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Iger’s Disney Return Is Familiar, Not Always Workable, Storyline

Nov. 23, 2022, 10:00 AM

The move by Walt Disney Co. to put Bob Iger back in charge echoes those by boards of other troubled major US companies, including Starbucks Corp., Proctor & Gamble and Twitter Inc., that summoned former leaders to right the ship.

In some cases, it’s been a smashing success. After Apple Inc. founder Steve Jobs returned in 1997, he was credited with saving that company from the verge of collapse.

Other times, long-term success has been elusive. Twitter co-founder Jack Dorsey returned to the top job at the social media company in 2015 before leaving again last year. As the company has since been rattled by Elon Musk’s takeover and widespread layoffs, Dorsey has apologized on social media for growing the company “too quickly.”

Iger’s return highlights several issues: the struggle to create a successful succession plan and potential problems with both corporate governance and management culture if a company appears too dependent on a single person.

The move “really raises questions about why is this company so reliant on this one individual,” said Doug Chia, a consultant at Soundboard Governance.

“Part of this is that it’s show business,” Chia said. But any doubts about a company’s succession planning or management culture could harm its reputation or make potential employees think twice before joining a business, he said.

The moves by Disney and other companies to draw back former CEOs highlights the importance of good succession plans, said Jonathan Ocker, a partner at Pillsbury.

“Succession is one of the most important inflection points or duties of a board of directors,” Ocker said.

Happiest CEO on Earth

It isn’t just business as usual for returning CEOs, said Jill Fisch, a corporate governance expert at the University of Pennsylvania. Fisch said a returning CEO would need to catch up to current ESG issues including human capital, supply chain matters or environmental concerns that might not have been such a priority in the past.

Bringing back a former CEO can be problematic if they want to continue where they left off even though the business has faced all sorts of changes under another leader, Fisch said. A former CEO might also not immediately appreciate the nuances of how changing political tides affected the business.

“You could say that’s a weakness” for a returning CEO, Fisch said.

Iger reclaimed the role at Disney from Bob Chapek, who has run the entertainment giant since Iger stepped down in 2020. Disney shares soared Monday upon news of Iger’s return. Among other immediate changes, Iger has already reversed an announced price hike for the Disney+ streaming service.

“The Board has concluded that as Disney embarks on an increasingly complex period of industry transformation, Bob Iger is uniquely situated to lead the Company through this pivotal period,” said Disney board chair Susan Arnold in a press release. During Iger’s previous 15-year stretch as CEO, Disney acquired Pixar, Marvel and 20th Century Fox.

More recently, Disney has been wrestling with troubles including a tense relationship with Florida governor Ron DeSantis, who has accused the company of being overly ‘woke’. Chapek and DeSantis butted heads when the CEO supported the repeal of Florida legislation, dubbed “Don’t Say Gay,” that bars public school teachers from instructing students about sexual orientation or gender identity.

Iger will be a steady hand during the anti-ESG backlash, Chia said.

Who’s Next

Starbucks rehired Howard Schultz as interim CEO in April after his successor, Kevin Johnson, retired after five years. Schultz has been CEO and chairman three times over multiple decades.

But Starbucks has a succession plan for Schultz’s next exit: it brought on former PepsiCo Inc. and Reckitt executive Laxman Narasimhan to take the top role in April. Starbucks said Schultz will advise Narasimhan and work closely with him before stepping down.

Ocker said that while the old way of doing things is letting the CEO “ride off into the sunset,” it sometimes makes sense to keep the old CEO around as executive chair to advise the incoming chief.

“The rub there is to make sure the old CEO doesn’t interfere too much with the new CEO, or it won’t work,” Ocker said.

For some CEOs, their attachment to a company makes them a prime candidate. Procter & Gamble brought back A.G. Lafley to take the wheel from his successor, Bob McDonald, in 2013. Lafley was CEO from 2000 to 2009, and had been at the company since 1977.

“The board called me and asked me if I would come back, and frankly, duty called,” Lafley told Bloomberg News at the time.

If a company is going to eschew a potential new leader and ultimately turn to a former CEO, it’s better to make that decision quickly, said Chia.

“There’s no point in dragging it out if you know what the outcome is going to be already,” Chia said.

— Andrew Ramonas contributed to this story.

To contact the reporter on this story: Clara Hudson at chudson@bloombergindustry.com

To contact the editors responsible for this story: Jeff Harrington at jharrington@bloombergindustry.com; Keith Perine at kperine@bloombergindustry.com