Disney's wildest ride: Iger, Chapek and the making of an epic succession mess

Key Points
  • What did a private bathroom, Oogie Boogie and a hippo have to do with the behind-the-scenes chaos between Bob Iger and Bob Chapek at Disney?
  • Here's the inside story of a CEO succession plan gone awry — a cautionary tale about ego and hubris at the highest levels of corporate America.
  • This article is based on conversations with more than two dozen people who worked closely with Iger and Chapek between 2020 and 2022.

In this article

Illustration by Elham Ataeiazar

After pushing back his retirement four times, Bob Iger finally made the leap. On Feb. 25, 2020, he announced he would step down as Disney's CEO. His hand-picked successor, Bob Chapek, then Disney's parks chairman, would take over the day-to-day job of running the company, effective immediately.

As part of the changing of the guard, the Disney board suggested the new CEO should take over Iger's expansive office at Disney headquarters in Burbank, California.

There was just one problem. Iger had no interest in moving out. He wasn't truly leaving Disney, anyway. His succession plan allowed him to stay on as executive chairman for 22 more months. Chapek would report to him and the board. Iger would also "direct the company's creative endeavors" — nebulous phrasing suggesting he would retain control of movie and TV content and operations.

There was a practical reason Iger didn't want to move out of his office. It had a private shower, built for former CEO Michael Eisner, and a vanity for shaving. Iger, now 72, consistently woke up around 4:15 a.m. to work out and then shower. On evenings when Iger was heading out for a Disney premiere, award show or benefit, he would often take a second shower — this time in the office.

Iger told Chapek that he lived for those "two-shower days," according to people familiar with the conversation.

Iger chose Chapek, now 64, as his successor because of Chapek's integrity and business acumen, not his interest in Hollywood socialization. Chapek has the outward corporate demeanor of a Midwestern businessman — or, as one colleague jokingly put it, "a tuna salad sandwich who sits in front of spreadsheets." He's a risk-taker who's not afraid to upend the status quo, but he's not a schmoozer by nature. Whereas Iger holds court around his Brentwood mansion — a short stroll from celebrities, producers, super-agents and other Disney executives — Chapek lives about an hour's drive from downtown Los Angeles, in Westlake Village. Iger enjoys yachting; Chapek is more of a power-boating and kayaking kind of guy. 

Both men agreed Chapek wouldn't have much need for the office shower; Chapek would instead move into a smaller office on the same floor. 

On the wall of Iger's office bathroom hung two posters. The first was a framed collage of newspaper front pages and magazine covers with images of Iger celebrating Disney's purchase of Marvel in 2009. The $4 billion deal was arguably Iger's shrewdest decision as CEO and one of the best media and entertainment acquisitions in U.S. corporate history.

The second picture spoofed the movie poster for the 1975 Clint Eastwood thriller "The Eiger Sanction," but the image was of Iger instead of Eastwood, with the title "The Iger Sanction."

LMPC | Getty Images

"The Eiger Sanction" is about an assassin who comes out of retirement for one last job.

On Nov. 20, 2022, Bob Iger came out of retirement to become Disney's CEO once again. The board had fired Chapek. Within days, Iger fired Chapek's closest advisors, including his former chief of staff, Arthur Bochner; his assistant, Jackie Hart; and his de facto second-in-command, Kareem Daniel. In July, Iger extended his contract through 2026, the fifth time he has pushed back his departure as CEO.

Chapek confided to a friend that his tenure at Disney was "about three years of hell," defined by one overriding theme: his unrelenting fear that Iger wanted his job back. 

Iger, meanwhile, has told peers and colleagues he returned to Disney to correct what he sees as one of the biggest mistakes of his career — choosing Chapek. 

"When the two people at the top of a company have a dysfunctional relationship, there's no way that the rest of the company beneath them can be functional," Iger wrote in his autobiography, "The Ride of a Lifetime." "It's like having two parents who fight all the time."

Iger wasn't describing his relationship with Chapek — he was recalling his observations living through the meltdown between Eisner and his No. 2, Michael Ovitz, in the 1990s. The pair got along great for years, until they became the top two people at Disney. Within 16 months, their relationship had exploded and Ovitz was fired. 

But like a son who vows never to repeat his father's mistakes and then proceeds to do just that, Iger's relationship with Chapek followed a strikingly similar pattern.

There's no company in the world more associated with storytelling than Disney; its most famous movies are modern versions of timeless fables. The story of the Chapek era is timeless in its own way. It's a tale of how good intentions clashed with hubris and ego can erode one of the most famous organizations in the world — a case study in corporate dysfunction and succession gone wrong. As Iger and the Disney board resume their search for a successor, a critical question looms: Have they learned the moral of the story?

Disney's succession mess: The inside story of Iger and Chapek
Disney's succession mess: The inside story of Iger and Chapek

This account is based on conversations with more than 25 people who worked closely with Iger and Chapek at Disney between 2020 and 2022. They declined to be named, as the events and conversations were private. Many of the details have never been reported. 

Through a representative, Chapek defended his record as Disney CEO in a statement to CNBC.

"Bob is proud of the work he did in the course of his 30-year career at Disney, particularly during his nearly three-year run as CEO, steering the company through the unprecedented challenges of the pandemic, and setting the course for business transformation as he and his team took the disruptive yet necessary steps for business revitalization and long-term growth," said a Chapek spokesperson.

Iger declined to comment for this story.

Iger's succession plan

Iger's decision to step down as CEO not only shocked the entertainment and media worlds, it took even his close associates by surprise. Disney's head of streaming, Kevin Mayer, whom many outsiders had pegged as Iger's likely replacement, found out minutes before Iger's public announcement. "I didn't know that was coming at all," Mayer told CNBC in 2021.

In February 2020, as Disney's head of streaming, Kevin Mayer, was in the line of succession for CEO. But Mayer, seen here on Sept. 29, 2022, and colleagues were stunned when Iger announced Bob Chapek would replace Iger immediately.
Bryan van der Beek | Bloomberg | Getty Images

But Iger figured the timing was right. He was getting close to 70 and he'd been CEO for almost 15 years. The company's recently launched streaming service, Disney+, was an instant success. And Iger was convinced Chapek was the right caretaker to continue his legacy.

Chapek grew up in Hammond, Indiana, "the son of a World War II veteran and a working mother," as he has described it. His family took annual trips to Walt Disney World when he was young, seeding his genuine love for the company's theme parks. He studied microbiology at Indiana University and got his MBA from Michigan State University. He joined Disney in 1993 and by 2015 had risen to become chairman of the parks division. 

For more than two decades, Chapek earned Iger's respect as a shrewd cost-cutter and a low-drama manager. Iger especially valued Chapek for his integrity and operational expertise. At each of the divisions Chapek led at Disney — home video, consumer products and parks — profit and revenue soared under his watch. He also benefited from some good timing, running the home video division when Disney animation hits such as "The Little Mermaid," "Aladdin" and "Beauty and the Beast" were first sold on VHS, and piloting consumer products just as "Frozen" launched. 

Chapek cemented his reputation with Iger and the board during the construction of Shanghai Disney, the $5.5 billion theme park that opened in 2016 after months of delays. Iger and Chapek traveled to Shanghai, China, together more than 10 times as Chapek got cost overruns and construction headaches under control. His success helped Iger move on from former Chief Operating Officer Tom Staggs, who was then in line to take the CEO job after Iger. Staggs left the company just before Shanghai Disney finally opened.

Tom Staggs, then Disney COO, announces the Iron Man Experience planned for Hong Kong Disneyland in 2016. Staggs had been promoted to the job specifically to be Iger's heir apparent.
Walt Disney Parks and Resorts

It was Iger's experience with Staggs — who didn't secure Disney's top job after being promoted to COO specifically to be Iger's heir apparent — that made Iger decide Chapek should start as CEO immediately. Iger told board members he didn't think Chapek needed to audition for the role. 

Years later, Iger would tell others he mistook Chapek's stellar operational track record for leadership skills.

This was a striking admission for Iger, who prides himself on his emotional intelligence. He's charming with co-workers and at ease with celebrities — a Hollywood star in his own right. These traits paid dividends over the years. He convinced Steve Jobs to sell him Pixar, cajoled Ike Perlmutter into selling him Marvel, and persuaded George Lucas to sell him "Star Wars" and its bounty of associated intellectual property. In 2017, he struck a deal with Rupert Murdoch to buy most of Fox. 

Some Disney executives have privately speculated that Iger chose Chapek because he wouldn't rival him in either charisma or celebrity — or, more cynically, because he was unlikely to eclipse Iger's glittering record at the company. 

What's clear is Iger didn't know Chapek as well as he should have. On a day-to-day basis, Iger worked far more closely with Mayer and Staggs. Iger doesn't mention Chapek once in his 2019 autobiography outside of the prologue — even though by then Chapek was at least tentatively in line to be Iger's preferred successor. For comparison, Iger spends more than five pages of his 236-page book discussing the TV show "Twin Peaks."

The entire process of naming a successor was bumpy. For a start, Iger kept delaying his retirement: In 2013, 2014 and then twice in 2017, he renewed his contract after saying he intended to walk away.

In 2017, according to people familiar with the matter, Iger first told Chapek he was in the running to be his potential successor. The vetting process for CEO would begin with Chapek flying across the country to meet one-on-one with board members — not unlike contestants' hometown dates on Disney's hit reality show "The Bachelor." Iger had gone through a similar process, taking 15 meetings with directors before securing the CEO position in 2005.

But Chapek never did the meetings. Iger agreed to buy the majority of Fox's assets in a $71 billion deal and renewed his contract as a condition of the purchase, pushing back any talk of succession.

In January 2020, Iger told Chapek the plan was back on. This time, Iger told him that instead of the one-on-one board interviews, Disney's lead independent director, Susan Arnold, would be in touch. Days later, Arnold delivered the news to Chapek over lunch at The Rotunda, Disney's executive dining room. She and Iger had both recommended Chapek for the job, and the board had approved. Chapek sat on the secret for six weeks before the public announcement.

Peter Rice, seen here on May 3, 2017, was head of Disney's TV entertainment business in 2020. He was one of several executives passed over for the CEO job in favor of Chapek.
David Paul Morris | Bloomberg | Getty Images

In choosing Chapek, Iger and the directors had passed over Mayer and Peter Rice, then head of Disney's TV entertainment business. The board felt the leadership styles of both men were too brash, according to people familiar with some of the directors' thinking. Also, Mayer had never run a business of scale, and Rice had joined the company from Fox less than two years earlier.

However, Iger never consulted anyone who worked directly for Chapek in the runup to naming him CEO, according to people familiar with the matter.  

He had pegged Chapek as someone who would accept his somewhat unusual succession plan, in which Chapek would serve both as CEO and CEO-in-training while Iger remained his boss and ran "creative endeavors" for 22 months as executive chairman. 

"Any of the big creative decisions that have to be made, I fully intend for Bob [Chapek] to be at my side," Iger told CNBC's Julia Boorstin on the day of the announcement. "What this is about, really, is, we believe, a really good succession process and a really smart transition process."

WATCH: Bob Iger steps down as Disney CEO and announces Bob Chapek will take his place

Bob Chapek, Disney's new CEO, says he will follow path laid by Bob Iger
Bob Chapek, Disney's new CEO, says he will follow path laid by Bob Iger

Iger needed full buy-in from the board for his plan, but that did not prove difficult. Over the past 15 years he had become the gold standard of legacy media and entertainment CEOs. From the time he'd taken over at Disney in 2005 to the end of February 2020, Disney's share price increased about 420%, far outpacing the S&P 500 index, which gained about 150%.

By 2019, Iger had personally selected every member of the board, which is surprisingly lacking in media and entertainment experience. Iger is personally close with several directors, including Nike Executive Chairman Mark Parker and General Motors CEO Mary Barra. In addition, the wife of another board member, Michael Froman, then vice chairman of Mastercard and now president of the Council on Foreign Relations, had been housemates with Iger's wife, Willow Bay, at the University of Pennsylvania.

It was from Parker that Iger got the idea for his succession plan, according to people familiar with the matter. In October 2019, Parker, who was then CEO of Nike, announced he would remain as executive chairman of Nike while passing the CEO torch to John Donahoe.

That structure also happened to be nearly identical to one that Iger's predecessor Eisner tried and failed to secure for himself. In 2004, Eisner floated a plan in which he would step down but remain as chairman, while Iger would take over as CEO. 

But unlike Iger, Eisner had lost his grip on the board. Directors Roy Disney, a nephew of Walt Disney, and Stanley Gold resigned their seats and in a blistering letter objected to the notion of Eisner remaining as chairman. "[His] 'succession plan' is for a company led by Michael Eisner and his obedient lieutenant, Bob Iger, to be handed over to ... Michael Eisner and Bob Iger," they wrote. "Any arrangement that permits Mr. Eisner to remain as Chairman after relinquishing his position as CEO is contrary to best governance practices." 

Michael Eisner, former Disney chairman and CEO, is seen here on July 11, 2023. In 2020, Iger came up with a succession structure that was nearly identical to one his predecessor Eisner tried and failed to secure for himself in 2004.
David A. Grogan | CNBC

Eisner gave up his chairman role in March 2004 after 43% of Disney shareholders withheld their votes to reelect him to the board the year before. He resigned as CEO in September 2005. Iger assumed leadership of the company without anyone hovering over his shoulder. This allowed him to move quickly on decisions that Eisner might not have agreed with, such as buying Pixar. Iger describes the acquisition process at length in his autobiography.

Chapek wouldn't have nearly the same degree of freedom. 

Big Bob and Little Bob

In "The Ride of a Lifetime," Iger recalls watching Eisner leave the Disney lot on his last day at the company: "It's one of those moments, I imagine, when it's hard to know who exactly you are without this attachment and title and role that has defined you for so long." 

Just weeks after Iger announced his departure, Chapek began to wonder if Iger had regrets, according to people familiar with his thinking. Equally soon, Iger started to think he'd made a mistake. 

At first, the signals were tiny. When Iger announced his departure to staff on Disney's Burbank studio lot, he jokingly called himself "Big Bob" and Chapek "Little Bob," a light reminder to employees about who was still the boss.

On March 10, 2020, about two weeks after the handoff, Chapek, Iger, Chief Financial Officer Christine McCarthy and a small handful of other Disney executives flew from Los Angeles to Raleigh, North Carolina, for Disney's annual meeting. 

At the front of the plane, Iger and Chapek were going over logistics and fretting about coronavirus. Iger caught Chapek off guard with some news. Chapek, not Iger, would lead the question-and-answer portion of the meeting, an annual ritual Iger called "stump the CEO." 

During his 27 years at the company, Chapek had only attended one annual meeting — as a guest in the audience. 

Chapek, then Disney CEO, speaks during a media preview of the D23 Expo, on Aug. 22, 2019.
Patrick T. Fallon | Bloomberg via Getty Images

Since Chapek's background at Disney had been in parks, consumer products and distribution, he knew little about the inner workings of ABC, ESPN or the movie studio. He'd been given a large binder of background material by the investor relations team, but now he had to be ready to answer questions on any topic, which could range from Disney's stance on the environment to the future of ABC News. 

After a couple of hours of general preparation, Chapek retreated to a private area in the back of the plane and closed the door to study. Iger was perplexed and expressed his confusion to McCarthy. He assumed the men would run through possible questions and answers throughout the flight. Iger walked to the back of the plane to see if Chapek needed help preparing.

"Isn't it all in here?" Chapek asked, holding up the binder, according to a person on the plane.

The basics, yes; but not the nuances, Iger replied. Chapek, who prefers to learn by reading and memorizing material — and thought he'd already spent the first hour or two prepping with Iger — said he'd rather stay in back and study. (The first question Chapek would receive was whether he thought there was bias within ABC News — a topic about which he knew little but had prepared for on the plane, according to people familiar with the matter.)

Iger would later relay this fleeting exchange to friends as one of the first moments it occurred to him that he may have made a mistake. He had thought he was handing off the company to a collaborative leader who would work with him, side by side, for the next 22 months. Iger began to worry about whether Chapek had plans of his own. 

Chapek's first concerns that Iger might be having regrets came during the next day's flight back to Los Angeles, after a brief stop in Orlando for a Disney town hall.

Coronavirus fears had billowed into a full-fledged panic. On this flight, Chapek stayed up front with McCarthy and Iger, who got on a call with California Gov. Gavin Newsom to discuss whether Disneyland should be shut down; it would be by the morning of March 14

Christine McCarthy, seen here on April 29, 2019, was Disney's chief financial officer. As Iger's departure from Disney prompted other executives to leave, Chapek worked overtime to make sure he retained the veteran McCarthy.
Michael Kovac | Getty Images

At some point, amid the chaos, McCarthy suggested to Chapek that they do their first weekly CEO-CFO meeting. They were around the third agenda point when Iger snapped. It was disrespectful to conduct this meeting right in front of him, he complained curtly, according to a person familiar with the exchange. 

It was rare for Iger to show Chapek a side of himself that wasn't "Disney nice" — the term many executives use for a corporate culture that emphasizes kind and respectful interactions. Chapek and McCarthy quietly finished their meeting, but Chapek told others after the flight he left with the distinct impression that Iger was having second thoughts about relinquishing the job he'd held for 15 years. 

These dueling perceptions that manifested themselves on that March round-trip flight — Chapek as bumbling and isolated; Iger as unwilling to give up control — would define the next 2½ years.

Relationship breakdown

Just days later, the two men had their first strategic disagreement. Chapek wanted to furlough about 100,000 parks employees after Disney World closed its gates. Iger advocated waiting for the government's Covid-19 relief act to kick in so the furloughed employees would have some government money to hold them over. Iger called then House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer, both Democrats, to ask them how close the U.S. government was to passing the bill. Ten days, they told him. Though it wasn't a creative issue, Iger overruled Chapek. Disney didn't furlough employees until April.

Around the same time, then New York Times media columnist Ben Smith published a story about the pandemic's disastrous impact on Disney. After "a few weeks of letting Mr. Chapek take charge," Smith wrote, Iger had "effectively returned to running the company." Iger didn't deny this. "A crisis of this magnitude, and its impact on Disney, would necessarily result in my actively helping Bob and the company contend with it, particularly since I ran the company for 15 years!" Iger said in an email to Smith.

Chapek was furious. He called Iger and told him he didn't need a savior, dropping a carefully placed expletive or two, according to people with knowledge of the call. It was the first time in more than 20 years that Chapek and Iger had had a major argument. Iger would tell people no colleague had ever spoken to him like that before in his life. 

Chapek also complained to the Disney board about the story, demanding to be given a seat immediately; Disney had already promised him one but had not set a date. Chapek did not want Iger and the board talking about him or his job status while he wasn't there, according to people familiar with his thinking. Three days after Smith's story ran, Disney complied. Arnold privately had a strongly worded conversation with Iger about setting Chapek up for success rather than undermining him, according to people familiar with the conversation.

Arnold declined to comment for this story.

WATCH: How Bob Iger returned as CEO: Disney's succession saga

Disney's succession saga: Bob Iger's wild ride to return as CEO