Bob Chapek leaves Walt Disney Co.’s top job with exit payments and benefits that could be worth more than $23 million. That’s without including the millions more he could collect in the coming years if the company’s share price recovers.
The amount is based on calculations by Bloomberg News using disclosures from regulatory filings. Disney hasn’t yet publicly disclosed the financial terms of the chief executive officer’s departure, and a representative didn’t respond to a request for comment sent outside normal business hours.
Chapek’s contract entitles him to collect a salary for the full duration of his term, even if he’s ousted prematurely. His term was recently extended to mid-2025, and the paychecks between now and then add up to roughly $6.5 million.
He’s also entitled to the pension he’s accumulated over his decades-long career at Disney. As of October 2021, filings show it stood at $16.9 million. That money is his, regardless of the circumstances of his departure.
As for the rest: he probably will get more, but it’s unclear just how much.
He holds a trove of Disney stock options, though most of them are underwater. If he had exercised his in-the-money securities and immediately sold the shares at Friday’s U.S. market close, he would have collected around $3.5 million.
He also holds stock awards he received in prior years that haven’t yet been vested. Some of them will likely continue to vest even though he’s no longer at Disney. How much they’ll be worth — and how many securities he’ll receive — will depend on the shares’ trajectory after they plunged 41% this year. If they pick back up, both the stock and the options will swell in value.
Finally, Chapek has a so-called non-qualified deferred compensation plan, which is akin to a super-sized 401(k) that many large companies set up for high-earning employees. It usually lets them invest some of their earnings into a selection of equity and bond funds. Around a year ago, Chapek had about $8.5 million in his plan, a figure that has likely changed given the recent market volatility.
For now, hardly any of this is etched in stone. It’s not uncommon for boards to strike bespoke exit agreements with CEOs, especially in contentious situations where they are cutting the person’s contract short. And if a board concludes that a CEO broke company policy or didn’t fulfill the commitments of the employment agreement, it may decline to pay the person at all. (Disney’s statement announcing Chapek’s departure and the reinstatement of his predecessor, Bob Iger, didn’t provide reasons for the switch.)
While Chapek’s payout by most measures is a generous one, it’s far from the rich entitlements that some chiefs in the entertainment industry have enjoyed in the past. When Chapek took over as CEO in 2020, the board set his target pay in the bottom quartile for media chiefs. The move followed years of controversy over Disney’s executive compensation, where everyone from shareholders to lawmakers and a Disney family heir had derided Iger’s pay.
The company's board announced Iger's stunning return Sunday night and said Bob Chapek, who succeeded Iger in 2020, had stepped down from the position.
"The Board has concluded that as Disney embarks on an increasingly complex period of industry transformation, Bob Iger is uniquely situated to lead the Company through this pivotal period," board Chair Susan Arnold said in a statement.
Bob Iger is returning to Disney as CEO, replacing Bob Chapek. (ROBYN BECK/AFP via Getty Images / Getty Images)
Iger was Disney's CEO from 2005 to 2020, then served as the company's executive chairman through 2021 before retiring. Iger will now return as CEO for two years.
"We thank Bob Chapek for his service to Disney over his long career, including navigating the company through the unprecedented challenges of the pandemic," Arnold said.
Disney said Bob Chapek (pictured above) stepped down as CEO. (David Livingston/Getty Images / Getty Images)
"Mr. Iger has the deep respect of Disney’s senior leadership team, most of whom he worked closely with until his departure as executive chairman 11 months ago, and he is greatly admired by Disney employees worldwide – all of which will allow for a seamless transition of leadership," she continued.
Iger said he was "optimistic" about Disney's future and "thrilled" to be back as CEO.
Bob Iger is once again Disney's CEO, effective immediately. He will guide the company for the next two years after stepping away from the CEO position in 2020. (REUTERS/Brendan McDermid / Reuters Photos)
"Disney and its incomparable brands and franchises hold a special place in the hearts of so many people around the globe — most especially in the hearts of our employees, whose dedication to this company and its mission is an inspiration," Iger said in a statement. "I am deeply honored to be asked to again lead this remarkable team, with a clear mission focused on creative excellence to inspire generations through unrivaled, bold storytelling."
Under Iger in his previous tenure as CEO, Disney acquired Pixar, Marvel, Lucasfilm, and 21st Century Fox. He also oversaw the launch of Disney+.
Iger's return comes after Disney posted lower-than-expected results for its fiscal fourth quarter.