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From ‘right leader’ to fired in 5 months: Why Disney ousted Chapek for Iger

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In a stunning shakeup Sunday night, Disney gave CEO Bob Chapek the boot and brought back his popular predecessor, Bob Iger, to steer the ship. It’s a shocking reversal from less than five months earlier when Disney called Chapek the “right leader at the right time.”

Disney’s 15-year CEO Iger had handpicked Chapek, who was head of parks, as his successor back in February 2020. Iger stayed on as executive chairman through 2021 to help with the transition but reports came out that he became increasingly frustrated with the new CEO. Disney announcing Iger’s return to the chief position means the boomerang CEO was only separated from the company for less than a year. His current plan is to stay for two more.

Chapek’s rise and fall

Chapek’s tenure was tumultuous from the start, with the global pandemic forcing nationwide lockdowns less than a month into his job. But while Chapek scored a series of wins during his two-plus years – overseeing a full rebound of park attendance and consistent growth in streaming – his loss column weighed heavier.

First, it was his high-profile fight with Black Widow star Scarlett Johansson over a pay dispute. Then, it was his complete botched response this last spring to Florida’s so-called “Don’t Say Gay” legislation, which prompted employee walkouts and fired up Florida’s Republican Gov. Ron DeSantis, who retaliated by stripping away Disney’s special tax status in the state.

But even after those two headline-making gaffes, Disney’s board gave Chapek a unanimous vote of confidence by renewing his contract for another three years in June, even though his previous contract wasn’t set to expire until February 2023.

“Disney was dealt a tough hand by the pandemic, yet with Bob [Chapek] at the helm, our businesses – from parks to streaming – not only weathered the storm, but emerged in a position of strength,” Disney’s board said at the time. “Bob is the right leader at the right time for The Walt Disney Company, and the Board has full confidence in him and his leadership team.”

That sentiment would last not even five months. Now Disney is on the hook for paying out his 3-year contract and more, totaling at least $23 million in walk-away compensation, according to Bloomberg.

The bottom line

After surviving all of those controversies, Chapek’s dismissal comes less than two weeks after investors learned Disney’s streaming service lost $1.47 billion in the fourth quarter, despite adding 12.1 million new subscribers. The loss more than doubled the figure from a year earlier and was far greater than analysts anticipated.

The company announced cuts to marketing and content budgets to get in line. But on the Nov. 8 earnings call, Chapek remained cheery in his outlook and was even described as “happy go lucky.” This tone prompted calls to fire him as the stock fell 12% after the call. Year to date, Disney shares were down more than 40%.

Now Iger is back in, the unicorn CEO who just can’t quit Disney. The company announced Iger will be in the seat for two years with two goals: get back on the growth track and find another successor. Disney’s stock jumped 9% in premarket trading Monday before settling up 6% by market close.

SIMONE DEL ROSARIO: IN A STUNNING SHAKEUP SUNDAY NIGHT, DISNEY GAVE CEO BOB CHAPEK THE BOOT AND BROUGHT BACK HIS POPULAR PREDECESSOR BOB IGER TO STEER THE SHIP.

HOW DID DISNEY GET HERE? AND WHAT MISSTEPS DID IT TAKE ALONG THE WAY?

AFTER ALL, CHAPEK WAS IGER’S HANDPICKED SUCCESSOR FOR THE TOP JOB.

AFTER 15 YEARS AS CEO, IGER WAS READY TO STEP DOWN – AS THE FORMER HEAD OF PARKS STEPPED UP.

CHAPEK’S TENURE WAS TUMULTUOUS FROM THE START – THE PANDEMIC FORCING NATIONWIDE LOCKDOWNS NOT ONE MONTH INTO THE JOB.

BUT WHILE CHAPEK SCORED A SERIES OF WINS…INCLUDING A FULL REBOUND AT THE PARKS AND CONSISTENT GROWTH IN STREAMING… HIS LOSS COLUMN WEIGHED HEAVIER.

FIRST IT WAS HIS HIGH-PROFILE FIGHT WITH BLACK WIDOW STAR SCARLETT JOHANSSON OVER A PAY DISPUTE.

THEN, A COMPLETE BOTCHED RESPONSE THIS LAST SPRING TO FLORIDA’S SO-CALLED ‘DON’T SAY GAY’ LEGISLATION, FIRING UP EMPLOYEES *AND FLORIDA GOVERNOR RON DESANTIS, WHO RETALIATED BY STRIPPING AWAY DISNEY’S SPECIAL TAX STATUS.

BUT EVEN AFTER THOSE TWO, DISNEY’S BOARD GAVE CHAPEK A UNANIMOUS VOTE OF CONFIDENCE. RENEWING HIS CONTRACT FOR ANOTHER THREE YEARS IN LATE JUNE, EVEN THOUGH HIS PREVIOUS CONTRACT WAS NOT SET TO EXPIRE UNTIL FEBRUARY OF NEXT YEAR.

AT THE TIME DISNEY’S BOARD SAID BOB IS THE RIGHT LEADER AT THE RIGHT TIME, AND THAT THEY HAD FULL CONFIDENCE IN HIM MOVING FORWARD. THAT SENTIMENT WOULD LAST NOT EVEN 5 MONTHS.

AND NOW DISNEY IS ON THE HOOK FOR PAYING OUT THOSE THREE YEARS AND MORE, TOTALING AT LEAST $23 MILLION IN WALK-AWAY COMPENSATION, ACCORDING TO BLOOMBERG.

AFTER SURVIVING ALL THOSE HEADLINE-MAKING GAFFES, CHAPEK’S DISMISSAL COMES LESS THAN TWO WEEKS AFTER INVESTORS LEARNED DISNEY’S STREAMING SERVICE LOST $1.47 BILLION IN THE FOURTH QUARTER, DESPITE ADDING 12 MILLION NEW SUBSCRIBERS. AND CHAPEK’S TONE ON THE EARNINGS CALL, DESCRIBED BY SOME AS HAPPY GO LUCKY, PROMPTED CALLS TO FIRE HIM.

JIM CRAMER: No doubt that he has to go, I mean that was just unconscionable. And the quarter itself, the way he handled it, he made it sound like a 4-star quarter. Delusional!

SIMONE DEL ROSARIO: THE STOCK WAS DOWN MORE THAN 12% AFTER THAT CALL, IT WAS DOWN MORE THAN 40% ON THE YEAR. AND NOW HE’S OUT.

AND IGER’S BACK IN, THE UNICORN CEO WHO JUST CAN’T QUIT DISNEY. HE’S BEEN GONE FROM THE COMPANY LESS THAN A YEAR – HE WAS EXECUTIVE CHAIRMAN FOR A WHILE AFTER STEPPING DOWN AS CEO. AND NOW HE’S BACK FOR TWO YEARS WITH TWO GOALS: GET BACK ON THE GROWTH TRACK, AND FIND ANOTHER SUCCESSOR.

DISNEY’S STOCK, JUMPING 9% IN PREMARKET TRADING ON THE NEWS.

I’M SIMONE DEL ROSARIO, IN NEW YORK IT’S JUST BUSINESS.

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In a stunning shakeup Sunday night, Disney gave CEO Bob Chapek the boot and brought back his popular predecessor, Bob Iger, to steer the ship. It’s a shocking reversal from less than five months earlier when Disney called Chapek the “right leader at the right time.”

Disney’s 15-year CEO Iger had handpicked Chapek, who was head of parks, as his successor back in February 2020. Iger stayed on as executive chairman through 2021 to help with the transition but reports came out that he became increasingly frustrated with the new CEO. Disney announcing Iger’s return to the chief position means the boomerang CEO was only separated from the company for less than a year. His current plan is to stay for two more.

Chapek’s rise and fall

Chapek’s tenure was tumultuous from the start, with the global pandemic forcing nationwide lockdowns less than a month into his job. But while Chapek scored a series of wins during his two-plus years – overseeing a full rebound of park attendance and consistent growth in streaming – his loss column weighed heavier.

First, it was his high-profile fight with Black Widow star Scarlett Johansson over a pay dispute. Then, it was his complete botched response this last spring to Florida’s so-called “Don’t Say Gay” legislation, which prompted employee walkouts and fired up Florida’s Republican Gov. Ron DeSantis, who retaliated by stripping away Disney’s special tax status in the state.

But even after those two headline-making gaffes, Disney’s board gave Chapek a unanimous vote of confidence by renewing his contract for another three years in June, even though his previous contract wasn’t set to expire until February 2023.

“Disney was dealt a tough hand by the pandemic, yet with Bob [Chapek] at the helm, our businesses – from parks to streaming – not only weathered the storm, but emerged in a position of strength,” Disney’s board said at the time. “Bob is the right leader at the right time for The Walt Disney Company, and the Board has full confidence in him and his leadership team.”

That sentiment would last not even five months. Now Disney is on the hook for paying out his 3-year contract and more, totaling at least $23 million in walk-away compensation, according to Bloomberg.

The bottom line

After surviving all of those controversies, Chapek’s dismissal comes less than two weeks after investors learned Disney’s streaming service lost $1.47 billion in the fourth quarter, despite adding 12.1 million new subscribers. The loss more than doubled the figure from a year earlier and was far greater than analysts anticipated.

The company announced cuts to marketing and content budgets to get in line. But on the Nov. 8 earnings call, Chapek remained cheery in his outlook and was even described as “happy go lucky.” This tone prompted calls to fire him as the stock fell 12% after the call. Year to date, Disney shares were down more than 40%.

Now Iger is back in, the unicorn CEO who just can’t quit Disney. The company announced Iger will be in the seat for two years with two goals: get back on the growth track and find another successor. Disney’s stock jumped 9% in premarket trading Monday before settling up 6% by market close.

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