Disney chief executive Bob Iger gets a third contract extension

In a filing Thursday, the company's board gave the ruler of the Magic Kingdom a new contract extension, moving the date he will step down as CEO and chairman to July 2, 2019. The one-year extension is the third time Disney has extended Iger's contract since 2013, when it moved an expected retirement in 2015 to 2016, and then later pushed it to 2018.

The latest extension was cheered by shareholders - Disney's stock moved up slightly - and followed earlier comments by Iger that he was open to staying on. But it also served as a reminder of the steep challenge the board faces as it tries to fill one of the most complex jobs in corporate America with someone who can match Iger's stellar track record and well-regarded reputation among investors.

"It's one of the hardest jobs in business," said Laura Martin, an analyst at Needham Securities who has a "hold" rating on Disney's shares. "I think it's a negative that [the extension] is not longer, but it's a positive that we've got him another year. It's a double-edge sword."

Three contract extensions may be unusual for executive successions, but the thorny circumstances of this one make it not entirely surprising. For more than 11 years, Iger has overseen a vast entertainment conglomerate that includes theme parks, movie studios, cable channels and consumer goods, making it hard to find a natural successor and creating some very big shoes to fill. His diversification of Disney in the film industry, buying up Pixar Animation Studios, Lucasfilm and Marvel Entertainment, has earned him wide praise from investors. "His strategic track record is spotless," Martin said.

Moreover, there are only so many executives who can fill such a broad mandate from the outside, especially in an era when a growing number of companies have been broken up into more simplified businesses. "Finding someone who understands entertainment and can run something that large, work across huge national divides, and understands everything from television to trinkets - that's a tall order," said Michael Useem, a professor at the University of Pennsylvania's Wharton School.

Meanwhile, outsiders weighing the job might hesitate after seeing the fate of Thomas Staggs, Disney's former chief operating officer, who had been groomed from a slate of insiders and was widely seen as Iger's heir apparent, until leaving the company last year amid uncertainty about his future ascent. Departures by other executives during the bake-off that elevated Staggs have also been seen as thinning the ranks of insiders positioned to take the job.

With that kind of precedent, said Peter Crist, chairman of the executive search firm Crist Kolder Associates, "it gives them pause. This is the greatest challenge companies have - dealing with an iconic CEO's succession and making the transition successful."

The company also faces other business challenges, especially from rapid technological change that is disrupting the cable industry, including Disney-owned ESPN, which has been shedding viewers.

Then there is Disney's history. The company has had only two CEOs since 1984, when it brought in Michael Eisner from Paramount Pictures to take the job, and the transition from Eisner to Iger was dramatic, even for an entertainment company. In a CNBC interview, New York Times columnist James Stewart, who wrote a book about Disney and Eisner, warned that "Disney does have a history, particularly with Eisner, of CEOs staying too long."

With all the scrutiny facing this succession, the board seems focused on a patient approach. That's the right one, said Yale School of Management professor Jeff Sonnenfeld, who said the extension shows that board members are "catching their breath, taking their time to select the right candidate. There is no 'burning platform' crisis with Disney, the best-led of all global media enterprises. Iger is healthy, 20 years younger than Rupert Murdoch, and universally revered as a highly effective leader."

Thursday, speaking at a conference at the University of Southern California's Annenberg School for Communication, Iger said he and the board agreed that "we could use more time to not only spend on succession but to create a better transition," according to Reuters.