The new CEO of Walt Disney, Josh D’Amaro, has been given a lucrative pay package for his first year, with a total grant-date value of approximately [value not provided] and the task of leading one of the most exciting and well-known companies globally. However, he will also receive something that could be the most valuable aspect of the succession process: Bob Iger’s planned departure.
According to Disney’s [information missing], two-time CEO Iger will step down from the board’s powerful executive committee after the annual shareholder meeting next month on March 18 and will leave completely at the end of the year. After the chief-executive role is passed to D’Amaro next month, Iger’s employment will transition to an advisory position. In the meantime, the four-decade veteran leader will “exclusively” focus on the board, where he will remain a member and stand for reelection before investors at the shareholder meeting in March.
This is a significant change from the last time Iger left the top position. In contrast, when Disney replaced former CEO Bob Chapek in February 2020, Iger became the executive chairman and retained control over guiding the company’s creative efforts. Disney named Susan Arnold as chairman in 2021 but ended up bringing back Iger in November 2022 for his second stint as CEO after the company struggled.
This time around, D’Amaro will serve as CEO with ex-chief James Gorman as the chairman of the board. Gorman, a Wall Street veteran with a skill for CEO transitions, will become Disney’s chairman in 2025 after leading its succession planning committee since 2024 and setting the stage for the official transition this week.
This structure, with D’Amaro as CEO, Gorman as chairman, and Iger being smoothly eased out, is the kind of structure that usually enables a smooth transition and a “clean break,” said board advisor and lawyer Richard Leblanc. That’s typically what boards aim for in an orderly succession, he said.
“There is always pressure on the new CEO when the old CEO is present to avoid making sudden changes and to continue the CEO’s legacy,” said Leblanc. In contrast, when the old CEO moves on, “they leave the company so that the new CEO can find their own path and implement changes without feeling like someone is watching over their shoulder.”
Regarding compensation, D’Amaro’s package includes a base salary of $2.5 million, a target annual bonus of 250% at $6.25 million, and an annual long-term award of $26.25 million, according to a [filing missing] with the Securities and Exchange Commission. He will also receive a one-time bonus of $9.7 million for his promotion from Disney Experiences chairman to CEO of the company. The total grant-date value of his package, including the one-time award and assuming full payouts, is about $44.7 million, although the majority of his pay depends on meeting certain financial benchmarks and will only be paid out over several years. Last year, Iger’s total compensation was [amount missing] at about $45.8 million.
Disney’s entire succession process is much more formal this time, said Arpita Agnihotri, a strategy expert and associate professor at Penn State who wrote a case study on CEO planning at Disney. With Gorman heading the succession committee, Iger mentored four internal candidates for the CEO position 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 whenever there is a major transition involving a well-known executive, said Agnihotri. And in the short term, D’Amaro is likely to take Iger’s advice and consider it invaluable. But once Iger is gone, D’Amaro will be able to fully run the company, and he will have the opportunity to convince shareholders that he is the right choice, just as he convinced the board, she explained. Once that happens, the invisible hand will withdraw, Agnihotri added, but investors and market observers will closely monitor Disney to ensure there won’t be a repeat of the last time the board tried to replace Iger.
“Everyone has been burned,” said Agnihotri. “Shareholders, the board, and other stakeholders will keep a close watch.”
A key role for Dana Walden
She noted that the appointment of Dana Walden as president and chief creative officer is also an important aspect of the CEO transition. While D’Amaro has credibility as a financial expert with extensive knowledge of resorts and parks, Walden has the creative skills to counter any potential criticism that the board made a mistake by appointing a finance-oriented CEO to lead a creative company.
“In my opinion, she will be the new CEO’s right-hand person,” said Agnihotri. Investors will want assurance that creativity won’t decline as the company aims to boost the Disney+ streaming service as a major revenue generator for Disney and to compete with [rival not specified].
According to Walden’s offer letter, her pay includes a yearly salary of $3.75 million, a target bonus of $7.5 million, an annual long-term incentive award of $15.75 million, plus a one-time award related to her promotion worth $5.26 million. The grant-date value of her total pay package, including the one-time award, is approximately $32.26 million, although her awards vest over several years and will only be paid out if she meets key performance targets.
It’s not surprising that Disney went from a dual leadership with an executive chair and a CEO to a single leadership structure with a CEO and an independent board chair, said Leblanc. Disney’s board wants to handle this correctly, he said. Stating that he was speaking generally and not referring to Iger specifically, Leblanc noted that when an outgoing CEO stays on as executive chair, “it’s difficult for the new CEO to leave their mark on the company.”