Disney’s board unanimously voted to extend CEO Bob Chapek’s contract for three more years, the company announced yesterday. His deal was set to expire in February 2023. Despite a chaotic tenure that began at the height of COVID, the new three-year agreement will begin Friday, July 1.
“Disney was dealt a tough hand by the pandemic, yet with Bob at the helm, our businesses—from parks to streaming—not only weathered the storm but emerged in a position of strength. In this important time of growth and transformation, the Board is committed to keeping Disney on the successful path it is on today, and Bob’s leadership is key to achieving that goal. Bob is the right leader at the right time for The Walt Disney Company, and the Board has full confidence in him and his leadership team,” said Susan Arnold, chairman of the board, in a statement.
The extension is Chapek’s chance to prove to the board, Wall Street and subscribers that he is capable of running a streaming business in this unpredictable climate and can overcome all the difficulties the company has been facing, including a stock loss of 38% year to date.
Disney stock has teetered more than its rivals. Netflix shares were down over 20% after losing 200,000 subscribers in the first quarter of 2022. Following the announcement of the new contract, Disney stock increased by 0.56% in late trading to $96.46. The lowest for the year was $92, and last fall, it was $186.
Chapek has felt the pressure to follow in former Disney CEO Bob Iger’s footsteps. Iger was Disney’s CEO since 2005 and is highly respected in Hollywood, especially for acquiring properties Pixar, Marvel and Lucasfilm.
It’s no secret that the new CEO hasn’t necessarily been welcomed with open arms. In September 2021, Chapek embarrassed Iger, who was still chairman then, when the new CEO was in a legal scuffle with Disney+ “Black Widow“ star Scarlett Johansson. Since then, Iger and Chapek’s relationship is estranged.
More recently, he has managed to frustrate employees with his initial lack of response to Florida’s anti-gay bill and the recent firing of Peter Rice, Disney’s most senior television content executive.
Chapek apologized for his silence on the bill after being slammed by Disney cast members who felt insulted by the decision. The chief executive officer publicly opposed the bill and announced the donation of $5 million to LGBTQ rights organizations. It was reported by accountability news site Popular Information that the Walt Disney Company previously donated more than $200,000 to politicians who sponsored Florida’s “Don’t Say Gay” bill.
Peter Rice, who oversaw the Disney General Entertainment Content division and was supposedly Chapek’s replacement, was let go at the beginning of this month. According to The New York Times, sources report that he was an ill fit for the company’s “corporate culture.”
Earlier this month, Disney pulled a controversial move and passed on streaming rights to popular Indian Premier League cricket, which will make it harder for Disney’s Indian streaming service Hotstar to retain subscribers. The sporting event helped Hotstar gain millions of subscribers and break several global streaming records. The company was outbid by Viacom 18 and Times Internet.
The chief executive officer has achieved some milestones as well during his time at Disney. He has worked for the Walt Disney Company for nearly 30 years and is its seventh CEO. Previously the chairman of Disney’s Parks, Experiences, and Products division, Chapek took on a precarious position in 2020 when the pandemic forced the closing of movie theaters and theme parks. Despite having little revenue from these divisions, the company’s fledgling streaming service Disney+ has seen success with shows “The Mandalorian,” “The Book of Boba Fett,” “Obi-Wan Kenobi” and “Loki,” among others. The streaming service also announced that it will get a new affordable ad-supported tier this year, which will likely attract new subscribers.
While Chapek is bold for his goal of reaching 230 million to 260 million Disney+ subscribers by 2024, the service may still be on track. At the end of Disney’s fiscal second quarter, Disney+ had more than 137.7 million subscribers.
Bob Chapek stated, “Leading this great company is the honor of a lifetime, and I am grateful to the Board for their support. I started at Disney almost 30 years ago, and today have the privilege of leading one of the world’s greatest, most dynamic companies, bringing joy to millions around the world. I am thrilled to work alongside the incredible storytellers, employees, and cast members who make magic every day.”
The details of his new contract, including base salary, are still in the works. In an SEC filing, the company said the new contract will grant Chapek a long-term incentive award with a target value of “not less than $20 million annually.” Also, the proportion of his long-term incentive award comprised of performance-based restricted stock units will be boosted to 60%. According to the SEC filing, the awards don’t guarantee any minimum amount of compensation.