In a sudden turn of events, Bob Chapek is no longer Disney’s CEO and Bob Iger has returned to lead for 2 years.
©Disney
We’ve shared a look at Disney stock values following the news of Iger’s return, a look at why Disney replaced Chapek with Iger, and celebrities’ reactions to the news. But now we’ve got more details about the determination made before Chapek was removed and what his exit payment could look like.
According to the New York Times, Disney’s Board of Directors determined that Chapek had done “irreparable damage to his ability to lead, with a string of missteps resulting in the lost confidence of Wall Street and most senior Disney executives, as well as many rank-and-file employees.” (To be clear, this is a quote from the New York Times about the reported determination of the Board. Disney has stated that Chapek was fired without cause.)
CNBC reports that (according to some sources) Christine McCarthy, Disney’s chief financial officer, was reportedly one of the executives who expressed a “lack of confidence” in Chapek.
©CNBC
According to the Financial Times, some senior executives at Disney actually “led a rebellion” against Chapek in recent weeks. The “covert campaign” reportedly started in the summer. Executives approached the Board to express their concerns, but the final straw was reportedly the earnings release from November 8th (Q4 of fiscal year 2022).
Following Disney’s recent report of a $1.5 billion loss in streaming, stock values went down and CNBC host Jim Cramer called for Chapek’s firing. He said Chapek was “incapable of running a fantastic company.”
Days after this report, Chapek announced job cuts, saying “We are going to have to make tough and uncomfortable decisions.”
©CNBC
Reportedly, Susan Arnold, the chair of the Board of Directors, called Iger late in the week to ask him to consider returning to the company. Ultimately, the Board’s determination led to bringing back Bob Iger as CEO. He will serve a limited, 2-year term.
According to CNBC, Disney “blindsided” Chapek with the decision, and the news caught “Chapek and his inner circle” “off guard.” Chapek was reportedly notified on Sunday night. The Financial Times shares that Chapek reportedly became aware of the moves being made against him but was “caught off guard by the speed of events.”
©Disney
According to Disney’s report filed with the Securities and Exchange Commission, the Company used its right to terminate Chapek without cause. Chapek also resigned from the Board “pursuant to the terms of his employment agreement.”
The report goes on to note, “Mr. Chapek will receive the separation benefits payable in accordance with the terms of his previously disclosed employment agreement.”
Disney CEO Bob Chapek in Disney World on its 50th Anniversary
Bloomberg reports that Bob Chapek will be leaving Disney with a number of “exit payments and benefits that could be worth more than $23 million.” This is in addition to the millions of dollars Chapek could also get if the Disney stock price increases in the coming years.
The Financial Times shares that under Chapek’s old contract, “at the end of 2021 he was entitled to an estimated $54mn in cash and stock in the event of early termination.”
Keep in mind that Disney has not released the exact financial terms of Chapek’s departure. Bloomberg reached its number by making some calculations based on disclosures from regulatory filings.
©Disney
So where do the numbers come from? Well, first, Chapek has a contract that reportedly entitles him to collect a salary for the FULL duration of the contract term, even if he is “ousted prematurely.” Chapek’s contract had been extended through part of 2025. Bloomberg shares that the salary payments from now through that 2025 date would be around $6.5 million.
On top of that, Chapek is entitled to collect the pension he has accumulated during his time with Disney. In October of 2021, some filings from Disney showed that the pension number was $16.9 million. According to Bloomberg, “That money is his, regardless of the circumstances of his departure.”
Hollywood Studios
Bloomberg notes that Chapek will probably get more money too, but it’s not clear just how much he’ll receive. Chapek does have a number of stock options and he also has some stock awards that haven’t vested yet.
It’s not clear how much these things will be worth, given how the stock value has dipped over the past several months. But stock values have jumped up given the news of Iger’s return. It’s possible that Iger will take steps that will improve the stock value. That could make Chapek’s stock and options increase significantly in terms of value.
Chapek also has a “non-qualified deferred compensation plan.” Bloomberg shares that this is “akin to a super-sized 401(k).” About one year ago, Chapek had about $8.5 million in his non-qualified deferred compensation plan, but that number may have changed given the changes in the stock market.
We’ll continue to keep an eye out for more developments on this situation. Stay tuned for the latest updates.
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Tell us your thoughts about the leadership change at Disney in the comments below.
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I never like to see anyone lose their job, even if deserved, but the business world in senior leadership ranks can be cold. I am hoping that Iger can restore some of the magic over the next two years and help select a worthy successor. I want the parks to remain profitable, so they attract internal capital for maintenance and refurbishment. I also want the parks to be full of the “extras” that help create the magic. I do not want to see bare bones profitable parks. I don’t mind reasonable price increases, knowing we are in inflationary times, but drop the nickel and dime price add ons. Resume annual pass sales. Raise the daily attendance caps, within reason, in the reservation system. Do away with surge pricing. Drop the extreme LGBTQ advocacy. It’s a turn off for most of us and costing Disney revenue. Settle with Florida, quickly and quietly, over Reedy Creek.
Executive compensation in America is outrageous. These people talk about millions like the majority of us talk thousands. No wonder Disney parks prices are beyond the average middle class.
At this point, how corporations in America, including Disney, are being run have gone way beyond comical.
Now it’s just farce.
No wonder it costs so much to visit Disney parks. Sounds like it’s run like the government. Pay the bigshots first and stick it to the little guy. Chapek surely did not earn the amount he’s receiving.
Sadly it was went Disney stocks to a deep dive that the board of director’s finally fired Chapek. Never mind listening to the people, just listen to the profit gods. I realize Disney is a business and is out to make as much money as they can. But throwing the loyal dedicated fans and guest under the bus is just bad business.
Chapek was way in over his head and had no business running the company (think he BS’d his way in). Grant it, he stepped in at the beginning of the Pandemic. But a CEO with his experience would have weathered the storm much better than he did. Instead he made some horrible decisions that harmed the fans and the share holders faith. He not only angered the Liberal fans, he also angered the Conservative fans and everyone in between. It’s pretty bad if everyone hates you like everyone hated Chapek. Just look at the comments. But the last straw was the stocks taking a dive.
The Florida debacle was when the dam began to break. Not that he should have kept quiet, but it the way he handle it. As stated in the Los Angeles Tines “Chapek wasn’t as diplomatic or elegant or smooth as Iger”. Chapek just blew, and it and seems he does not to have the right people and business skills.
It almost seems like he wanted to harm the company and anger everyone with the way he was doing things (on purpose or by mistake). I read an article that right he took over, Bob Igor made a comment that angered Chapek. After that Chapek went rouge and off the rails. I just hope Igor can fix the irreparable damage he has caused.
so my disappointment in Disney this past year is shared by many including disney employees. bravo to their BOD for taking such swift action…..I was really loosing faith in them.. here’s hoping Mr Iger can re-establish faith in the mouse for all of us… I truly love disney and what it ‘stood’ for. I hope to get that back.
No one, I mean, no one is worth that much money. He should forfeit some of that money back into the economy that put him there!
Leave it to corporate America to reward a terrible CEO when the board basically booted him out of office due to a vote of no confidence. Chapek doesn’t doesn’t deserve half of what they say he would get. His pension and stock is all he should walk out with.
There shouldn’t be a severance package offered to him. Us lowly minions, employees of corporate America don’t get severance packages when we get fired. The Disney employees didn’t get a severance package when they got laid off. CEOs shouldn’t get anything when they are fired by vote of no confidence. He ran Disney into the ground. Yet he’s getting rewarded for it!
$23 mil to leave and then millions in pensions, stock, and other assets? All for failing? This wage gap is the real problem in the US. Only ego would make him work with this bank account.
And of all the folks he upset, they focus on the board and stockholders – never a mention of clients or customer satisfaction or even average employee issues. And THAT’s what’s wrong with corporations in the US. Always bending the knee to investors and boards, never to customers and employees.
Sigh
Ousting Chapek is one thing, but they are not going to roll back all the horrible things he intitiated.
Glad to hear he’s been replaced, happy to have Mr. Iger back at the helm. Disney needs to take care of its employees, they make Disney the fulfillment of dreams for Disney fans and visitors. I am a DVC member and need to know Disney cares about their loyal fans.
If you’re reading between the lines then you understand that neither Chapek or Iger or McCarthy or Arnold or anyone else at the top of the Disney Corporation are in touch with the people who they ultimately work for … us, the guests. One of the biggest screw-ups in Disney history gets to walk away with millions of dollars
We scrimp and save and forego certain things just for, if you’re lucky, two or three weeks to make your family happy.
I realize that this is no different than most big corporations but there should come a time when someone who screws up that bad gets next to nothing.
Chapek is crying all the way to the bank !!!!!!!!! With his millions. As if he cares about anything especially Walt Disney World.
The story I heard here in Los Angeles is that the fired CEO of Disney was widely disliked by the employees. I don’t think it’s possible in this day and age to run a well managed organization unless you have the loyalty of the people around you by treating them fairly and with respect.
Looks like he had annoyed just about everyone – from staff to customers to fellow execs. No one survives that. Apparently he had decided to take the parks upscale but those increases are not going to be palatable until you start limiting attendance. Folks who can afford it will pay more to not have to wait in line, but they aren’t going to put up with endless increases on top of waiting in line. They’ll go somewhere else on vacation instead. Igor and the board need to keep that in mind as they untangle this mess. And discussion about laying off staff members before Christmas – I’d put a hold on that. Especially as you pay out millions to a failed outgoing exec. Very bad optics all around.