Iger Gets 2nd Contract Extension

Bob Iger

From The New York Times

Robert A. Iger will remain Disney’s chief executive and chairman until June 2018, an extension of two years beyond his previously extended retirement date, which reflects a continuing streak of success at the world’s largest entertainment company.

The second extension, announced by the Walt Disney Company on Thursday, will be his last: Mr. Iger, 63, plans to name a chief operating officer next year, an appointment that will signal his heir apparent and end a succession competition between two well-regarded internal candidates.

Under the terms of Mr. Iger’s last contract, signed in July 2013, he was to step down as chief executive and chairman in June 2016.

“I don’t usually like to talk publicly about C.E.O.s, making them feel good about themselves, but he has simply been doing an amazing job,” said Michael Nathanson, a senior media analyst at MoffettNathanson. “He has a China strategy. He is honest about businesses that are not doing well. He’s investing for future growth at a time when a lot of C.E.O.s are just buying back stock.”

Starting last spring, Mr. Iger began receiving private inquiries about his post-Disney plans. A small but influential group of sports executives, for instance, pushed him to consider becoming Major League Baseball’s next commissioner. The rumblings started a discussion by Disney’s board to retain Mr. Iger even longer than he had already agreed to stay.

Under Mr. Iger’s nine-year leadership, Disney’s market capitalization has risen to $153 billion from $48.4 billion. Disney shares have recently traded a little below $90, an increase of 40 percent compared to a year ago. Disney reported profit of $6.14 billion last year, an 8 percent increase from the year before.

Almost every division of Disney has been thriving. Movies have emerged as a strong spot after Mr. Iger’s acquisitions of Marvel Entertainment, Lucasfilm and Pixar. ESPN has been holding its own. Disney’s video game division appears to have turned a corner, having found a long-lasting hit in Infinity, a game that allows players to combine Pixar, Disney and Marvel characters.

ABC has struggled, though, as hit shows like “Desperate Housewives” and “Dancing With the Stars” have either faded or ended their runs, and the broadcast television business has faced overall upheaval. But even ABC may be perking up. The new shows “Black-ish” and “How to Get Away With Murder” are both early ratings successes.

Mr. Iger’s pay — well below that given to some media moguls who run smaller entertainment companies — did not change under his previous extension. Disney’s results have only improved since then, but Mr. Iger has agreed to remain with the same annual performance-based contract. Mr. Iger received overall compensation valued at $34.3 million for Disney’s last fiscal year, down from $40.2 million in 2012, according to regulatory filings.

However, Disney said Mr. Iger had the opportunity to earn a performance-based retention bonus if certain financial goals were met over a five-year period ending with the 2018 fiscal year. Disney said it would disclose those details in a coming regulatory filing.

Big media companies have a spotty track record when it comes to succession planning, and Mr. Iger took over Disney in 2005 after a period of turbulence following a bitter dispute between Michael Eisner and Roy E. Disney.

But Mr. Nathanson said that keeping Mr. Iger in place did not signal that Disney needed more time to groom a successor. The Magic Kingdom has long had two princes waiting in the wings: James A. Rasulo, chief financial officer; and Thomas O. Staggs, chairman of Disney’s theme park division.

By remaining Disney’s chief executive, Mr. Iger will be able to see to fruition the opening of Shanghai Disneyland — a resort on par with Walt Disney World in Orlando, Fla. — as well as the continued integration of Lucasfilm, which Disney bought in 2012 for $4 billion. Disney is also spending $400 million on an “Avatar”-themed expansion at Walt Disney World.

Disney is not without challenges. Pixar did not release a film this year, the first time since 2005 that the film studio had gone 12 months without a new movie, leading to questions about the studio’s creative footing. Disney Channel ratings have softened, and ESPN faces a new challenger in Fox Sports and potentially added muscle among cable providers reluctant to pay ever-higher carriage fees.

Mr. Iger, who is also a member of the Apple board, started his entertainment career at ABC in 1974. Disney has no mandatory retirement age for chief executives; the company’s mandatory retirement age for board members is 74.