There's now a clear front-runner to succeed Robert Iger at Walt Disney Co.
The Burbank company elevated longtime executive Thomas Staggs to the role of chief operating officer, placing him in the pole position to assume the top job when Iger steps aside. Staggs, 54, has overseen Disney's profitable theme parks and resorts for five years.
"Tom has been a star since the second he arrived at Disney," said former Disney Chairman and Chief Executive Michael Eisner, who hired Staggs in 1990. "He is excellent working with people, working with investors, and he knows Disney better than almost anyone else.... My guess is that this will make him the front-runner from inside the company."
Disney is the world's largest entertainment and media company, with a lucrative television division that houses
Staggs, a 25-year Disney veteran who previously served as chief financial officer, was selected for the No. 2 job over another internal candidate, Chief Financial Officer Jay Rasulo. The two had been locked in a race to succeed Iger, who twice in recent years had extended his contract with the entertainment giant.
Iger, Disney's chairman and chief executive, is expected to retire when his contract expires in 2018. In October, Disney's board of directors gave Iger a two-year extension in recognition of his strong track record, and so he could complete ambitious projects, including a theme park and resort in China. That move also gave Disney more time to scrutinize internal candidates for the top job.
Although there is no guarantee that Staggs would be elevated to chief executive, Disney has previously used the No. 2 position to groom incoming CEOs. Iger, who turns 64 this month, held the COO role from 2000 to 2005. It has been vacant since then.
Iger, who heads a company with about 180,000 employees and $49 billion in annual revenue, has set the bar high.
The company's core film studio has been on a hot streak over the last few years, with "The Avengers," "Iron Man 3" and "Frozen" each grossing more than $1 billion worldwide. In December, the company will premiere its first "Star Wars" film, the product of Disney's $4-billion purchase of Lucasfilm in 2009. That acquisition — and the multibillion-dollar purchases of Pixar Animation Studios in 2006 and Marvel Entertainment in 2009 — transformed Disney and enriched its already strong content pipeline.
Disney stock has been on a run in the last year, and on Thursday closed at $102.64, within cents of its all-time high. This week the company wowed investors after reporting a $2.2-billion profit for the first quarter.
"Wall Street applauds this move, because they like Tom Staggs. He had good relationships with Wall Street when he was the CFO, then he added to his quiver by having a good operating record while he has been at the parks division," said Laura Martin, an analyst at Needham & Co. who covers Disney.
Staggs, an Illinois native who before joining Disney was an investment banker for Morgan Stanley, became chairman of Walt Disney Parks and Resorts in January 2010.
Since then, the division has doubled the size of its cruise line fleet and launched MyMagic+, an online system that allows theme park visitors to more efficiently tour attractions. Staggs also is deeply involved in developing the forthcoming Shanghai Disney Resort, a nearly $5-billion project expected to open in spring 2016.
Disney veterans said that Staggs' management style would serve him well as COO — and potentially as chief executive. Former colleague Jim Cora, who previously served as chairman of Disneyland International, said Staggs showed a willingness to delegate responsibilities and had a keen eye for talent.
"The thing I liked about Tom, he picks good people," said Cora, who left Disney in 2001. "He likes young, bright, ambitious people and respects their opinion. More importantly, there is a lot of talent in the Disney organization, and he let that talent do its thing."
Succession at Disney has become a highly managed and careful process since the protracted hand-off from Eisner to Iger in 2005.
In 2010, Rasulo and Staggs switched jobs in a move seen as a way to broaden their experience and to see how they would perform in new roles. Although the race between the two executives lingered, it never became a public spectacle. That was in contrast to corporate bake-offs at other entertainment firms.
At Warner Bros., a contentious battle for the company's top job became an enervating and distracting process before Kevin Tsujihara took over as studio chief in March 2013. Within three months, Tsujihara's rivals for the job — Jeff Robinov and Bruce Rosenblum — had departed the company.
Veteran executive recruiter Stephen Unger said Disney handled the COO race in a "textbook" fashion.
"They've had a bit of a Darwinian ethic with [Staggs] and Jay Rasulo trying to move up the ladder there, but that's not unusual," said Unger, who in the late 1990s conducted a search for a Disney board member on behalf of the company. "Disney is doing it in a very typical fashion — methodically and very professionally."
Rasulo's fate is unclear. According a recent Securities and Exchange Commission filing, the executive's contract expired Jan. 31. Some observers believe Rasulo could depart to run another major company.
"It's sort of like losing the Academy Award to Meryl Streep," analyst Martin said. "The horse race underscored that Jay Rasulo was qualified to lead arguably the greatest company in the world."
If Staggs is made chief executive, Martin said, "he will be a different type of CEO, just as Iger was different from Eisner. Their paths to the top job differ dramatically."
Indeed, Iger came up in the television business, joining ABC in 1974. He became part of the Disney fold when the company acquired the network in 1995. A year later, Iger was named chairman of ABC Group and eventually became Eisner's chief lieutenant.
On the other hand, Staggs, who received an MBA from the Stanford Graduate School of Business, was hired into Disney's strategic planning group in 1990. Eisner promoted him to CFO in 1998.
"I just liked him," said Eisner, who stepped down as CEO in 2005 and was replaced by Iger. "I liked [Staggs'] Midwestern attitude and his intelligence. He's very personable. He's just an effective executive, and he is not pretentious, he's not arrogant, and he doesn't pretend to know it all. Not only that, he understands the Disney brand."
Staggs will continue to head the parks and resorts division until the company appoints a successor.
According to a regulatory filing, Staggs' new contract — like Iger's — expires at the end of June 2018. His contract calls for a $2-million annual base salary. In addition, each year he will be eligible for bonuses that could exceed $5 million and $8 million in stock-based compensation.
The company's senior management team will now report to Iger and Staggs, save for a handful of top executives, including Rasulo, who will continue to report directly to Iger.
Disney did not make Iger and Staggs available for interviews, but both executives released statements about the promotion.
"It's a privilege to step into this role, and I am humbled and honored by the opportunity," Staggs said.
Staggs' ascension to chief executive is not preordained. Between now and 2018, his leadership will be scrutinized by Disney's board of directors, which would choose the company's next leader.
It's also possible that Disney could eye an outsider for the top job. When Iger's contract was extended in October, he told The Times that his stint as chief operating officer was "very, very valuable," helping him better understand the company he'd come to run.
"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," Iger said.