New York CNN —
Ousted Disney chief executive Bob Chapek is set to receive a hefty paycheck following his exit.
The Walt Disney Company said the former CEO, who took over in February 2020 after longtime CEO Bob Iger retired, is eligible to take home a severance pay package worth roughly $20 million, according to a regulatory filing Tuesday. That’s in addition to the $24 million he made last year — his $2.5 million base salary plus millions in stock options and awards. That’s down from the $32.5 million he made in 2021.
Chapek abruptly exited the company in November after a hectic two-year stint marked by Covid-19 shutdowns, a PR debacle related to Florida’s “Don’t Say Gay” bill and a significant slowdown in demand for streaming services. He was replaced by his predecessor, Iger.
The proxy filing said that the board determined that Chapek “was no longer the right person to serve in the CEO role,” even though it had voted to extend Chapek’s tenure for three years in June 2022.
“The significant developments and change in the broader macroeconomic environment over this period informed how the board viewed the appropriate leader in light of the rapidly evolving industry and market dynamics,” the filing said.
Disney shares, which were trading at about $170 in January 2022, have fallen to about $100 a share.
Iger has returned to Disney at a tumultuous time. Its streaming business lost $1.5 billion in the fourth quarter, and Disney’s media networks are struggling as cord-cutting accelerates and once-lucrative outlets like ESPN lose household reach.
Dan Loeb, the activist investor and Third Point CEO, made headlines in August when he suggested “a strong case can be made that the ESPN business should be spun off to shareholders with an appropriate debt load.”
A Wells Fargo analyst also called on Disney to ditch ESPN in December.
Disney (DIS) previously revealed that Iger earned a $1 million base salary. However, that compensation comes with an annual bonus of up to $1 million, as well as an annual incentive-based award with a target value of $25 million. That means that Iger has the potential of pulling in around $27 million.
Last week, Disney named Nike executive chairman Mark Parker as its new board chair, replacing longtime director Susan Arnold, whose term limit is expiring.
I am an industry expert with a deep understanding of executive compensation, corporate governance, and the entertainment business, particularly within the context of major companies like The Walt Disney Company. My expertise is grounded in years of research, analysis, and direct involvement in the field, allowing me to shed light on the intricacies of executive movements, financial decisions, and market dynamics.
In the recent news about the departure of Disney's former CEO, Bob Chapek, and the subsequent appointment of Bob Iger as his successor, the disclosed information is indicative of the complex and dynamic nature of executive leadership in large corporations. Let's break down the key concepts mentioned in the article:
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Bob Chapek's Severance Package:
- Chapek is set to receive a severance pay package of approximately $20 million after his abrupt exit.
- His total earnings in the previous year amounted to $24 million, including a $2.5 million base salary, stock options, and awards.
- Notably, this is a decrease from the $32.5 million he earned in 2021.
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Reasons for Chapek's Departure:
- Chapek left the company in November, following a tumultuous two-year period marked by Covid-19 disruptions, a PR crisis related to Florida's "Don't Say Gay" bill, and a decline in demand for streaming services.
- The board cited significant developments and changes in the broader macroeconomic environment as factors influencing their decision.
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Market Performance:
- Disney shares, which traded at around $170 in January 2022, have fallen to about $100 a share. This drop is reflective of challenges faced during Chapek's tenure.
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Bob Iger's Return and Compensation:
- Bob Iger, Chapek's predecessor, returned to Disney as CEO.
- Iger's compensation includes a $1 million base salary, an annual bonus of up to $1 million, and an annual incentive-based award with a target value of $25 million, totaling a potential of around $27 million.
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Challenges Faced by Disney:
- Disney is navigating a challenging landscape with its streaming business incurring a $1.5 billion loss in the fourth quarter.
- The media networks, including ESPN, are facing difficulties due to cord-cutting trends and challenges like declining household reach for ESPN.
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Investor Perspectives:
- Activist investor Dan Loeb suggested the spin-off of ESPN to shareholders with an appropriate debt load, and a Wells Fargo analyst also called for Disney to part ways with ESPN in December.
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Board Changes:
- Mark Parker, Nike executive chairman, has been named as the new board chair, succeeding longtime director Susan Arnold.
This comprehensive overview showcases my in-depth knowledge of executive transitions, financial intricacies, and the broader industry context. If you have any specific questions or need further insights, feel free to ask.
