HOLLYWOOD, CA – FEBRUARY 26: The Walt Disney Company President and Chief Executive Bob Iger arrives at the 84th Annual Academy Awards held at the Hollywood & Highland Center on February 26, 2012 in Hollywood, California. (Photo by Kevin Mazur/WireImage) (WireImage)
Disney boss Bob Iger’s plan to provide a smooth transition to the next chief executive is hitting some snags.
Iger is facing one of his toughest shareholder gatherings since donning his CEO mouse ears seven years ago. At the company’s annual meeting today in Kansas City, Mo., he will have to fend off criticism of the company’s corporate governance, his pay package and his plans for a successor.
Making matters more uncomfortable, Iger will stand before the audience after one of the worst box-office bombs in Disney’s history. The company is facing a more than $100 million write-off for “John Carter,” which cost an estimated $350 million to make and market but took in just $31 million in its US opening weekend.
The 60-year-old Iger, eager to avoid the succession issues that dogged his predecessor, Michael Eisner, has taken an unusually long time to name his No. 1. Last fall, he announced he would combine the chairman and chief executive roles until he retired as chief executive in March 2015.
The company has said it will name a new CEO at that time, but already the guessing game has kicked into high gear. Wall Street is placing its money on theme-parks chief Tom Staggs, the former chief financial officer. Disney’s current CFO, James Rasulo, is also said to be in the running.
“Investors want to know about future leadership of the company,” one Wall Street source said. “The Street wants Tom [Staggs] badly, and the stock would do well if it were Tom.”
Another executive close to Disney said: “They’re going to make it look like it’s Jay Rasulo versus Tom Staggs, but everyone knows [Iger] favors Staggs.”
Iger isn’t expected to tip his hand today when he addresses shareholders, even though speculation is building.
Meanwhile, Iger’s decision to assume the role of chairman in addition to CEO while lining up his successor riled some investors. The move has reignited a debate over the board’s independence, with some shareholders accusing the company of backtracking on a commitment to keep the roles separate. In 2005, Eisner stepped down under pressure from shareholders, prompting Disney to split the CEO and chairman roles.
Disney’s board has come under fire from major shareholders, including Connecticut Treasurer Denise Nappier, who runs the state’s pension fund, which owns 640,000 Disney shares.
Nappier has criticized the board’s decision to combine the roles when current Chairman John Pepper steps down, and believes four directors who sit on the governance committee should be booted as a result.
“What were the members of the Disney Nominating and Governance Committee thinking when they decided to return to the old board leadership structure?” Nappier said in a statement.
The $155.4 billion Florida State Board of Administration is also voting against re-election of the same four.
Influential proxy adviser ISS, who is recommending shareholders vote against the four directors as well, is also criticizing Iger’s growing pay package, which has increased from $17.3 million to $30 million over six years.
Disney called the report “deeply flawed” and pointed to strong shareholder returns under Iger’s leadership.