The Walt Disney Company (NYSE: DIS) Board of Directors announced today it has agreed to extend Robert A. Iger’s contract through June 2016 as part of the Company’s ongoing succession planning. Under the new agreement, effective Oct. 1, Iger will assume the role of chairman in addition to chief executive officer following Chairman John E. Pepper’s retirement from the board at Disney’s 2012 annual shareholder meeting in March. Until then, Iger will remain president and chief executive officer.
Iger will hold the positions of chairman and chief executive officer through March 31, 2015, at which time a new CEO would be named; Iger will thereafter serve as executive chairman for 15 months through June 30, 2016. Iger’s current contract was set to expire on Jan. 31, 2013. It has been often speculated that current Disney Parks Chair Tom Staggs, who switched roles with now-CFO Jay Rasulo, was being primped to succeed Iger.
The Disney board took action at this time to secure the benefit of Iger’s leadership through 2016, provide for an effective, seamless succession and management transition and a continuity of the company’s corporate strategy to create long-term value for shareholders.
As provided in the company’s corporate governance guidelines, the board will also select an independent lead director when Iger assumes the role of Chair immediately following the meeting in March.
“As one of the most iconic brands and preeminent companies in the world, The Walt Disney Company requires a leader with the proven ability to drive creative and financial success in a dynamic world. For more than six years, Bob Iger has proven he has that ability at the highest level,” said Mr. Pepper. “The Board is delighted that the company has been able to secure the longer-term continuation of Bob’s unique blend of experience and leadership skills. His ability to bring together the many parts of Disney’s business against a clear and proven strategy, while instilling a culture of innovation, collaboration and discipline, will continue to serve the long-term interests of shareholders.”
Pepper added: “It is for these reasons – continuing the strategic direction and growth of the company while ensuring a smooth transition process to the next generation of leadership – the Board has determined that Bob should assume the additional role of Chairman.”
Iger said: “No CEO could have a better counselor than John — his impeccable integrity, vast experience, and knowledge and appreciation of Disney have been invaluable. I want to thank him for his many contributions, and his support of our people and our strategy including two of the company’s most significant acquisitions in recent years – Pixar and Marvel.”
“I’m privileged and grateful to lead The Walt Disney Company and our talented, dedicated team at this exciting time,” Iger added. “I’m committed to increasing long-term value for shareholders and am confident we will continue to do so through the successful execution of our core strategic priorities: the creation of high quality, branded content and experiences, the use of technology, and creating growth in numerous and exciting international markets.”
Since being named president and chief executive on September 30th, 2005, Iger, 60, has led the Company to record operating results while positioning Disney for the future in the global, dynamic multi-media industry. Disney’s total shareholder return since October 1, 2005 is five times higher than that of the S&P 500.
During Iger’s leadership tenure, The Walt Disney Company has been recognized as one of “America’s Most Admired Companies” by Fortune magazine (2009, 2010, 2011); one of the “World’s Most Respected Companies” by Barron’s (2009, 2010); and one of the “Best Places to Launch a Career” by BusinessWeek magazine (2006-2010).
As part of the agreement, Iger’s annual base salary will be $2.5 million. Iger is not receiving any up front equity award in connection with signing the new agreement. His annual bonus award will be calculated based on the Company’s performance, including its operating income, return on invested capital, earnings per share and after-tax free cash flow. He will also be entitled to an annual long-term equity incentive award of options and restricted stock units, the ultimate value of which will be entirely dependent on the Company’s future financial performance.