Bob Iger, chief executive officer of Walt Disney Co. , will take on the role of chairman and extend his contract with the company from 2013 to 2016, the studio owner said on Friday as it set out the terms of a staggered succession plan.
The board of Disney, which also owns theme parks, the ABC television network and the ESPN sports channel, said John Pepper had announced his intention to retire as chairman at its 2012 annual meeting, after five years in the position.
The news comes after the death of Steve Jobs, the Apple Inc. co-founder who had been a board member of Disney since selling it the Pixar animation studio he had built up.
Mr. Iger, a veteran of ABC whose contract was due to expire in January, 2013, will then become executive chairman, but will hand over the CEO's title at the end of March, 2015. He will step down as chairman in June, 2016.
The new arrangement could be worth more to Mr. Iger than his existing contract, struck in 2008. His basic salary will increase from $2-million (U.S.) to $2.5-million and his annual bonus target increases from not less than $10-million to $12-million until 2015, at which point it will fall to $6-million.
Similarly, a long-term incentive plan with a target of annual equity-based awards worth not less than $9-million will be changed to a fixed target of $15.5-million for each year from 2012 to 2015 and then $6-million for his last year as chairman.
In a filing, the board said that "securing Mr. Iger's leadership and skills for a period of almost five years, through mid-2016, was of critical importance and value to the company," allowing him to aid in the succession to a new CEO.
The executive chairmanship arrangement "would add a substantial strategic perspective to the chair position, provide important continuity to board leadership and best position Mr. Iger to accomplish the transition with the new CEO," the Disney board said.
It added that an independent lead director would be appointed to evaluate Mr. Iger and ensure "the appropriate independent exercise of judgment by the board".
Mr. Iger was handpicked to succeed Michael Eisner as CEO in 2005, after a tumultuous period in which Mr. Eisner's leadership was challenged by two former directors, Roy Disney and Stanley Gold.
Disney made no mention of plans to replace Mr. Jobs on its board. This week, Mr. Iger described the creator of the iPhone and iPad as "a great friend as well as a trusted adviser."
Shares in Disney have fallen in line with the media sector in the last three months, amid uncertainty about the outlook for advertising, theme park attendance and traditional pay-television business models. Disney's head of consumer products resigned unexpectedly last month, and earlier in the year it cut 200 jobs from its film studio as a result of slowing worldwide DVD sales.