Is Disney’s New CFO Its Next CEO?

The Walt Disney Company has named Hugh F. Johnston its new Chief Financial Officer and Senior Executive Vice President effective December 4, 2023. Chief Executive Officer Bob Iger made the announcement today, which Disney shared in a press release along with compensation details in an SEC filing. This post covers that along with our commentary about this move, including the likelihood that the new CFO is the next CEO.

Johnston is the current Vice Chairman and Chief Financial Officer of PepsiCo, where he has held numerous leadership positions during a highly successful 34-year career with the multinational food and beverage giant. As Disney’s Chief Financial Officer, Johnston will report directly to Iger and will lead the company’s worldwide finance organization, which includes corporate strategy and business development, financial planning and analysis, investor relations, risk management, and much more.

“Hugh’s well-earned reputation as one of the best CFOs in America and his wealth of leadership experience in both financial and operational roles overseeing a diverse portfolio of top global brands make him a perfect addition to Disney’s senior leadership team,” said Iger. “His expertise will serve Disney and its shareholders well as we continue the transformative work we are doing to drive growth and value creation.

“I would also like to extend my sincere gratitude to Kevin Lansberry, who stepped into the CFO role on an interim basis earlier this year,” Iger said. “Kevin has provided steady leadership and invaluable counsel to our executive management team, and he will continue to be one of our company’s most important financial leaders as he returns to his role as CFO of our Disney Experiences segment.”

“Disney is such a storied company, with the most beloved brands in the world and a strong financial foundation to support the company of the future that Bob and his team are building,” Johnston said. “Very few companies have withstood the test of time that Disney has, making the company as rare as it is special. I share Bob’s enthusiasm for Disney’s future, and I am incredibly excited to join this management team in this moment of opportunity and possibility.”

Johnston joined PepsiCo in 1987, and has held a variety of roles, including Executive Vice President, Global Operations, PepsiCo; President, Pepsi-Cola North America; Senior Vice President, Transformation, PepsiCo; Senior Vice President and Chief Financial Officer, PepsiCo Beverages and Foods; and Senior Vice President, Mergers and Acquisitions, PepsiCo. Johnston also served as Vice President, Retail at Merck & Co. from 1999 until 2002, when he rejoined PepsiCo.

Johnston was named CFO of PepsiCo in 2010 and has been responsible for providing strategic financial leadership for PepsiCo, including ensuring the company’s strategy creates shareholder value, communicating the company’s strategies and performance to investors, and implementing a capital structure, financial processes and controls to support the company’s growth and return on investment goals.

Johnston currently serves as a member of the board and chair of the audit committee of Microsoft Corp., and as a member of the board and chair of the audit committee of HCA Healthcare. He is also a director for the Peterson Institute for International Economics, a leading global economic think tank. Johnston holds a Bachelor of Science degree from Syracuse University and an M.B.A. from the University of Chicago.

An SEC filing noted details of the Johnston’s employment agreement with Disney. His salary is set at $2 million and he is eligible for an annual, performance-based bonus under Disney’s annual incentive plan, as is the case with all c-suite executives. The board’s compensation committee will set a target bonus each year of not less than 200% of his annual base salary in effect at the end of the preceding fiscal year, the amount dependent upon the achievement of performance objectives.

For each fiscal year during the term of the Employment Agreement, Mr. Johnston will be granted a long-term incentive award having a target value of 575% of base salary. In addition, in connection with the commencement of his services under the Employment Agreement, the Company will recommend to the Compensation Committee that he receive a one-time award of long-term incentive stock units with a target award value of $14 million.

Johnston also will receive a special one-time signing bonus of $3 million, which is subject to repayment in full as provided in the Employment Agreement if his employment is terminated within one year after commencement other than for “Good Reason.”

Turning to commentary, I don’t have much to say about this particular dude. This being the internet, I could Google “Hugh F. Johnston,” read a few things, and then pretend like I’m a college football scout and he’s been on my radar since he was slinging back in pee-wee. Fun as that might be, it’d also be disingenuous. The first time I heard of this guy was today.

Although I doubt you care this much, I will share an article I read last year: PepsiCo has churned out 16 Fortune 500 CEOs thanks to this simple leadership development strategy. If that’s familiar, you might’ve actually read it already–we linked to it back in Is Disney Ruining Its Reputation? last year.

This article about PepsiCo leadership practices has now been shared twice on a Disney blog because it reminds me of how Disney used to develop talent–and how the company still pretends it does business when presenting itself to corporate America with stuff like the Disney Institute. As much as I love Disney, if I were in the market for professional development and training, I’d look elsewhere.

Anyway, this isn’t to say that this Hugh F. Johnston fella is an exemplar of PepsiCo’s internal talent development. Nor is it to infer that he’s going to transform the Walt Disney Company’s corporate structure in the image of Pepsi. (But maybe he should!) It’s only to point out that Pepsi is good at cultivating leaders–they have a lot of alums at Fortune 500 companies–and perhaps this is another instance of that.

Oddly, one of the questions from fans following the naming of Hugh F. Johnston as CEO is whether Walt Disney World and Disneyland will now serve Pepsi. I think at least some of this as a joke, but some sounds sincere. In any case, it’s not like this was an Al Michaels for Oswald the Lucky Rabbit style trade to acquire Johnston from PepsiCo in exchange for Pepsi products being served in the park.

Yes, Johnston is a longtime Pepsi guy. That doesn’t mean his former employer’s product being served in the parks is a condition of employment. Disney gave him literally millions of reasons not to care! (Honestly, it wouldn’t surprise me if most people who work at high levels at Coca-Cola or PepsiCo don’t drink soda at all, since they know too much about the products.)

Suffice to say, I cannot imagine that this alters the longstanding contractual relationship between Disney and Coca-Cola. That corporate alliance is big business–it’s not like Disney decides on a whim to serve Pepsi or Coke based on a straw poll of its c-suite. (If you’re interested in this topic, see Shanghai Disneyland Serves Pepsi for further reading–it’s actually pretty interesting!)

Turning back to the actual topic at hand, another interesting point is Johnston’s age. Based on my sources (a 3 second Google search), he’s 62 years old. That’s 10 years younger than Bob Iger, 5 years younger than departed CFO Christine McCarthy, one year younger than Bob Chapek, and the same age as my mom (who has equal chances of becoming a Fortune 50 CEO in the future as Bob Chapek).

Most significantly, it’s almost the exact same age as both Tom Staggs and Kevin Mayer, a duo that this blog has been championing as co-heads of Disney with an Eisner-Wells or Walt-Roy dynamic. (Frankly, I didn’t realize Staggs and Mayer were that old–they must be following the Paul Rudd skincare regimen!)

In other words, Hugh F. Johnston is young enough that he could be coming aboard as part of the Walt Disney Company’s succession planning, and being groomed to be the future CEO once Iger retires. I personally would not bet on this, but it’s not outside the realm of possibility given who we know is or was being considered as a successor to Iger.

Previously, CFO Christine McCarthy’s name appeared atop the list of five talked-about candidates for the future CEO job. After orchestrating the ouster of Chapek, McCarthy is similarly now gone herself. That list also is/was rumored to have included Dana Walden, Disney’s television chief, and Josh D’Amaro, Disney’s theme park chairman. Previous reporting suggests that the board doesn’t view either candidate as “quite ready” for the role.

Both Walden and D’Amaro are under 60, which seems much more ideal. Disney is known for its long-serving CEOs, and although Eisner and Iger have both arguably overstayed their welcome, they were in their 40s and 50s when their tenures at the top began.

While a tag team of Tom Staggs and Kevin Mayer is our top scenario, Josh D’Amaro as CEO (or a co-head of the company) is a very close second. Really, we just want to see someone with background in Parks & Resorts at the top of the company. Disney is a media company and that’s understandably integral to their future success.

But all too often, Walt Disney World and Disneyland are taken for granted, treated as reliable cash cows to be milked while other segments lose money. It would be nice to see that change, with serious emphasis and investment in theme parks. The last few years have proven that’s a sound strategy–probably more so than literally any other investment.

Ultimately, whether Johnston might be a future CEO candidate for the Walt Disney Company is purely speculative on our part. It’s also possible that Disney simply offered him more money and he has no aspirations beyond being CFO, or no clear path to the CEO position. If Disney is going to look outside the company for its next CEO, it would seem logical to poach someone with experience in the entertainment industry.

That is, unless the plan were to have a duo at the top, with one having generalized leadership skills and the other having a media background. Even in that scenario, it does seem somewhat odd to have an ‘outsider’ in the top spot, leading a team of Disney veterans. It’s also possible that they’ll do the normal Disney thing, and shuffle Johnston into a few positions to round out his experience. The clock is really ticking on that, though.

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OUR THOUGHTS

What do you think about Disney hiring Hugh F. Johnston as its next Chief Financial Officer? Think he’s realistically in the running as replacement CEO? Who do you think will be CEO of the Walt Disney Company on January 1, 2027? Will it be Bob Iger (still), Bob Chapek (somehow), Tom Staggs, Kevin Mayer, Josh D’Amaro, Hugh F. Johnston, my mom, or none of the above? Who should it be? Thoughts on anything else discussed here? Are you optimistic or pessimistic about the Walt Disney Company’s future? Think things will get better in 2024-2025? Do you agree or disagree with our assessment? Any questions we can help you answer? Hearing your feedback–even when you disagree with us–is both interesting to us and helpful to other readers, so please share your thoughts below in the comments!