is another reason his return is part of an irresponsible board action. Iger created the streaming service Disney+ in late 2019 and described it as the pinnacle decision of his decade-plus period in the captain’s chair. Disney’s plan appeared to be an unqualified win as it grew in subscribers. However, Iger initially priced the service too low, making profitability an improbable outcome. Even though Disney+ had a subscriber base that approached the size of industry leader Netflix, the cost to run it could not be lowered enough to make money.
Based on the Iger consulting deal and the board’s other actions, which undermined the new CEO, Chapek never had a chance.
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