Latest / Boardroom Conversations with Fexingo: CEOs, Strategy, and Corporate Leadership Explained / How the Disney Board Handled CEO Succession Twice in a Decade
Transcript
- Lucas: In February 2020, the Walt Disney Company board did something that seemed straightforward: they announced Bob Chapek as the new CEO, replacing Bob Iger, who would stay on as executive chairman. That decision set off one of the messiest CEO successions in corporate history, and it tells us almost everything about what can go wrong when a board lets a founder-like CEO control the timeline. Luna: And then they had to do it all over again? Because Iger came back in late 2022, right? Lucas: Exactly. Chapek lasted less than three years. By November 2022, the board had ousted him and asked Iger to return as CEO for two more years. So in less than a decade, this board handled two successions, and arguably botched both. The first one was poorly planned. The second was a panicked reversal. And the common denominator was that the board never truly controlled the process. Luna: Let's start with that first one. Iger had been CEO for fifteen years. He'd built an incredible track record — Pixar, Marvel, Lucasfilm, the Shanghai park. Why did the board pick Chapek? Lucas: Chapek was the head of Disney's parks division. He was an internal operator, very different from Iger's dealmaker profile. The board, led by then-chairman Bob Iger himself, believed a steady operational hand was what Disney needed after years of M&A. But the process was rushed. Iger had initially planned to retire in 2019, then delayed. When he finally stepped down, the board had been evaluating candidates for less than a year. Luna: And they didn't have a deep bench. I've read that the board considered only internal candidates, and Chapek was basically the only one with CEO ambitions. Lucas: Right. Kevin Mayer, Disney's streaming chief, was seen as a strong contender, but he was passed over. Mayer left Disney within months. So the board ended up with a CEO who had never run a media or entertainment company, and they gave him almost no runway to prepare. Worse, they kept Iger on as executive chairman, which created immediate confusion about who was actually in charge. Luna: That dual structure almost never works. It's one thing to have a former CEO stay on as chairman, but executive chairman with the same board seat? That's a recipe for power struggles. Lucas: And that's exactly what happened. Within months, Chapek and Iger were publicly contradicting each other on strategy. The board didn't step in to clarify roles. Then the pandemic hit, and Chapek had to make brutal decisions — park closures, layoffs — while Iger remained the public face of Disney. By the time Iger actually stepped down as chairman in December 2021, the damage was done. Luna: Let's talk about Chapek's ouster. Was it purely performance, or was it the board realizing they'd lost control? Lucas: Both. On performance, Disney's streaming business was burning cash, the stock had fallen about 40 percent from its 2021 high, and Chapek's handling of the Florida 'Don't Say Gay' controversy created a political firestorm. But more fundamentally, the board realized they'd handed the keys to someone who didn't command the respect of the creative community. When Chapek tried to reorganize the company into a single media unit, he alienated the very executives who made Disney's magic. Luna: So they called Iger back. But that created its own governance problems. Iger came back with a two-year term that he's now extended. Where's the independent succession plan? Lucas: That's the billion-dollar question. Iger has said he'll step down in 2026, but the board hasn't publicly identified a successor. They've added some new independent directors — including former Morgan Stanley CEO James Gorman — and they've strengthened the board's governance committee. But the process remains opaque. And Iger's influence on the board is still enormous. Luna: Let's talk about the activist pressure. Nelson Peltz's Trian Fund Management launched a proxy fight in early 2024, arguing the board had lost credibility over succession. They wanted two board seats. Lucas: Right. Peltz made a compelling case that the board's composition was too insular. Disney had a board of mostly retired executives and academics, with very few current media operators. Trian nominated Peltz and former Disney CFO Jay Rasulo. The proxy fight got ugly — Disney spent tens of millions defending its slate. Eventually, Disney won at the shareholder vote, but only after Iger announced a series of strategic moves: cost cuts, a partnership with Epic Games, and a clear timeline for his departure. Luna: So the board won the vote, but lost the argument. Because they only made those changes under pressure. Lucas: Exactly. The board committed to a formal succession process led by the governance committee, and they've since added two new independent directors with media experience. But if Iger extends again, or if the board picks another internal candidate without a search, the trust deficit will return. The lesson from Disney is that succession isn't a one-time event — it's a continuous governance responsibility. Luna: It strikes me that a lot of the conversation around these episodes focuses on how boards can learn from mistakes, and honestly, that kind of thinking has been really valuable for me in my own work. If it's been useful for you too, there's a small way you can help us keep having these conversations ad-free. Lucas: Yeah, listener support is what lets us stay independent and dive deep into cases like this without any sponsor influence. If you've gotten something out of the show, you can buy us a coffee at buy me a coffee dot com slash fexingo. No pressure, seriously — just if it's added value. Luna: Exactly. And we really appreciate it. So back to Disney — what do you think the board absolutely has to get right this time around? Lucas: Three things. First, they need to force a genuine external search. The temptation is always to promote from within, but Disney's bench is still thin. Second, they need to define the CEO role clearly — is this a creative leader, an operator, or a dealmaker? Because Iger was all three, and that's rare. Third, they need to establish a timeline that the board controls, not the CEO. Iger's return was a necessary emergency measure, but it can't become a permanent state. Luna: And if they don't? What's the worst case? Lucas: The worst case is that we're back here in 2027 having the same conversation. Another botched transition, another activist campaign, another decline in shareholder value. Disney is one of the most iconic brands in the world, but no brand survives bad governance forever. The board has one more chance to get this right, and the clock is ticking. Luna: Let's hope they learned from the last decade. Lucas: Let's hope so. Because the next CEO of Disney will inherit a company that's undergoing massive transformation — streaming profitability, theme park investment, sports rights negotiations. The board can't afford to wing it.