Succession planning is no fairy tale for Bob Iger and Disney

Once again Bob Iger rules the magical kingdom.

Disney’s longtime CEO is back in the executive suite just months after Disney extended the contract of his handpicked successor, Bob Chapek. It was short and did not perform well. The pandemic’s headwinds certainly haven’t helped, but analysts’ calls about the struggles within Disney’s burgeoning streaming division, the recently filed antitrust lawsuits, low box office returns, and the company’s sluggish earnings Coupled with Čapek’s flirtatious demeanor, his closest cause was downfall.

Yet, as much as the logic of Iger’s return is self-evident in many respects, as much as he knows Disney better than Bob Iger, who built his modern incarnation, Chapek’s rapid resignation is a truism. It shows that the Eiger made a mistake in the succession plan at the time. He left the position for the first time.

The notable thing about Iger’s replacement for Chapek isn’t that it happened — apparently something went off the rails at Disney — but that was shortly after Chapek took the top job. It happened. himself. This is a case where a hand-picked successor does not fully fill the position of his predecessor. Well, it’s to Iger’s credit that he came back and tried to fix the mess. His base salary of $10,000 and a target bonus of $1 million is low for a CEO of a company as big as Disney. Instead, most of his potential rewards are Another $25 millionconsist of performance-based restricted stock units and stock options that vest only after the expiration of a two-year term.

Why is Eiger’s reward so important at a moment like this, and what can we learn from its structure? He’s not in charge of the company for payday, but if he succeeds, he might get paid. No. Second, his willingness to agree to such a package shows that he believes he can achieve the necessary milestones as defined by the Board. It shows that he feels personally responsible for the company’s performance, and believes he can chart a path to calmer seas.

Of course, it’s important to be realistic and understand the full scope of the situation. First, the CEO’s primary job and the board’s number one job is succession planning. Clearly, Iger and the board mishandled his Chapek. He and the board are now asking shareholders and the company to trust them again. This could be best done with Eiger correcting the ship and finding a viable replacement of his own.Based on his track record, Eiger will come back and fix the company. But this requires avoiding the mistakes he and the board made with his Chapek.In fact, in his recent June, Disney Chairman Susan Arnold Chapek said It said he was “the right leader at the right time” and that the board “has complete confidence in him and his leadership team.” It clearly wasn’t.

Chapek’s departure may be the result of multiple factors. Growing pains in Disney’s streaming division are certainly part of the reason, as is its declining performance.The Dying Box Office of Recent Pixar Movies light year It certainly didn’t help.and the morale reportedly low in-house since Iger first attempted to leave. A looming recession could hit Disney theme parks, antitrust litigationfiled just days before Iger’s return, alleges Disney is operating Hulu and ESPN in a way that stifles competition.

Whatever the exact combination of factors that led to Iger’s return to the board, Chapek’s departure is a sign of poor succession planning. When Iger and the board first considered hiring Chapek, he at Disney knew exactly what skill set was expected of a CEO, and it was important for them to investigate whether Chapek actually possessed that skill set. was the responsibility of He and Chapek had worked very closely together for some time, so Iger should have known if this was the case.

If Iger and the board believed Chapek had the right skill set and that included personality, they made the decision they believed was right. I was. The board and Iger now need to study what they did wrong and take responsibility for it. If they believed Chapek had certain skills or aptitudes that he didn’t actually possess, they were wrong about how they assessed his skill set and the requirements of the position.

Hopefully Iger and the board will very carefully outline the Disney CEO’s skill set this time around and determine if potential candidates for the job are demonstrating those skills. It’s not an exercise, it’s an important activity. This means digging deeper than just watching streaming results and movie Box Her Officer performances. They need to understand the skills Čapek lacked that would have been necessary to ultimately succeed. A good CEO must be ready to meet the challenges. Knowing how to get through difficult situations is a core part of this job. Iger and Disney’s board of directors are cutting their jobs to find that person.