Heir apparent to Disney's CEO will step down

Apr 4, 2016 | The Wall Street Journal

Succession planning at the world’s largest media company fell into disarray on Monday as Tom Staggs, Walt Disney Co.’s chief operating officer and the heir apparent to Chief Executive Robert Iger, unexpectedly said he would step down.

Mr. Staggs made the decision after learning recently that both Mr. Iger, who is also 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. The implication was that Mr. Staggs’s odds of rising to the CEO role had declined precipitously, this person said.

Mr. Iger, 65, has said he plans to retire in June 2018.

The 55-year-old Mr. Staggs had seemed Mr. Iger’s most likely successor since he was named operating chief in early 2015, beating out his main internal rival, former Chief Financial Officer Jay Rasulo, for the company’s No. 2 post.

Mr. Staggs’s announcement that he would leave effective May 6 shocked employees throughout the Disney empire, where the executive was known as a longtime personal friend of Mr. Iger, with whom he shared a similar leadership style. Though the board hadn’t confirmed him as the next CEO, many inside and outside the company thought it was all but a sure thing.

Disney directors decided “in the past few weeks” that Mr. Staggs was unlikely to get the CEO job, another knowledgeable person said, declining to elaborate. The decision was based on a review of the executive’s performance after one year as operating chief. As a result, the board “couldn’t give him any assurance” about succeeding Mr. Iger, this person added.

Now, Disney’s board will “broaden the scope of its succession-planning process to identify and evaluate a robust slate of candidates for consideration,” the company said Monday.

The board is likely to focus in large part on outside CEO candidates, said a person close to the process. For now at least, none of the executives remaining at the company are well-positioned to rise to the top. Many senior executives, including the heads of Disney’s television, parks, and consumer-products businesses, as well as the company’s CFO, took those jobs within the past two years.

A CEO’s expected successor rarely resigns so close to the expected transfer of power, one succession expert said.

“It’s fairly unusual when you’re about to be handed the keys to the kingdom to run away from the opportunity,’’ said Jeffrey Cohn, managing director for global CEO succession planning at recruiting firm DHR International.

Before becoming operating chief, Mr. Staggs, who served as Disney’s CFO and as chairman of its parks and resorts business, among other positions, during his 26 years at the company, was well-regarded but had little experience in the company’s creative operations like film and television. Opinions were mixed among employees of those divisions as to whether he had worked hard enough to learn how they worked and to become a trusted leader.

Mr. Iger and his predecessor, Michael Eisner, grew up in Disney’s television and film businesses, respectively, before taking the company’s helm. As parks chairman and operating chief, Mr. Staggs played a key role in one of the most significant projects in the company’s history: its long-in-the-works first theme park in China, which opens in June in Shanghai.

After stepping down from his executive role next month, Mr. Staggs will stay on as a special adviser to Mr. Iger through the current fiscal year, which ends around the beginning of October. His compensation, which totaled $20 million last fiscal year, will remain under the terms of his current contract.

Messrs. Staggs and Rasulo were long viewed as leading internal candidates to succeed Mr. Iger and spent years in a bake-off for the job of chief operating officer before Mr. Iger and the board made their choice last year. In June 2015, Disney said Mr. Rasulo would step down.

Some people close to the company believe Mr. Staggs’s departure means Mr. Iger could stay on past his announced retirement date, but the CEO has given no indication he plans to do so. Disney’s board, which has been extremely supportive of Mr. Iger, would likely welcome such a decision.

In after-hours trading, Disney shares fell 1.6% to $97.10. The stock finished Monday’s regular New York trading session down 39 cents at $98.68.