Almost exactly two years ago, Florida legislators, with the support of the state’s Governor Ron DeSantis, were working on a bill to protect children from sexualization in school. The legislation—the Parental Rights in Education Bill—was controversial in Florida among some of the more aggressive left-leaning culture warriors, but beyond that, was hardly national news. As The Washington Post noted, even at Disney, one of the “wokest” corporations in the country, the legislation seemed so unimportant and irrelevant to the company’s operations “that top executives at Disney’s headquarters in Burbank, Calif., were still in the dark about the issue.”
On February 24, however, that all changed. Bob Iger, the former CEO of Disney and the architect of its contemporary business strategy, tweeted about his opposition to the bill, writing, “If passed, this bill will put vulnerable, young LGBTQ people in jeopardy….” Again, according to the Post, Iger’s tweet “caught many in the Florida government and Disney’s headquarters by surprise” and “set in motion an epic clash between” DeSantis and Disney.
The point here is that Bob Iger, a man who no longer worked for Disney and had installed his hand-picked successor as CEO to handle these sorts of matters, stuck his nose into the company’s business and prompted it to get involved in a protracted legal and public relations battle that it might otherwise have avoided. In other words, Bob Iger picked this fight with Ron DeSantis and Florida. And in gratitude for involving them all in an ugly and thoroughly unnecessary fight over the curricula in Florida’s public schools, Disney’s board of directors fired CEO Bob Chapek and re-hired Iger, signaling to the world—and especially the government of Florida—that it too was itching to dive headlong into the culture wars.
In just over two years—roughly the period since Iger picked his fight with DeSantis—Disney’s stock price has fallen by roughly 40%. Inarguably, much of this drop is related to structural issues such as streaming platform weakness and poor motion picture performance. But then, that’s more or less the point. A company’s performance is based at least in part on its reputation, and reputation is comprised of several interconnected parts related to public image. Disney’s public image has taken a beating over the last couple of years, in large part because of its position—Bob Iger’s position—in the culture wars.
Last September, Disney’s 10k filing with the SEC contained, among other things, an explicit admission of failure to meet consumer expectations. In brief, the company and its management conceded that they don’t know their customers and, as a result, have pursued policies that have negatively impacted their bottom line. “We face risks relating to misalignment with public and consumer tastes and preferences for entertainment, travel, and consumer products,” the company acknowledged.
Earlier this week, a judge in Florida dismissed the lawsuit brought by Disney against Governor DeSantis in response to the governor’s action last year to remove the company’s self-governing status. Disney supporters and DeSantis detractors had argued that the suit was a welcome comeuppance for the governor’s “retaliation” against the company’s aggressiveness in the culture war. As The Washington Post suggested in the article cited above, the suit proved that DeSantis had “met his match in Disney’s Iger.” The federal judge in the suit obviously disagreed.
Not that any of this has had much impact on Disney’s board of directors. The shrunken share price, the collapse in public image, the admission of mission “misalignment,” and the dismissal of the Iger-directed lawsuit might be expected, in combination, to cause normal observers to question Bob Iger’s fitness for the job that he formerly did exceptionally well. Time moves on, as they say, and the game sometimes passes by even the greatest of players.
Disney’s board of directors, however, is not comprised of “normal observers.” On January 16, Disney’s SEC filings revealed that the board had more than doubled Iger’s compensation to just over $31 million in 2023. While Disney employees were being laid off by the thousands and its shareholders were seeing their net worth slashed nearly in half, the company’s board was handsomely rewarding the guy who made it all happen, emphatically reiterating its support for and confidence in a man who has overseen a series of politically tinged failures.
Three days ago, the Disney board asked all shareholders to “protect their investment and the future of the company by voting the WHITE proxy card for only Disney’s 12 nominees and not the Trian Group or Blackwells nominees.” The Trian Group and Blackwells are, of course, activist investors who believe that Disney, as a company, has lost its way, has strayed from its mission. They want new leadership on the board and want the company’s shareholders to use their proxy votes to provide it. It’s not hard to see why.
There is a saying that is popular among the culture warriors of the right, warning that companies that “get woke, go broke.” This aphorism isn’t always right, however. Sometimes business players must make a great deal of effort to turn their wokeness into brokenness. Disney, with its longstanding reputation as a great and wholesome entertainment company, is one such example. Simply going woke wouldn’t have harmed the company—and, indeed, it didn’t harm the company substantively for years. Instead, the company’s board of directors had to work hard to destroy its once unimpeachable reputation. But work hard they did.
The simple fact of the matter is that Disney’s inescapable problem right now is its stubborn and politically preoccupied chief executive. As long as its board is protecting and even rewarding his intransigence and fixations, it is harming shareholders. One struggles to come up with a justification to keep that board intact.
Stephen R. Soukup is the Director of The Political Forum Institute and the author of The Dictatorship of Woke Capital (Encounter, 2021, 2023)