This structure, with D’Amaro as CEO, Gorman as chairman, and Iger being gracefully ushered to the exit, is the type of structure that typically allows for a smooth transition and a “clean break,” said board advisor and lawyer Richard Leblanc. That’s typically what boards strive for in an orderly succession, he said.
“There is always pressure on the new CEO when the old CEO is there to not make any sudden moves, and to carry on the CEO’s legacy,” said Leblanc. In contrast, when the old CEO moves on, “they exit the company so that the new CEO can find their way and implement change without feeling as though someone is looking over their shoulder.”
Disney’s entire succession process is much more formal this time around, said Arpita Agnihotri, a strategy expert and associate professor at Penn State who authored a case study on CEO planning at Disney. With Gorman helming the succession committee, Iger mentored four internal candidates for the CEO role and trained them equally well, and the board reached a consensus on the best candidate for the job, she said.
“There is clarity about who will be running this company,” noted Agnihotri.
There is always a lingering “invisible hand” of the former CEO anytime there’s a major transition with a well-known executive, said Agnihotri. And in the short term, D’Amaro is certainly likely to take Iger’s advice and counsel and consider it invaluable. But once Iger is gone, D’Amaro will be able to completely run the show, and he’ll have the opportunity to convince shareholders he is the right choice, much as he convinced the board, she explained. Once that happens, the invisible hand will withdraw, Agnihotri added, but investors and market observers will be watching Disney very closely to ensure there won’t be a repeat of the last time the board tried to replace Iger.
“Everyone has burned their fingers,” said Agnihotri. “Shareholders, the board, and other stakeholders are going to keep a close eye.”
She noted that the appointment of Dana Walden as president and chief creative officer is also a key note in the CEO transitional chord. While D’Amaro has credibility as a financial expert with deep expertise in resorts and parks, Walden has the creative chops to counter any potential criticism that the board has erred by appointing a finance-minded CEO to lead a creative company.
According to Walden’s offer letter, her pay includes $3.75 million in yearly salary, a target bonus of $7.5 million, an annual long-term incentive award of $15.75 million, plus a one-time award tied to her promotion valued at $5.26 million. The grant-date value of her total pay package, including the one-time award, is roughly $32.26 million, although her awards vest over multiple years and will only pay out if she hits key performance hurdles.
It’s not a surprise that Disney went from a duality with an executive chair plus a CEO to a unitary command structure with a CEO plus an independent board chair, said Leblanc. Disney’s board wants to get this done right, he said. Stipulating that he was speaking generally and in no way referring to Iger, Leblanc noted that when an outgoing CEO hangs out as executive chair, “it’s hard for the new CEO to make their imprimatur on the company.”
