All CEOs report to the Board of Directors and ideally the CEO and Board of Directors work together to implement the plans of the CEO. The Board is to provide direction on policy and discuss who the next leaders are because even though it seems some companies go run on autopilot, they do not. When a company makes a profit and things are going well, the Board of Directors are not in the limelight, however when the company loses money who is on the Board is very important. Are members of the Board providing good governance? are they asking questions? or are they seemingly going along with the CEO and picking up their compensation packages? When there is a boardroom fight the issues come to light.

In an article by Dawn Chmielewski of Reuters, Disney announced the James Gorman with become Chair of the Board. Mr. Gorman was formerly the CEO of Wall Street investment firm Morgan Stanley and did a terrific job. (my bias is I own share in the company). Recently he changed the structure of the company through acquisitions to become a wealth-management powerhouse as well as investment bank. Often times when a new CEO comes into being, some of those who were considered successors leave the company to take leadership positions at other companies. Morgan Stanley has kept the 3 names that were considered as leading candidates, which is a rare thing.

The past history of Disney is Bob Iger was CEO for a decade and transformed the company to a media powerhouse through acquisitions such as Pixar, Marvel and Star Wars franchises. He became Chair and his successor did not perform as expected and was let go and Mr. Iger took over as CEO planning on staying for 2 years but that has been stretched out to 2026.

Mr. Gorman’s task as Chair of the Board will be to find a replacement for Mr. Iger. The skills Mr. Gorman learned and used at Morgan Stanley to find a new CEO and retain talented people in the organization should be transferable. Reuters reported the 4 top contenders to be new CEO are: Disney Entertainment co-Chair Dana Walden; Disney Experiences Chair Josh D’Amaro; ESPN Chair Jimmy Pitario and Disney Entertainment Co-Chair Alan Bergman.

Linking to dividend paying stocks, if you like sports you will notice there are many teams that play the game but not all of them challenge for the Championship. They all have talented players, they play in the same arenas, what is the difference? Why should not all of them challenge for the cup? Sometimes it is the people and team or culture of the organization. Sometimes it is the execution of the game plan. Sometimes it is something else. For your investments are the independent directors ensuring the company is on the right track?

There are more questions than answers, till the next time – to raising questions.