Some Asking if Disney CEO Will Extend Tenure

Robert Iger, left, chief executive officer of The Walt Disney Co., Ben Sherwood, center, co-chairman of Disney Media Networks, and President, Disney-ABC Television Group, and Thomas Staggs, chief operating officer of The Walt Disney Company at the Allen & Company Sun Valley Conference on July 8 in Idaho. ENLARGE
Robert Iger, left, chief executive officer of The Walt Disney Co., Ben Sherwood, center, co-chairman of Disney Media Networks, and President, Disney-ABC Television Group, and Thomas Staggs, chief operating officer of The Walt Disney Company at the Allen & Company Sun Valley Conference on July 8 in Idaho. Photo: Getty Images

In the top echelons of Hollywood on Tuesday, the question wasn’t just, “Who’s next?” as Walt Disney Co. DIS -1.70 % chief executive, but rather “Will Bob stay longer?”

Monday’s surprise news that Chief Operating Officer Thomas Staggs, widely viewed as heir apparent to Chief Executive Robert Iger, will step down calls into question who may be ready to take over the world’s largest, and arguably most complex, media conglomerate by June 2018. That’s when the 65-year-old Mr. Iger has said he plans to retire.

The sudden change at the top is the latest bumpy leadership transition at Disney, where prior executive changes have involved cinematic battles for power. What’s striking this time, executive recruiters and governance experts said Tuesday, is that the company had been doing everything right in preparing for Mr. Iger’s departure.

Disney pitted Mr. Staggs in a horse race with another executive, former Chief Financial Officer Jay Rasulo in 2009, asking the two men to swap jobs and eventually naming Mr. Staggs second in command last year.

Now back to square one, Disney faces a major challenge: Unless the board selects a new candidate soon, that person would have less than two years to spend working with Mr. Iger, learning about Disney’s corporate culture and other aspects of the job. That makes it more likely Mr. Iger will stay past his planned retirement date, people close to the company speculated.

The board of directors will now more seriously consider outside candidates for the CEO job than it has in the past, people familiar with the matter said. The board is looking for someone to continue Mr. Iger’s strategy, rather than take Disney in a new direction.

In a statement on Monday, the company said the board “will broaden the scope of its succession planning process to identify and evaluate a robust slate of candidates.”

The collapse of a succession plan as solid as Disney’s is nearly unheard of, experts said, and the news has sent anxiety rippling through the company. There were no public indications that Mr. Iger and the board were dissatisfied with Mr. Staggs’s performance and no signs the operating chief was having a difficult time in his new role, which he took in February of 2015, according to employees.

“Usually when an heir apparent gets the nod, it’s taken not as an airtight contract but pretty much a done deal,” said Donald Hambrick, a management professor at Pennsylvania State University’s Smeal College of Business who studies succession planning.

Mr. Staggs, who is 55 years old, made the decision to leave after learning that Mr. Iger, who also is Disney’s chairman, and the rest of the company’s board had decided to broaden the search for Mr. Iger’s successor to include more candidates, said a person with knowledge of the matter.

Internal candidates also could be identified to replace Mr. Iger, people close to the company have said.

Keeping a stable of CEO-ready leaders on hand can be tough, said Peter Crist, the chairman of executive search firm Crist|Kolder Associates. Ambitious leaders can grow restless waiting for their turn at the top and jump ship if they get the sense they are likely to be passed over.

A number of Disney’s senior executives have many years’ experience at the company, but none are as prepared to ascend to the CEO spot as Mr. Staggs was.

Chief Strategy Officer Kevin Mayer is well regarded, but lacks operational experience. Robert Chapek has worked at Disney for more than 20 years, at divisions including consumer products and the movie studio, but was named chairman of parks and resorts only last year.

Disney-ABC Television Group President Ben Sherwood has had a fast rise but was named to his current job two years ago. ESPN chief John Skipper has worked at the company 19 years, but has no experience in Disney’s entertainment businesses outside of sports. And movie studio Chairman Alan Horn previously was the No. 2 executive at Time Warner Inc. TWX -1.14 % ’s Warner Bros, but at 73 he is eight years Mr. Iger’s senior.

CEO successors usually are named 18 months to two years in advance, according to Prof. Hambrick, though Mr. Staggs’s promotion was announced three years before Mr. Iger’s planned departure.

Media companies have been buffeted by waves of changes in recent years, from cord-cutting to globalization, making the job of running a company like Disney a very different proposition than it was even two years ago.

Those hoping to climb Disney’s ranks may feel unnerved by the company’s abrupt change of heart toward a favorite son, said Michael Useem, a management professor at the University of Pennsylvania’s Wharton school.

Mr. Iger previously had planned to step down as CEO in 2015, but in late 2014 the board of directors extended his contract through June of 2018.

The CEO’s search for a post-Disney role in the sport business hasn’t borne fruit.

Mr. Iger helped lead an effort to build a stadium near Los Angeles, with the intent of luring the National Football League’s San Diego Chargers and Oakland Raiders. Mr. Iger was to serve as chairman of the venture, with an option to acquire a minority interest in either football team after he left Disney.

The league in January selected a competing option in nearby Inglewood, Calif., where the St. Louis Rams will relocate. Mr. Iger also was briefly considered to serve as Major League Baseball’s next commissioner.

The Disney CEO privately has expressed interest in politics, according to people who know him. But the frequent political donor, largely to Democratic candidates and causes, hasn’t taken steps to prepare for an electoral run.

Disney’s board of directors would be happy to have Mr. Iger stay on past 2018, people familiar with their thinking have said, but he hasn’t given any indication he plans to do so.

When he extended his contract, Mr. Iger was adamant that his new retirement date was firm. “This time I really mean it,” he said.


WSJ.com: US Business

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