Why Bob Iger’s return to Disney could end in disaster as study shows ‘Boomerang CEOs’ perform WORSE

The Steve Jobs Syndrome’: Why Bob Iger’s fairytale return to Disney could end in disaster as MIT study shows ‘Boomerang CEOs’ perform WORSE and rarely emulate iconic former Apple chief’s success

  • Bob Iger  faces several challenges as a ‘Boomerang CEO’ with his sudden return to Disney after it ousted his successor, Bob Chapek
  • An MIT study of ‘Boomerang CEOs’ found that on average, 167 returning chiefs from S&P 500 companies between 1992 to 2017 performed worse than newbies
  • Despite their track record, companies often rely on former heads for help during times of crisis, which has been dubbed ‘The Steve Jobs Syndrome’ 
  • The late Apple chief famously turned his company around when he retook the helm in 1997, with industry leaders trying to emulate the success ever since 
  • Disney appears to be hedging its bet on Iger, who could make a potential $27 million salary if he proves successful  

While Disney hopes to bounce back after announcing former CEO Bob Iger will take the reins once again, his return might bring further turmoil, not success. 

Disney shocked the markets when it announced Sunday that it fired woke CEO Bob Chapek, tapping Iger to takeover, who previously ran the company from 2005 to 2020 and stands to earn $27 million if he helps turn things around.   

Tech columnist Therese Poletti wrote in an op-ed for MarketWatch that while ‘Boomerang CEOs’ seem like an attractive option, with companies trying to emulate the success of Apple when it brought back Steve Jobs in 1997, returning chiefs often lead a company to further ruin. 

Dubbed the ‘Steve Jobs Syndrome,’ a 2020 MIT study of ‘Boomerang CEOs’ found that on average 167 returning chiefs from S&P 500 companies between 1992 to 2017 performed worse when compared to new heads.

‘The expectation that Iger can pull another Steve Jobs is going to weigh heavily on him over the next two years, and history is not on his side,’ Poletti wrote. 

Bob Iger (pictured) faces several challenges as a 'Boomerang CEO' with his sudden return at Disney after it ousted his successor, Bob Chapek. More often than not, 'Boomerang CEOs' fail to save their companies amid times of crisis

Bob Iger (pictured) faces several challenges as a ‘Boomerang CEO’ with his sudden return at Disney after it ousted his successor, Bob Chapek. More often than not, ‘Boomerang CEOs’ fail to save their companies amid times of crisis

Dubbed the ‘Steve Jobs Syndrome,’ many large companies hope that bringing back an experienced CEO to the helm will lead them out of trouble the same way the late Apple chief (pictured in 2009) did for his company in 1997

Pictured: Iger (left) and Jobs (right) sharing a laugh when the two met in 2007. Jobs became a Disney board member the previous year after the company bought his Pixar animation firm

Pictured: Iger (left) and Jobs (right) sharing a laugh when the two met in 2007. Jobs became a Disney board member the previous year after the company bought his Pixar animation firm

Disney' stock, which plummeted by about 40 percent under Chapek, saw a 6 percent boost upon news of Iger's return. The stock has since leveled while still trading at a higher price

Disney’ stock, which plummeted by about 40 percent under Chapek, saw a 6 percent boost upon news of Iger’s return. The stock has since leveled while still trading at a higher price

Chapek has been wildly criticized for his alleged mishandling of Disney since assuming the position in February

Disney share prices have fallen drastically, by roughly 40 percent so far this year – losses further compounded by a more than $10billion deficit incurred during the pandemic.

The ousted CEO has been slammed for overestimating profits from the company’s theme park, which saw a drop in visitors due to the pandemic, as well as its streaming service. 

Chapek also caught heat in his culture wars against Florida Gov. Ron DeSantis over his so-called ‘Don’t Say Gay’ Bill. 

In losing the controversial head, Disney appears to want to recapture the magic of its past with Iger, 71, who helmed the company through a 15-year period of explosive growth. 

Disney appears to be betting its hopes on Iger, as the board member will earn a $1 million base salary as the CEO, with another $1 million set up as a bonus, according to Securities and Exchange Commission filings. 

The company also presented Iger with an annual incentive-based award valued at $25 million. In total, Iger stands to earn $27 million, which would be a roughly half of his previous salary as CEO.   

Just the news that Iger would return was enough to send stocks up 6 percent on Monday. Share have evened out and are trading at 96.10 on Tuesday.    

Poletti, however, warned the outlook may be too optimistic given the track record of ‘Boomerang CEOs.’ 

According to MIT Sloan Management Review’s study: ‘On average, the annual stock performance of companies led by boomerang CEOs was lower than their first-stint counterparts. These results held true even when we compared them with other (non-boomerang) CEOs who were hired in times of crisis.’ 

The study noted that many ‘Boomerang CEOs’ often return to a company they no longer recognize because of the fast-changing nature of large industries, typically leading to poor performances rather than the comeback companies hoped for when reinstating leaders with known track records. 

‘Although some executives may be able to adapt to these new challenges, our evidence suggests that most do not,’ researchers wrote.  

In returning to Disney, Iger  will earn a $1 million base salary as the CEO, with another $1 million set up as a bonus. The company also offered an annual incentive-based award valued at $25 million, bringing his potential earnings up to $27 million

In returning to Disney, Iger  will earn a $1 million base salary as the CEO, with another $1 million set up as a bonus. The company also offered an annual incentive-based award valued at $25 million, bringing his potential earnings up to $27 million 

Paul Allaire, former Xerox CEO

Kenneth Lay, former Enron CEO

Among the most notable failures in ‘Boomerang CEO’ history include Xerox’s Paul Allaire (left) and Enron’s Kenneth Lay (right) 

Among the most notable ‘Boomerang CEOs’ who failed to save their companies was Xerox’s Paul Allaire and Enron’s Kenneth Lay. 

Allaire, who once led the digital printing industry, returned in 2000 as Xerox began losing ground during the tech boom. 

Unable to keep up with the latest changes in the industry, as Microsoft and Apple became household names, Xerox stock fell by a spectacular 60 percent under Allaire’s return, which only lasted for a year. 

‘Boomerang CEO’ Kenneth Lay infamously oversaw the 2001 crash of energy-giant Enron, with Portfolio.com dubbing the late businessman the third-worst American CEO of all time in 2009. 

Aside from Jobs, Starbuck’s Howard Schultz is one of the few ‘Boomerang CEO’ of note who was able to turn his company around, but the coffee giant is currently facing its own troubles as workers unionize.   

The MIT researchers said that successful ‘Boomerang CEOs’ were few and far between, and urged companies to look for new blood rather than relying on past glory. 

‘It can be tempting in times of crisis to return to a former hero who made the company great once and who can hopefully do it again. But doing so may end up pushing the company backward rather than moving it forward. 

‘Many successful executives are one-trick ponies, and research on CEOs finds time and again that they have a relatively fixed paradigm of how their industries work, what options are feasible, and how an organization should be run,’ the researchers wrote.  

Disney fired its CEO Bob Chapek (pictured) after receiving several internal complaints from senior staffers that the exec was running the company into the ground, people familiar with the matter have revealed

Disney fired its CEO Bob Chapek (pictured) after receiving several internal complaints from senior staffers that the exec was running the company into the ground, people familiar with the matter have revealed

Bob Chapek’s disasters as Disney CEO 

July 2021 Bob Chapek gets the blame when a feud erupts after actress Scarlett Johansson sues Disney, accusing it of breach of contract in a dispute over the release of Black Widow. Former CEO Bob Iger is reportedly embarrassed by Disney’s approach to the suit.

March 2022 Chapek faces a backlash from Disney staff for failing to criticize Ron DeSantis’s ‘Don’t Say Gay’ bill. He eventually speaks out, but is then bruised by a public battle with the Florida governor.

March 2022 Employees, furious about the handling of the Florida bill, claim that Disney execs censored ‘overtly gay affection’ in recent movies. The company backtracks on some of those decisions, reinstating a kiss in the Toy Story spinoff ‘Lightyear’.

June 2022 Chapek ousts Peter Rice, the well respected chairman of entertainment and programming. The Hollywood Reporter says insiders are ‘baffled’ by the decision. ‘This stuns me,’ says one executive.

November 2022 Costs at Disney’s streaming business are blamed for weaker-than-expected fourth-quarter earnings. Shares continue to tumble before Chapek is ousted. 

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The company’s board of directors acted almost immediately after receiving complaints of Chapek’s leadership, reaching out to his predecessor and former mentor, Iger, Friday to come out of retirement and replace a man he less than a year ago touted as his successor.

The shakeup reportedly left Chapek ‘blindsided,’ sources told CNBC, bringing his 11-month tenure as head exec to a premature end after a series of errors and woke controversies cratered the firm’s share price.

Brass from the company announced the change in a statement Sunday night, but did not provide a specific reason for Chapek’s dismissal.

The shakeup comes as an abrupt return to power for Iger, who, prior to stepping down had served as Disney’s head exec for more than 15 years.

Now back in the hot seat as staffers look to rescue their bottom lines, Iger has agreed to serve as CEO through to the end of 2024. 

Chapek, meanwhile, has been removed from the company completely, after implementing a host of changes to its power structure – reportedly causing a rift between the two, while also angering other senior staffers who held influence over the board, such as Disney’s Chief Financial Officer Christine McCarthy.

One such problematic power struggle that surfaced under Chapek came almost immediately, with his decision to nix the responsibilities of many of Iger’s veteran division leaders and instead consolidate them under his right-hand man, Kareem Daniel.

Daniel, 46, served as the head of the company’s latest faction, its Media and Entertainment Distribution group, implemented to aid in its shilling of streaming platforms Disney+, Hulu, and ESPN+. Daniel’s status with the company is currently up in the air, and dependent on the direction Iger wants to take at the business, two of the insiders said.

Chapek was criticized for not condemning Florida's so-called 'Don't Say Gay' bill, and tried to quell the backlash with a backtracking statement to staff. (Pictured: Disney employees in California rallying against the bill on March 22)

Chapek was criticized for not condemning Florida’s so-called ‘Don’t Say Gay’ bill, and tried to quell the backlash with a backtracking statement to staff. (Pictured: Disney employees in California rallying against the bill on March 22)

The moves by Chapek, sources said, was meant to streamline the company so he, through Daniel, can make decisions across all of the platforms – but instead backfired by angering heads previously responsible for those decisions.

In addition to McCarthy, the move reportedly angered the company’s then-head of strategy Kevin Mayer, who left Disney in 2020 to become TikTok’s CEO, months after Iger chose Chapek as his replacement.

The decisions, as well as Chapek’s nixing of free perks and raising of prices at Disney resorts, reportedly also angered a slew of other Iger-era staffers – including Iger himself.

In an email Sunday evening, Iger confirmed his return to staffers – in a pointed correspondence that saw him make no mention of his nixed successor.

In an email Sunday evening, Iger confirmed his return to staffers - in a pointed correspondence that saw him make no mention of his nixed successor

In an email Sunday evening, Iger confirmed his return to staffers – in a pointed correspondence that saw him make no mention of his nixed successor

‘Dear Fellow Employees and Cast Members, It is with an incredible sense of gratitude and humility-and, I must admit, a bit of amazement-that I write to you this evening with the news that I am returning to The Walt Disney Company as Chief Executive Officer,’ the email, obtained by The Ankler, read.

‘When I look at the creative success of our teams across our Studios, Disney General Entertainment, ESPN and International, the rapid growth of our streaming services, the phenomenal reimagining and rebound of our Parks, the continued great work of ABC News, and so many other achievements across our businesses, I am in awe of your accomplishments and I am excited to embark with you on many new endeavors.

‘I know this company has asked so much of you during the past three years, and these times certainly remain quite challenging, but as you have heard me say before, I am an optimist,’ wrote the CEO, who sparked controversy in 2019 when it was revealed he earned $66million a year – about 1,000 times the salary of a typical Disney employee. 

‘If I learned one thing from my years at Disney,’ he continued, it is that even in the face of uncertainty-perhaps especially in the face of uncertainty-our employees and Cast Members achieve the impossible.’

The notice added that staffers would be hearing more about the shifting arrangement and what it entails in the coming weeks.

‘In the meantime,’ Iger wrote, ‘allow me to express my deep gratitude for all that you do.’ 

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