UPDATED: In a departure that has stunned the entertainment industry, Thomas Staggs is stepping down as chief operating officer of Disney after the board of directors failed to give him the assurance that he will succeed Bob Iger as chairman-CEO in 2018.
The news of Staggs’ resignation after a little more than one year in the COO post sends Disney’s CEO succession plan back to square one and is likely to focus on candidates outside the current Disney kingdom for the first time in decades. The company’s board said it “will broaden the scope of its succession planning process to identify and evaluate a robust slate of candidates for consideration,” signaling its intention to seek external candidates.
News of Staggs’ exit, announced Monday afternoon shortly after the stock market closed, shocked most company insiders. Staggs will step down as COO on May 6 and leave the company entirely at the close of Disney’s fiscal year in September. Disney’s division heads, including film chief Alan Horn, TV leaders Ben Sherwood and John Skipper and Parks and Resorts topper Bob Chapek, will again report directly to Iger after having a dual-reporting structure for the past year.
A source said Staggs, 55, made the decision to leave after pressing for a formal commitment from the Disney board about his future ascent to the throne. When that didn’t come, the executive came to the decision that he did not want to wait another two years and that it was time to move on.
There was also speculation that delays and cost overruns with the long-awaited Shanghai Disneyland park, now scheduled to open in June, played a part. He had shepherded the $5.5 billion project during his previous tenure as head of the Parks and Resorts division before his promotion to COO in February 2015. However, sources cautioned that many of those issues were spurred by the complexities of doing business in China. During Disney’s earnings call in February, Iger and Staggs cast the park as on track and poised for future expansion.
“It’s one of the most extraordinarily creative and innovative projects in the history of our company, which makes it the perfect way to firmly establish Disney in the hearts and minds of the people of China as well as an attractive and profitable place to deploy our capital for the long term,” Staggs said on the call.
A 26-year Disney veteran, Staggs was generally well-liked among the rank-and-file and had won praise for how he handled the transition to the COO role. Sources said he had a tough assignment working in Iger’s shadow in the apprentice role and some questioned how much authority Iger was willing to cede. But sources said the Disney board had been evaluating Staggs’ readiness for the CEO job since before he was upped to COO, and they were not bowled over by his performance during the past year.
Iger cast the shakeup in friendly terms in a statement. There was, of course, renewed speculation about Iger possibly extending his contract past its current June 2018 expiration. At present, insiders said, Iger is planning to step down as scheduled.
“Tom has been a great friend and trusted colleague for more than 20 years,” said Iger. “He’s made important contributions to this company, earning wide respect across the organization for his achievements and personal integrity. I’m proud of what we’ve accomplished together, immensely grateful for the privilege of working with him, and confident that he will be enormously successful in whatever opportunity he chooses.”
Staggs joined Disney during Michael Eisner’s tenure as CEO, and rose through the ranks from the strategic planning department to CFO. In 2010 he was tapped to run the Parks and Resorts division, a move that was seen as giving him operational experience in preparation for his promotion to the CEO post. But during his time at the parks wing, Staggs was in a highly public competition with former Disney CFO Jay Rasulo (who swapped jobs with Staggs in 2010) for the promotion to Iger’s heir apparent. Staggs prevailed in that contest early last year. Rasulo remains an adviser to Iger, but sources emphasized that he is no longer considered a CEO candidate.
“Disney truly stands alone, not only because of the company’s phenomenal creativity, but also because of the thousands of remarkable people who make it such an extraordinary place,” Staggs said. “It’s been a privilege to work with them and be inspired by their creativity and commitment. It’s also been a great experience to work with Bob during this dynamic era of unprecedented growth and transformation. I remain grateful for that opportunity, and I’m confident that Disney’s future will be just as exciting as its legendary past.”
The renewed uncertainty about succession comes at a time of some turmoil for Disney. The company’s shares have been on a roller coaster ride of late as “Star Wars: The Force Awakens” has been busting global box office records but investors are increasingly focused on the company’s vulnerabilities on the TV side as growth prospects slow for its powerhouse ESPN cable franchise. Staggs by many accounts spent a good deal of time after his promotion to COO learning the ins and outs of the TV business, which is the primary driver of Disney earnings.
At the premiere of “The Jungle Book” later on Monday, Iger declined to comment on the news. At the end of the red carpet, other executives were also reluctant to comment, including Ben Sherwood, co-chair of Disney Media Networks and Disney ABC Television. Staggs was not sighted.
Iger said he “debated not coming, but I am such a fan of the movie I thought I would be doing it a disservice if I were not here.”
Walt Disney Studios chairman Alan Horn also declined comment. He said he found out around 12:30 pm on Monday. “I’m still processing it,” he said.