After 27.5% Drop In Disney Shares, Could Bob Chapek Be On His Way Out As The Mouse's CEO?

Zinger Key Points
  • Shares of Disney are now down 27.5% in the two-plus years since Chapek became the CEO of the company.
  • The Disney Board is gathering for an annual retreat, where they could discuss the contract with Chapek, which expires in February 2023.

A struggling stock price and controversies surrounding one of the largest media companies could lead to the very public exit of a CEO.

Investors could get more clarity soon on where the future of The Walt Disney Company DIS is headed with or without CEO Bob Chapek.

What Happened: Tasked with running Disney during a pandemic, Bob Chapek may have had the odds stacked against him.

Changes made to the theme parks ride reservation system and the lack of commenting on LGBTQ+ issues could be two issues that lead to Chapek not lasting long at Disney.

Employees hosted a companywide walkout due to the lack of Disney voicing support for the LGBTQ+ community.

Outside of the company’s employees, Disney fans and people who frequently travel to the company’s theme parks have voiced their frustrations with a petition to remove Chapek as CEO.

The Disney board of directors is gathering in Orlando for an annual retreat, according to a report from The Los Angeles Times.

Among the key topics will be the Chapek's contract, which expires in February 2023.

The board has previously voiced public support for the CEO.

A contract extension after the retreat would show firm support for Chapek leading the company, while the lack of an extension could suggest there is still the potential to replace Chapek after his contract term runs out.

“Bob Chapek stepped into his CEO role only two weeks before most of the company’s businesses shutdown, and he deserves credit for leading the company through the unprecedented crisis of a global pandemic and emerging even stronger,” Disney’s Chief Financial Officer Christine McCarthy told The Los Angeles Times.

Related Link: Disney Q2 Earnings Highlights: Disney+ Hits 137.7 Million Subs, Streaming Platforms See Higher ARPU, Parks Segment Up 110% 

Why It’s Important: The hiring of Chapek as CEO followed two of the most high-profile CEOs who have led the media company: Michael Eisner, the CEO from 1984 to 2005, and Bob Iger from 2005 to 2020.

As Benzinga reported in November, a very public petition on called for the removal of Chapek as CEO.

“He has consistently made decisions that decrease the quality of what is put into the parks, and also ones that favor using intellectual properties instead of original attractions,” the petition reads. “He consistently put himself and money above the product and quality of the company.

At the time of writing, the petition has over 115,000 signatures.

One item that could lead to a contract extension for Chapek is a lack of internal candidates waiting in the wings to take the CEO role for a company that often promotes from within.

The company also saw a feud between Chapek and Iger lead to the former CEO leaving the company’s chairman role early — and could lead to Iger not wanting to come back to lead the company, even if temporarily, while a permanent replacement is found.

Disney's Stock Trajectory: Along with a lack of support from Disney employees and theme park fans, there’s also the matter of Disney shareholders.

Chapek took the reins as the CEO of Disney on Feb. 25, 2020. Shares of Disney are now down 27.5% in the two-plus years since Chapek became CEO. 

Compare that to the 383% increase in shares and annual return of 25.5% when Iger led the company, and there’s reason to believe shareholders might be happy to see someone else lead the Mouse. 

DIS Price Action: Disney shares lost 1.19% Monday, closing at $96.61 versus a 52-week range of $92.01 to $187.57.

Posted In: EntertainmentNewsManagementTrading IdeasGeneralBob ChapekBob IgerChange.orgDisney Theme ParksDisney+LGBTQLGBTQ+Michael Eisner