Thomas Staggs, heir apparent to Disney CEO Robert Iger, is leaving the company
For years, Walt Disney Co. adhered to a carefully orchestrated process to choose a successor to Chairman and Chief Executive Robert Iger.
In 2015, the Burbank company elevated longtime executive Thomas Staggs to the No. 2 role, a move widely interpreted as anointing him CEO in waiting of the world’s largest entertainment firm.
But those plans were cast aside Monday, when Disney announced that Staggs would step down from his role as chief operating officer next month.
Disney’s board of directors was not yet prepared to make a final decision regarding the CEO selection, and Staggs “read the tea leaves,” said one person close to the company who was not authorized to comment publicly.
One issue for Disney’s board may have been Staggs’ lack of a serious creative pedigree, people close to the company said.
Staggs headed the company’s parks and resorts division from 2010 to 2015 — a tenure that included the launch of MyMagic+ to allow visitors to more efficiently tour attractions — but has no other experience leading a unit that churns out entertainment content.
Although Staggs was widely viewed as Iger’s heir apparent, Disney never guaranteed Staggs, 55, the top job and made clear a year ago that his work would be evaluated by the board. Iger, 65, is expected to leave the company when his contract ends in June 2018.
Nonetheless, the move stunned investors as well as executives inside and outside the Disney empire.
“I’m shocked,” said Jim Cora, a former chairman of Disneyland International who left in 2001 and has since consulted for the company. “Whatever happened sure happened quietly.”
Staggs’ impending departure prolongs an already drawn-out succession process. After former Chief Financial Officer Jay Rasulo was passed over for the No. 2 job last year, he left the company.
“It doesn’t look good to lose two people within your organization,” Cora said.
Now Disney will search for new candidates to succeed Iger. With the notable exception of former Chairman and Chief Executive Michael Eisner, Disney usually selects its chief executive from within. But the departures of Staggs and Rasulo make it more likely that Disney would have to turn to an outside executive to find a person capable of handling such a complicated job, analysts said.
“These are high-level skills, dealing with complex issues in a $160-billion market cap company,” said Laura Martin, an analyst at Needham & Co. “It is a short list of people who can do that job.”
Among the executives who’ve already been mentioned as possible candidates is Sheryl Sandberg, the powerhouse Facebook chief operating officer and a Disney board member.
Sandberg, 46, has the kind of resume that might be useful at Disney, especially as the Internet becomes an increasingly important entertainment portal. Before joining Facebook as chief operating officer, the Harvard graduate was a top executive at Google. She also has Washington experience — serving as chief of staff to former Treasury Secretary Lawrence H. Summers — a valuable asset for a company with a big media portfolio.
Sandberg helped shepherd Facebook through its 2012 initial public offering of stock, one of the biggest IPOs of all time. She also is known for her 2013 bestseller, “Lean In: Women, Work, and the Will to Lead.”
A Facebook representative said Sandberg was unavailable to comment.
Running Disney is considered one of the plum jobs in corporate America and could attract any number of high-profile executives such as Steve Burke — the chief executive of NBCUniversal and a former Disney executive — and former top Fox executive Peter Chernin.
People close to Chernin and Burke said it was unlikely that either executive would trade their current positions to run Disney.
The Staggs announcement comes at a critical time for Disney, which in June will open its $5.5-billion Shanghai Disney Resort, a project that the executive worked on over several years.
Staggs will leave his post in May but remain at the company as an advisor to Iger through its fiscal year, which ends Oct. 1.
Disney said in a statement that its board of directors would “broaden the scope of its succession planning process to identify and evaluate a robust slate of candidates for consideration.”
The move sent the company’s stock down nearly 1.75% to $96.95 in after-hours trading. Analysts said they’d gotten to know Staggs well over his 26-year career at Disney, especially during his 12-year tenure as chief financial officer.
“Tom Staggs is Wall Street’s fair-haired boy,” Martin said. “I think it is shocking that the board, after stringing him along … is doing this to him.”
Analyst Robin Diedrich of Edward Jones Research said Disney’s board could want a CEO well versed not only in content creation but also technology.
“Disney is very focused on the creative side of the business — which really is the driving force — and the technology side as well,” Diedrich said. “As you look at Mr. Staggs, his skill set has been operations and financial.”
Staggs and Iger declined to comment.
Iger, who became chief executive in 2005, will be a tough act to follow for any executive who replaces him. Iger engineered the purchases of Pixar Animation Studios in 2006, Marvel Entertainment in 2009 and Lucasfilm in 2012. Those multibillion-dollar deals transformed Disney, sending the company’s stock soaring to record highs while providing it with a trove of new content to pump through its many ventures.
“There are questions as to whether there are people able to fill Bob Iger’s shoes,” said Stephen Unger, a veteran executive recruiter who has led CEO searches for IMAX Entertainment, Telemundo and Public Broadcasting System. “But as far as indispensable people are considered, as the saying goes, the cemeteries are filled with indispensable people. I’m sure Disney will find someone fantastic.”
Iger praised Staggs in a statement Monday, calling his longtime colleague a “great friend.”
“I’m proud of what we’ve accomplished together, immensely grateful for the privilege of working with him and confident that he will be enormously successful in whatever opportunity he chooses,” Iger said.
According to Disney’s proxy statement, Staggs’ total compensation for fiscal 2015 was $20 million.
This isn’t the first time that Disney’s succession plans have created turmoil at the company. Jeffrey Katzenberg, the former chairman of Disney’s film studio, had a bitter falling-out with Eisner after being passed over for the job of president, and left the company in 1994. Eisner’s hiring of super-agent Michael Ovitz as president in 1995 unraveled after a little more than a year.
Times staff writers Meg James and Ryan Faughnder contributed to this report.
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