Disney’s mouse is staying in his house. In a surprise move, Disney’s Board of Directors unanimously voted this week to extend CEO Bob Chapek’s contract for an additional three years, paying him $2.5 million per year in base salary and at least $20 million in stock.
Talk about failing up. Disney’s board is rewarding Chapek for destroying shareholder value through his controversial political activism. “Bob is the right leader at the right time for The Walt Disney Company, and the Board has full confidence in him and his leadership team,” said Susan Arnold, chairman of the board. That’s cold comfort for Disney shareholders, including millions of American retirees, who have been victimized by his woke positions which the board chose to ignore.
Disney’s board should have stood up for shareholders and held Chapek accountable for not fulfilling his responsibility to them. Doing so would have landed a significant blow against woke capitalism and put corporate CEOs across the country on notice that they can’t put their personal political opinions above shareholders.
This spring, Chapek decided to wade into the culture wars by vocally opposing a Florida law that prevents teachers from discussing sexual orientation and transgender issues with kindergartners. He said the bill “should never have been passed” and called it a “challenge to basic human rights.”
Backlash was swift. Consumers launched boycotts and protests, and many canceled their Disney+ streaming subscriptions. Florida’s legislature abolished Disney’s special self-governing status that had saved the company tens of millions of dollars annually. In the U.S. Congress, Rep. Jim Banks promised to oppose extending Mickey Mouse’s lucrative copyright, which expires next year.
Disney’s share price has fallen by approximately one-third since Chapek’s goofy comments versus about 12% for the broader market. This plunging stock performance is especially painful to savers and retirees on fixed incomes who are contending with the highest inflation in 41 years. The prices they pay on everyday items are rising while their 401(k) accounts are falling.
Disney’s woke implosion also threatens the company’s broader stakeholders, including its employees, customers and communities. They may have to pay for Chapek’s unforced error in the form of reduced job opportunities, higher prices and reduced economic activity.
Disney is only one of many household companies that have recently engaged in woke capitalism by speaking out on contentious political issues that do not affect their bottom lines. Last year, for instance, numerous major companies such as Coca-Cola and Delta Airlines vocally opposed a Georgia state law that aligns its voting standards with those in other states. Their politicking caused Major League Baseball to move its All-Star Game from Atlanta to Denver, costing local businesses roughly $100 million in lost economic activity.
Fortunately, woke capitalism may have reached its high-water mark. Thanks to recent pushback from new organizations sticking up for shareholder interests, such as the Boardroom Initiative, which I co-chair, CEOs seem to be having second thoughts about engaging on divisive social issues.
Observe the relatively muted corporate reaction to the recent Supreme Court decision overturning Roe vs. Wade. Most major companies — even those with a history of making political statements — haven’t vocally opposed the ruling.
Many companies are rightly being advised by their PR firms to stay silent. An executive from a subsidiary of the PR giant Edelman warned corporate clients “not take a stance” on this issue, explaining: “This topic is a textbook’ 50/50′ issue. Subjects that divide the country can sometimes be no-win situations for companies because regardless of what they do they will alienate at least 15 to 30 percent of their stakeholders.” CEOs should heed this advice for all political issues and stick to focusing on running their business.
Hopefully, other companies have learned a valuable lesson from Chapek’s woke fail, even if the Disney boss has ducked the mousetrap on this occasion.
Brad Anderson is co-chair of the Boardroom Initiative, former CEO and Vice Chairman of Best Buy, and a member of Job Creators Network.
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