Walt Disney last year awarded Bob Iger a $10mn deal to advise his successor Bob Chapek despite the two executives at the media company barely being on speaking terms.
Iger, who ran Disney for 15 years, rocked Hollywood by returning to the company this week as chief executive after his chosen heir Chapek was ousted in an internal revolt.
Iger’s reappointment ended a 11-month stint outside Disney where the former executive pursued other interests but remained loosely tied to his old employer through a “consulting services” agreement.
Under terms disclosed in Disney’s corporate filings, Iger was granted $2mn a year until the end of 2026 for advice “on such matters as his successor as chief executive officer may request from time to time”.
Disney said the five year consulting services deal would enable the company “to have access to Mr. Iger’s unique skills, knowledge and experience with regard to the media and entertainment business”.
But by the time of his departure Iger’s relationship with Chapek had badly deteriorated and Iger expressed frustration to friends that his advice was not sought by his successor at key moments.
One former Disney executive friendly with Iger said this included Disney’s bungled response to a Florida law that regulates what teachers can say about LGBT+ issues.
“Iger never forgave Chapek for the way Chapek distanced himself and took control of the company,” they said. “In some ways, Iger thought he would still be the coach. Chapek was not willing.”
Disney declined to comment on the services provided by Iger after he left the company.
While seven-figure consulting deals for former executives are rare in Europe, such arrangements are used by some US companies. Disney also agreed to continue paying Iger’s security costs as an ex-employee, which totalled around $750,000 a year.
Disney did not say whether Iger’s $2mn required a minimum amount of consultancy advice, but the contract does include monthly and yearly “maximum time commitments” of unspecified length.
Iger’s return to Disney as chief executive was on a slimmed down pay package, which includes a $1mn base salary, a $1mn target bonus and stock awards valued at $25mn. This compares to an average pay package of around $47mn during his last five years as chief executive.
“Essentially he’s taken a pay cut of 40 per cent . . . to come back,” said Tom Gosling, an executive fellow at the London Business School who established PwC’s executive pay practice. “He must love the job, love the company or see a lot of upside in the share price. Maybe all three.”
Disney, in corporate filings announcing the change of management, said Iger’s consultancy arrangements would be paused while he serves as chief executive and would resume when he left the company.
Source: Financial Times