The Walt Disney Co. can ill afford another succession implosion.

The last time Chief Executive Bob Iger handed over the reins, the plan backfired, executives revolted, his replacement got bounced and Iger returned to lead the storied entertainment giant for another four years.

Iger will close out his two-decade tenure at Disney at the end of this year when his contract expires. The board is preparing to make a pivotal leadership move at a perilous time for the industry.

This time, Disney has entrusted a take-charge outsider to oversee its CEO transition, which is expected to unfold in the coming weeks.

James P. Gorman, former head of Morgan Stanley, became Disney's chairman a year ago with succession at the top of his to-do list. The 67-year-old Australia native comes with strong opinions and sterling credentials: He helped stabilize, then revitalize the Wall Street bank during his 14 years in the C-suite, retiring in December 2024 after orchestrating a seamless baton pass.

"I don't know that there's anyone who could have navigated these kinds of leadership transitions better than James," Wharton School Dean Erika H. James said in an interview. "He's not afraid to do the hard things."

Disney has kept a lid on its deliberations. The company declined to make Gorman available for this story.

Four internal candidates have been vying for the job and many believe the parks boss, Josh D'Amaro, is the likely successor. Wall Street is rooting for the charismatic 27-year Disney veteran and quarterback of the company's ambitious five-year, $60-billion parks and cruise line expansion.

Hollywood insiders, however, aren't counting out top television and streaming executive Dana Walden, who could become the first woman to lead the 102-year-old company. Movie studio head Alan Bergman and ESPN chairman Jimmy Pitaro round out the field.

Unlike the last go-round, Disney's board tightened up the process by establishing a succession committee. The group — comprising Gorman, General Motors CEO Mary Barra, Lululemon Athletica CEO Calvin McDonald and Sir Jeremy Darroch, the former head of Sky broadcasting in Britain — have been evaluating the smarts, stamina and public appeal of each candidate. They also must consider the intangibles needed to steer Disney through its steep business challenges.

And those challenges are numerous — including the erosion of traditional TV channels, the shift to streaming, the expansion of artificial intelligence, the uncertain U.S. economy and a caustic political environment.

"There's so much volatility — economic, geopolitical and cultural volatility," James said. "People have a lot of anxiety, [which] makes it so difficult for leaders to gain a solid footing. Every day, you can be confronted with something that's deemed a crisis."

Picking a new leader for a company that is adored by millions and employs 230,000 people is a high-wire act. Elevating one internal candidate also could spark an exodus by the others, putting pressure on the board to devise ways to retain Disney's accomplished runners-up.

Gorman earned the deep respect of Wall Street during his tenure at Morgan Stanley, which included deftly steering the investment firm out of the Great Recession and bolstering its businesses and workplace culture.

A native of Melbourne, Gorman earned a law degree but didn't like being a lawyer so, in the mid-1980s, he moved to the U.S. and obtained an MBA at Columbia University. He has joked that he had to stay in the U.S. to earn enough money to pay his student loan, which carried a 24% interest rate.

When he retired, Gorman was approached to join numerous corporate boards.

"He chose Disney because it was the most challenging," said James, who serves on Morgan Stanley's board. "He felt he could be that change agent in service to Disney ... given all that was going on with the company."

Disney was enmeshed in turmoil, including fending off a proxy challenge from two billionaire shareholders, who had aimed their wrath at Iger and Disney's stalled stock price. Iger had exited the Burbank giant at the end of 2021 after nearly two years as executive chairman. He returned 11 months later when Disney's board dumped his successor, Bob Chapek.

Chapek had been promoted to CEO in February 2020 just weeks before the world recognized the magnitude of the COVID-19 pandemic. Theme parks, theaters and sporting events — Disney's business pillars — went dark.

At the time, the board envisioned a power-sharing arrangement between the two Bobs, but it ultimately fueled bitterness.

By early 2022, Iger had exited and upheaval at the company intensified. Disney became a punching bag for Florida's Republican Gov. Ron DeSantis and Chapek's stutter-step response to Florida's so-called "Don't Say Gay" education bill gave DeSantis ammunition. He labeled Disney as "woke," then yanked the company's development authority around Disney World — a blow to the company's vast Central Florida empire.

Senior executives carped about Chapek to Disney board members. Streaming losses mounted, alarming Wall Street. Disney's board gave Chapek a new contract and, five months later, shoved him out the door.

"There have been all of these starts and stops with succession," David F. Larcker, director of the Stanford Graduate School of Business Corporate Governance Research Initiative, said. "It's been a bit embarrassing for such a big company."

Larcker noted that, years ago, Disney announced that Iger would retire in 2015, which Larcker called "odd" because Iger then was in his early 60s, producing stellar results and was not ready to leave. (Iger now is 74 and has been actively mentoring the candidates in preparation for the handoff, people close to the company said.)

CEO succession has long been Disney's Achilles' heel. Michael Eisner famously held onto power until tensions with shareholders and Pixar Animation's co-founder, the late Steve Jobs, mounted into a boardroom crisis. Iger was appointed in 2005, and quickly made savvy moves to shore up the company's creative engines, including buying Pixar Animation, Marvel Entertainment and Lucasfilm, the studio behind "Star Wars."

In 2015, Disney installed Tom Staggs as chief operating officer to eventually take over for Iger. Staggs left in frustration the following year with Iger still firmly in control.

"They've put people in a position where they are kind of doomed and Iger keeps coming back for another two years, another five years," Larcker said. "That's not the way it's supposed to work."

By the time Iger returned to Disney in November 2022, the world had changed.

Wall Street no longer was cheering on Disney or other entertainment firms to spend big to attract streaming subscribers to compete with Netflix. Investors began demanding profits at a time when Disney and other traditional entertainment companies were bleeding billions on their streaming ventures.

Disney stock had climbed to nearly $200 a share in March 2021. Shares closed last week at $111.20.

"Disney is at a unique moment in time," said Robert Fishman, a media analyst with MoffettNathanson Research, said.

"They must prove to investors that the value of their premium content and theme parks is meaningful," Fishman said. "Investors need confidence that their streaming pivot, which is well underway, will have a big payoff — more than what investors can appreciate today."

Disney's next CEO must navigate an uncertain future and fortify Disney+ as a leading streaming service. The company must strengthen the movie studio and its blockbuster franchises, Marvel, Pixar and "Star Wars," while simultaneously refreshing theme parks and overseeing construction of a new Abu Dhabi resort. The CEO and their team must balance advances in artificial intelligence without allowing it to destroy the value of such beloved characters as Moana and Winnie the Pooh.

Each of the four contenders is responsible for a major Disney business unit, heightening fears that one or more of the unsuccessful candidates will depart — leaving a big void. When Chapek was named CEO six years ago, Disney's streaming strategy chief, Kevin Mayer, exited.

"Successions are multi-person events," Larcker said. "It's not just about the CEO."

At Morgan Stanley, Gorman led a multi-year process with a disciplined "framework in mind," said board member Erika James.

The Morgan Stanley candidates spent considerable time with board members, which has also been the case at Disney.

Gorman "led the succession by remembering these are real people who are at stake," James said. "Shareholders are real people, the employees who will get a new leader are real people and the contenders for this role are real people."

Gorman, in a Morgan Stanley interview, said he's been asked for the secret of that firm's smooth succession.

"It starts with a very basic principle: Do you, as the boss, want to leave the job?" Gorman said. "And I did. ... What that does is frees you up so that your successor has every opportunity to succeed."

In October 2023, Morgan Stanley named Ted Pick to succeed Gorman as CEO. The two other candidates were given sizable portfolios and elevated to co-president. Each received a one-time bonus of about $20 million to stay put.

Speculation is rampant that Gorman and the board will make similar chess moves at Disney.

While D'Amaro knows every nook of Disney's parks and oversees the company's video game unit and vaunted Imagineers, he does not have Hollywood experience developing movies or television — two areas that are critical to Disney's success.

Walden, who joined Disney in 2019 from Fox, has spent her career in television and more recently streaming — far from the park's profit centers in Anaheim and Orlando. Among her specialties is talent relations, working closely with agents, producers and writers.

Hollywood insiders wonder how Disney will strike its leadership balance and whether it will appoint co-presidents reporting to the new CEO.

"The Board is committed to not only finding the right leader, but also focused on .... positioning the new CEO for long-term success," Disney's board told investors in 2024. That includes "surrounding the new CEO with a team of senior executives who can work together to lead the company into the future."

Disney is expected to name Iger's successor next month.

"Organizations grow because you have change," Gorman told Bloomberg in 2023. "You're not going to grow by doing the same thing, again and again."

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