The board of the Walt Disney Company decided to bring back the last successful CEO by re-hiring Bob Iger.
On Sunday night, Disney's board announced that Iger would return as CEO of Disney and that Bob Chapek would be replaced in 2020.
Iger is now a part of a group of so-called boomerang CEOs that include Apple's Steve Jobs, and others.
Disney's market cap increased by five times during Iger's time as CEO. Disney was able to become a content giant because of Iger's acquisition strategy.
One study found that companies that brought back CEOs did worse than those that brought in someone new.
There is a mixed record posted byBoomerang CEOs.
Steve Jobs returned to lead Apple in 1997 after 12 years as CEO, making him one of the most successful. Apple became one of the world's largest companies, if not the largest, thanks to Jobs' second stint in leadership.
Howard Shultz was the first leader of Starbucks and he was a success. During the Global Financial Crisis, the company lost market share to cheaper providers, which led to the return of Shultz as CEO. The company's share price went up between 2008 and 2017: when Kevin Johnson took the helm.
Other CEOs have failed.
In the wake of food safety scandals, Steve Ells came back to lead the food chain. Ells resigned as CEO of the company a year after he failed to rebuild public trust.
Jack Dorsey was pushed out of his position as CEO in 2008. During the second run of the company, it was criticized for its content moderation policies, such as the company's shifting views on whether or not to allow then- President Donald Trump on the platform. His return resulted in annual losses for the social networking site. The man who stepped down as CEO was a supporter of the purchase of the company by Musk.
Even though he returned in March as Starbucks CEO for a third time and is acting in an interim capacity until Laxman Narasimhan takes over as CEO next April, he has had his troubles. Starbucks shareholders are not as enthusiastic about the third mandate as they would like. Tensions with Starbucks' workforce have been caused by the aggressive handling of a unionization movement at the chain's stores.
Disney's board believes that established leaders can help fix a company's direction in difficult times. Disney's decision to bring back Iger comes after a difficult year in which the entertainment giant reported a lower-than- expected $20.2 billion in revenue for the fourth quarter and a $1.5 billion loss from streaming. Disney shares are down by a large amount.
Disney board chair Susan Arnold said in a statement that Bob Iger is uniquely positioned to lead the company through this important period.
Evidence shows that boomerang CEOs might limit a company's growth. Firms that bring in a new CEO have a lower stock performance than firms that bring in a former CEO, according to a study published in 2020.
The negative effects were magnified when the company brought back a founder.
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