Disney’s CEO boomerang reveals Iger’s biggest failing

Iger was transformative at Disney, buying assets such as Pixar, Marvel, Lucasfilm and 21st Century Fox — moves that sent the stock soaring almost 500% during his 15-year tenure. So much vision and foresight, yet not enough to know until it was too late that Chapek was the wrong pick — something Iger started to regularly hint at in private, according to Puck News’ Matthew Belloni. This kind of undermining of a successor also seems to be part of the boomerang CEO play book. Schultz famously wrote in a leaked Valentine’s Day memo while Donald was in charge that the company’s stores “no longer have the soul of the past.”

From a pure performance perspective, investors might not necessarily get what they’re hoping for with a boomerang. Research from the University of North Carolina’s business school has found that stock performance under repeat CEOs is about 10% worse than a leader taking the job for the first time, Bloomberg News reported earlier this year.

And from a succession standpoint, a boomerang is just a band-aid. The company will need a viable successor at some point. At Disney, finding one just became a lot harder. The board has signalled that it doesn’t have any internal candidates ready to step up. If it did, they’d already be the next CEO. Any serious external candidate will now rightly be wary of Iger’s failed attempts to retire and the board’s inclination to bring him back when things get tough.

But Iger’s return reveals a more urgent question about what happens inside these boardrooms, where directors can see no other alternative to the future than what’s worked in the past. Yes, the prodigal son has returned. But really the board must do some deep soul-searching as to why it so desperately needed him to come back.