Disney gives CEO Robert Iger a two-year contract extension
Walt Disney Co. Chairman and Chief Executive Robert Iger’s contract has been extended two years through June 2018, delaying the company’s decision on choosing a successor but perhaps only slightly.
Iger has headed Disney during a period of unprecedented growth in which it gobbled up entertainment firms, including “Star Wars” producer Lucasfilm Ltd., and launched lucrative film franchises such as “Frozen” and “The Avengers.” Along the way, the entertainment giant’s stock price more than tripled.
This is the second time in recent years that Iger’s contract has been extended by Disney’s board: He agreed last year to stay on as CEO through June 2016, 15 months longer than initially planned. The latest extension is expected to be the last.
Disney plans to name a chief operating officer next year who would succeed Iger in 2018, according to a person familiar with the matter who is close to Iger.
In a telephone interview with The Times, Iger, 63, called it a “privilege” to run Disney, and said he relished “having more time to do that.”
Iger said he was especially pleased that the contract extension would enable him to continue with the company well beyond the launch of two major projects at the end of next year: a massive theme park planned for Shanghai and the rebirth of the “Star Wars” film series.
“I wanted to be around — not just to be a part of their launch but a part of their early lives at Disney,” he said. “That was very, very much on my mind as it relates to this decision.”
Industry observers have speculated for months on who would replace Iger. It is widely believed that Disney will choose between Chief Financial Officer Jay Rasulo, and Thomas Staggs, who runs Disney’s theme parks unit.
In January 2010, the two longtime Disney executives swapped jobs in a move viewed as a way to broaden their experience and see how they would perform in new roles.
Iger, who heads a company with about 175,000 employees and $45 billion in annual revenue, would be a “very difficult” act to follow, JPMorgan analyst Alexia Quadrani said.
“The good news is that if Disney is choosing someone from within, which is what is expected, they will have had the benefits of working with Iger for some time,” Quadrani said. “So I think whoever replaces him could surprise us — in a positive way.”
Disney does not have a chief operating officer. Within the company, the job is seen as a grooming station for the next CEO, a position usually filled from within.
Indeed, Disney’s last chief operating officer was Iger, who held that position and the president post from 2000 to 2005, when he became CEO.
Iger said his time as chief operating officer was “very, very valuable” because it helped deepen his understanding of the company and craft a strategy that could lead to long-term success.
“I would hope that a COO during the time that I am in my waning years as CEO would be able to do the same thing,” he said.
Under Iger, Disney made three key deals that have established healthy pipelines of content: the multibillion-dollar acquisitions of Pixar Animation Studios in 2006, Marvel Entertainment Inc. in 2009, and Lucasfilm in 2012.
And next year will be a big one for the company.
The Shanghai Disney Resort, a nearly $4-billion theme park that Iger has been working on for more than a decade, is slated to open by Dec. 31, 2015. That same month, the first “Star Wars” film in a decade is scheduled to be released.
Now, Iger will be on hand to guide the Shanghai park through its first few years of operation and shepherd the “Star Wars” franchise through the launch of movie sequels and other expected projects, including video games and theme park attractions.
“It’s comforting to know he is going to be there through that transitionary period,” Quadrani said.
Iger will continue to receive the same annual compensation under his existing contract, of which a large portion is tied to Disney’s financial performance. For the fiscal year that ended Sept. 28, 2013, Iger’s base salary was $2.5 million, but his total compensation was $34.3 million.
Disney said Thursday that Iger could earn a performance-based bonus at the end of the 2018 fiscal year if the company meets certain financial goals. Disney said it would detail the arrangements for the bonus in a Securities and Exchange Commission filing Friday.
In the fiscal third quarter, which ended June 28, Disney posted net income of $2.25 billion, up from $1.85 billion a year earlier. Revenue rose 8% to $12.47 billion. Disney also delivered earnings of $1.28 a share — a company record.
“From all of the financial statistics and data, you can say Iger has earned it,” entertainment business analyst Harold Vogel said. “As long as he’s got this strong track record, they can make a very strong case, and he can make a strong case, that he ought to continue.”
Shares of Disney closed down 70 cents, or 0.8%, to $86.79 on Thursday. It hit an all-time high of $91.20 on Sept. 4.
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