The Walt Disney Co.’s board of directors finally snapped out of its near-catatonic corporate state this week by extending Bob Chapek’s term as CEO, a definitive move that expressed confidence both to the smart money on Wall Street and tourists ambling up Main Street, U.S.A.
By extending Chapek’s contract for three years, the 11-member board put to rest speculation that Bob Iger would return to save the day, among other names bandied about as a possible replacement. And, at least for now, the move silences some of the well-documented whispers and complaints of missteps that have plagued Chapek since taking the job in February 2020.
“Bob Chapek inherited a nightmare with this pandemic, and he has managed their big core businesses effectively through a very challenging time. It’s only fair play to give him a chance to run the company under normal circumstances,” said Tom Nunan, former president of NBC Studios and UPN who’s now a continuing lecturer at the UCLA School of Theater, Film and Television.
“They have given him large leeway with these PR fiascos when judged alongside how he kept the trains running… managing shutdowns, managing no box office, no parks, no hotels, no cruises,” he said. “Hollywood loves a comeback, a redemption story.”
But Chapek may have only a short window to prove himself, if not to solve every single problem facing the company than to at least give the appearance that he’s on top of the situation. But the long-term damage to Disney’s credibility may already have been done.
The entertainment giant has been under fire for doubling Chapek’s annual compensation to $32.5 million in 2021 amid a slew of corporate fumbles that include a public legal battle with “Black Widow” star Scarlett Johansson, a botched response to Florida’s “Don’t Say Gay” law and this month’s abrupt firing of TV content boss Peter Rice.
To add to Chapek’s troubles, Abigail Disney, whose grandfather co-founded the company nearly a century ago is poised to mount a legal battle to challenge Chapek’s annual pay. The move comes two decades after her father, Roy E. Disney, led a proxy fight that ultimately ousted then-Disney CEO Michael Eisner. The contract renewal may have slowed her momentum. Disney declined to comment for this story, deferring to the board and Chapek’s statements made on Tuesday. Abigail Disney did not immediately respond to a request for comment.
On June 8, when Rice’s ouster became public, Disney board chairwoman Susan Arnold released a statement saying the CEO had “the support and confidence of the board.”
But still no contract. And in fact, the statement caused insiders to question if Disney’s board actually aligned with Arnold’s statement.
In the nearly three weeks it took between Arnold’s statement of support and finally giving Chapek a new contract, the whispers grew only louder about who might become the next CEO — and how soon. Besides Iger coming back, Hollywood began placing their bets on whether Rice — the former 21st Century Fox honcho and a longtime Murdoch top lieutenant — could make a comeback. Or perhaps Dana Walden, who succeeded Rice as chairman of Disney General Entertainment Content, would get a second promotion to become the company’s first female CEO since being founded in 1923.
There was even heavy speculation that the board might seek to acquire Candle Media, which was founded by former Disney top executives Tom Staggs and Kevin Mayer, and tap one of them for the top job. Both Staggs and Mayer were the leading candidates to succeed Iger before Chapek won the board’s confidence.
“Both of them came really close to grabbing the golden ring,” said Hal Vogel, a veteran media analyst, of the Staggs-Mayer proposition. “It would be a big to-do that would send talent agents buzzing around about what it means — a zero probability but not crazy or out of the question.”
Companies making an acquisition as a means to buy a new executive officer are rare, but not unprecedented. Apple bought Next Software for $400 million in 1986 so they could get Steve Jobs back, and JPMorgan Chase & Co. in 2004 picked up regional powerhouse Bank One Corp. for $58 billion to land Jamie Dimon. Both Jobs and Dimon went on to become among the most influential CEOs of the century.
And Candle, a fledgling Blackstone-backed content company which owns two production houses that supply shows like “CoComelon” and “Fauda” to Netflix, would provide relatively few regulatory challenges for Disney to acquire.
One Wall Street analyst said that guessing about Chapek’s future had become Hollywood’s favorite parlor game. But one big reason driving all the speculation had to do with what investors care about most: “None of this would be happening if they just got the stock price up,” that analyst said. “That’s all.”
Disney shares edged lower to $95.65 on Wednesday — a nearly 45% drop from last September’s 52-week high. But Chapek now has an additional three years to right the ship.
A previous version of this article mistakenly stated that Chapek named Arnold to the Disney board. He in fact named her chairman. The Wrap regrets the error.