Thomas Staggs, a longtime executive at Disney who was appointed its chief operating officer last year, was considered the heir apparent to CEO Bob Iger, who is expected to depart when his contract is up in 2018. That all changed on Monday, when Disney announced that Staggs would step down next month, Daniel Miller reports for the Los Angeles Times:
Disney never guaranteed Staggs, 55, the top job and made clear a year ago that his work would be evaluated by the board. … Nonetheless, the move stunned investors as well as executives inside and outside the Disney empire. “I’m shocked,” said Jim Cora, a former chairman of Disneyland International who left in 2001 and has since consulted for the company. “Whatever happened sure happened quietly.”
Staggs’ impending departure prolongs an already drawn-out succession process. After former Chief Financial Officer Jay Rasulo was passed over for the No. 2 job last year, he left the company. … Now Disney will search for new candidates to succeed Iger. With the notable exception of former Chairman and Chief Executive Michael Eisner, Disney usually selects its chief executive from within. But the departures of Staggs and Rasulo make it more likely that Disney would have to turn to an outside executive to find a person capable of handling such a complicated job, analysts said.
Also in the LA Times, David Pierson and Natalie Kitroeff discuss what it means for an organization to lose its designated or presumptive successor CEO:
Over the last decade, such corporate stalwarts as Hewlett-Packard, Cisco Systems and Lockheed Martin have seen designated heirs to the top executive seat abruptly depart. “Any time a natural successor is no longer in the running, it creates questions,” said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “For the company, it throws some uncertainty into the mix.”
Botching a succession at the top can be costly. Disney shares fell nearly 2% in after-hours trading on news of Staggs’ planned departure. Strategy&, formerly Booz & Co., analyzed 4,498 CEO successions from 2000 to 2014 and found that companies forced to fire their leader lost $1.8 billion in shareholder value compared with companies that orchestrate a replacement.
Even normal, orderly successions can make investors jittery, all the more so when there’s uncertainty about who will fill a departing CEO’s shoes. Our research has looked at leadership transitions and how organizations can navigate them successfully. CEB Corporate Leadership Council members can read our findings here.