Disney’s board removed CEO Bob Chapek five months into a three-year contract extension, and it cost them dearly.
In case you’ve been living under a rock, making your list, checking it twice, or simply tuning out for a while, Disney’s Bob Chapek is gone. Finished. Sacked. Eighty-sixed. Out–much to the delight of droves of Disney fans. Bob Iger, former CEO and supposed conquering hero, is back, despite his multiple attempts to retire from the company, and heads just keep rolling.
Details were released about Disney’s offer to Bob Iger in exchange for his help in returning to right the ship. He will reportedly be paid an annual base salary of $1 million with a possible 100% annual bonus. He’ll also “be granted a long-term incentive award having a target value of $25 million” for each fiscal year in the agreement. His term is currently set to end on December 31, 2024, meaning this go around, Iger will be with Disney for just over two years.
Now, details have been released about what it cost Disney to rid the company of the former CEO.
In June, the board at The Walt Disney Company extended Bob Chapek’s contract as CEO for three more years, so at the time of his dismissal, Chapek was less than 5 months into that 36-month extension. As such, it was clear that Disney would have to buy Chapek out of his contract.
A Disney regulatory filing states that “options and restricted stock units awarded to executive officers with employment agreements also continue to vest (and options remain exercisable) beyond termination of employment if the executive’s employment is terminated by the Company without cause or by the executive with good reason.”
Though Disney hasn’t made a public announcement about how much Chapek’s pink slip set the company back, that figure can be very closely estimated by looking at the company’s public earnings records over the last fiscal year, during which revenue topped out at a record $28.7 billion.
Based on those earnings records, Chapek’s payout for the last fiscal year would have been $17.9 million in cash, $6.5 million for an option acceleration, and a $19.6 million restricted stock unit acceleration, meaning his prize for walking out the door totaled nearly $44 million–not bad for being unemployed now.
According to Investors.com, Wall Street’s finest will likely easily bid adieu to the now-excused CEO at Disney:
During his roughly two-year stint as the company’s president, shares of Disney sagged nearly 27%, while the S&P 500 rose 22%. Additionally, theme park analysts pointed out the disconnect between ticket prices and the quality of the experience. Downtimes at malfunctioning rides are rising, the Wall Street Journal reports, even as the price of a single park, one-day admittance to Disneyland rose again this year to nearly $180.