The Hastening Fall of Bob Chapek, and Disney’s Long Road to Diversity, Equity & Inclusion: Part II

In our previous podcast, Part I, we chronicled two years of a pandemic that was highlighted by Covid, the Black Lives Movement, and the Presidential Certification by Congress. Titled similarly, this podcast is Part II, but is now called the hastening fall of Bob Chapek, not the long fall. We now move into the last three months of 2023, which in some ways has been nearly as turbulent as the preceding two years. Decisions in years past to support Republican members of the Florida Legislature have come back to haunt Disney as Governor DeSantis has sought to sign into law a bill referred by many as “Don’t Say Gay”. We will make sense of all of these events, and why they have unravelled the way they have. We will revisit the role of Bob Chapek as CEO of The Walt Disney Company, and how an organization that promises to be more active in matters of diversity, equity and inclusion can at times be so far away from the goal. And finally, as this is a Disney at Work podcast, we’ll offer some thoughts as to what these events mean to you and me and to not only our own workforce experience, but our personal lives. Join us for The Hastening Fall of Bob Chapek, and Disney’s Long Road to Diversity, Equity & Inclusion: Part II.

The podcast carries the narrative and is available on Podbean, iTunes, Spotify,  and ListenNotes. Please subscribe to the podcast and to this website so you can be notified of upcoming posts and podcasts! 

You can find the post to Part I of this podcast here.

The Present: 2022

January 7th, 2022: Due to new Covid strains, Hong Kong Disneyland Again Closes. The park was closed 40% of 2020-21. Management announces losses of U.S. $308 million.

January 10th, 2022: Bob Chapek lays out out three specific “pillars” as his goals for 2022: “storytelling excellence,” “innovation” and “relentless focus on our audience.” An emphasis is on the “consumer” as the North Star.

February 16th, 2022: Storyliving by Disney is introduced as an over 55 community with its first location in the greater Palm Springs area out in California. Disney emphasizes Cast Member like customer service. But the fine print notes that Disney is not the developer of Cotino, the name given to the community, nor is Disney the builder or seller of homes within Storyliving by Disney communities. Instead, third-parties are developing and building these independently owned and operated properties. Moreover, the illustration showcases an enormous lake-like pool, in a multi-state region impacted by lowering water shortages on the Colorado River.

February 24th, 2022: The Florida House of Representatives passes a bill that would prohibit “classroom discussion about sexual orientation or gender identity” in the state’s primary schools. Formally known as the The Parental Rights in Education bill, critics soon refer to it as the “Don’t Say Gay” bill.

February 24th, 2022: Not long after Disney’s former CEO Bob Iger, now outside the company, tweets in support of President Joe Biden’s call against the bill in February. “I’m with the President on this! If passed, this bill will put vulnerable, young LGBTQ people in jeopardy,”

March 1st, 2022: Star Wars: Galactic Starcruiser opens its doors. Those reviewing it (largely on Disney’s dime) note the quality of the experience and the efforts made by Imagineering to create such a space. Still few if any can justify its large price point, which places many families out of the space from experiencing it.

March 3rd, 2022: Disney releases a statement: “We understand how important this issue is to our LGBTQ+ employees and many others. For nearly a century, Disney has been a unifying force that brings people together. We are determined that it remains a place where everyone is treated with dignity and respect. The biggest impact we can have in creating a more inclusive world is through the inspiring content we produce, the welcoming culture we create here and the diverse community organizations we support, including those representing the LGBTQ+ community.”

March 7th, 2022:  After days of increased pressure from LGBTQ+ rights groups the company takes a public stand against the Florida bill. Chapek notes that Disney’s stories “are our corporate statements” in support of a diverse, inclusive world. As we have seen time and again, corporate statements do very little to change outcomes or minds,” said the Disney exec in an email sent out to staff this morning. “Instead, they are often weaponized by one side or the other to further divide and inflame,” Chapek added. “Simply put, they can be counterproductive and undermine more effective ways to achieve change.”

This initial memo will serve to further frustrate not only affected interest groups, but employees within the company.

March 9th, 2022. Disney holds its annual shareholders meeting online. On the ballot were these initiatives:

• A proposal requesting an annual report disclosing information regarding lobbying policies and activities
• An amendment of the Company’s governing documents to lower the stock ownership threshold to call a special meeting of shareholders
• A request for a dilligence report evaluating human rights impact citing recent filming in China (It is believed that one million Uighur people have been forcibly detained in the high-security prison camps in recent years).
• A proposal for disclosure in gender and racial pay parity (this was the only measure that passed).

Bob Chapek then states in the Shareholder’s meeting that “while we have been strong supporters of the community for decades, I understand that many are upset that we did not speak out against the bill. We were opposed to the bill from the outset, but we chose not to take a public position on it because we thought we could be more effective working behind the scenes working with lawmakers on both sides of the aisle.” To that end, he states that he called Governor DeSantis that morning prior to the Shareholder’s meeting, and that the two agreed to discuss the bill.

March 9th, 2022: Human Rights Campaign refuses 5 million dollar donation from Disney until meaningful action is taken to combat Florida’s “Don’t Say Gay or Trans” bill.

March 9th, 2022: Pixar employees protest that “We at Pixar have personally witnessed beautiful stories, full of diverse characters, come back from Disney corporate reviews shaved down to crumbs of what they once were. Nearly every moment of overtly gay affection is cut at Disney’s behest, regardless of when there is a protest from both the creative teams and executive leadership at Pixar,” the group alleged. Even if creating LGBTQIA+ content was the answer to fixing the discriminatory legislation in the world, we are being barred from creating it.”

The company will eventually respond by approving the insertion of a same-sex kiss in the Pixar film, Lightyear, coming out this next summer.

March 10th, 2022: Florida’s legislature pass what supporters have called the “Stop WOKE Act,” a bill intended to limit how workplaces and classrooms around the state handle discussions surrounding Critical Race Theory. Disney is particularly singled out for its diversity training.

March 10th, 2022: A week after Disney paused the Russian theatrical releases in the wake of the invasion of Ukraine, Disney said Thursday that is “taking steps to pause all other businesses in Russia” as the fighting intensifies.

March 10th, 2022: Port Neches-Groves High School band dancers perform a routine in the Magic Kingdom, after being denied wearing purple native American-like headdresses. During the performance, the dance team chants, “Scalp ‘em, Indians, scalp ‘em.” Disney later takes apologizes for what occurs. You can see a local news clip outlining the controversy here.

March 11th, 2022: Turning Red premieres across the U.S. on Disney+ but not in theaters, unlike West Side Story and Encanto. This disappoints many Pixar employees.

March 11th, 2022: Chapek posts a formal statement of support for of the LGBTQ+ community. In this letter he apologizes for not taking a more forceful stand against what activists call the “Don’t Say Gay” legislation in Florida. Many employees still don’t accept what Chapek has to say.

March 12th, 2022: In the wake of the controversy over Florida’s ”Don’t Say Gay” bill, a group of Imagineers have asked embattled CEO Bob Chapek to reverse a decision to move their entire division to Florida, a move they consider unreasonable given what they have called the state’s “hateful legislation.” California Governor Newsom tweeted: “Disney, the door is open to bring those jobs back to California — the state that actually represents the values of your workers.” 

March 13th, 2022: Florida governor Ron DeSantis cricizes Disney for being ”woke” and claimed it has cozy ties with communist China. “Disney is in far too deep with the communist party of China and has lost any moral authority to tell you what to do.”

March 16th, 2022: Cheaper by the Dozen premieres on Disney+ but its star Gabrielle Union references the script and show, saying: “I’m incredibly proud of this, especially right now, because we actually say gay.” Then speaking directly about the legislation, she added, “I don’t want to say shock because hatred doesn’t shock me at this point. I’ve been a Black woman in America since ’72 — nothing shocks me. But the fear that gripped me because I know what this leads to. Every moment in history, there has been this moment. We know how this ends. We know where hate and oppression lead. And it can start now with the LGBTQIA community, but if you think that it’s just a ‘them problem,’ oh baby, you’re next.”

March 21st, 2022: Shanghai Disney closes again due to Covid outbreaks. The previous November Shanghai health authorities closed down the park with some 34,000 guests inside after a woman who had visited the park earlier tested positive. The guests inside were all tested for Covid through the night before letting them leave.

March 21st, 2022: Town Hall meeting is held with Bob Chapek’s and heads of HR in what is part of a series known as “Reimagine Tomorrow”. One individual felt the LGBTQ+ panel was really good, but that the event “showed the egg on Bob’s face”.

March 21st, 2022: Daily Wire notes that conservative workers at Disney, who fear naming themselves, have posted an open letter asking that Disney remain politically neutral.

March 22nd, 2022: Disney employees stage a massive walkout to protest. This played out in front of Disney Animation in Burbank, at Pixar, at LucasFilm and at the gates of Disneyland and Walt Disney World. Celebrities like Mark Ruffalo and Oscar Isaac noted via social media their support.

March 22nd, 2022: Disney Parks, Experiences and Products under Josh D’Amaro instagrams: “To ALL who come to this happy place, welcome. Disney Parks, Experiences and Products is committed to creating experiences that support family values for every family, and will not stand for discrimination in any form. We oppose any legislation that infringes on basic human rights, and stand in solidarity and support our LGBTQIA+ Cast, Crew, and Imagineers and fans who make their voices heard today and every day.”

March 22nd, 2022: The Florida Democratic Party late Tuesday night abruptly scrapped plans to hold its biggest annual fundraiser at Disney’s Coronado Springs Resort after the party’s LBGTQ caucus and other top Democrats threatened to boycott the event amid the fight over controversial anti-LGBTQ legislation.

The Future

Last week Bob Chapek announced that instead of a corporate retreat, he was going to go on a listening tour with employees.

In the wake of all this the company’s stock has been languishing near a 52-week low. That’s far better than it was on March 20th of 2020 when after parks and movie theaters closed the world over, when stock fell to $85.98. It closed at the end of Friday’s trading at $139.14. That compares to $197.16 in February of 2021, when stocks surged after Bob Chapek announced major strategies and content for Disney+ in a special investor’s meeting.

Speaking of Investor meetings, there will be one this week at Walt Disney World following the listening tour. Team Disney is hoping that they can showcase enough great things that the stock will soar again, like it did after the Disney+ investor’s meeting.

Beyond that, who can tell. But one thing is known. Bob Chapek’s contract runs out on February 28th, 2023, according to Deadline.

Of interest, 104.1 (a station that prides themselves on being more LGBTQ+ friendly the any other station in Orlando) was chatting about current events with Disney but could not come to any consensus as to whether Disney was truly behind LGBTQ+ issues. One stated that they couldn’t think of another more gay-friendly employer. One former employee on the show thought it to be more show than anything. If the Orlando community doesn’t see Disney as gay friendly, who does?

Jill Goldsmith, again of Deadline, shared a quote from Michael Morris of Guggenheim Partners:

“To expect that somebody can move into one of the most complicated CEO roles in the world during a global pandemic and get all A’s is probably not a reasonable expectation…On the other hand, when issues do arise, how you handle them does provide an indicator of your potential to be the right leader for the long term.”

Putting It All Together

In summary what does it all mean?

Guest & Customer Loyalty Matters

At the end of the day, Disney is a business. People who mention this are oft times in a fairly cynical place, and will exclaim it as a means of criticizing or dismissing poor or unethical behavior. But world-class organizations know that long-term success comes not simply by short-term profit gains but by creating customer loyalty. They crave your product. They become your biggest advocates. Disney has achieved this better than most any other company across the globe. But sometimes they forget how important it is. Therefore, sometimes Disney acts like a business that is short-sided and money-focused. It’s not new to Disney. It’s just not their best formula. Disney’s best formula (and the formula of great world-class organizations) is long-term customer loyalty, which is earned by doing the things your customers or guests want.

Great Leadership Matters

World-class organizations are led by great leaders. Walt Disney and his brother Roy were great leaders. They’ve been replaced by others, a few of which were titled CEO. Finding a great CEO is huge and difficult. To that end or another, Bob Iger postponed his retirement three times. This included Tom Staggs, heir apparent who stepped down as COO in 2016. At the center of this should be the Disney board of directors, who were under the direction of Bob Iger, when serving as chairman as well as CEO. A board’s most important calling is keeping the leadership of an organization alive. Disney barely has a process for choosing top executives. Moreover, it’s still far away from finding great leaders.

Remove Politics–Focus on Standards, Values & Beliefs.

Disney has for decades contributed to political campaigns that serve the interests of its company. Some are even political themselves. Even Walt Disney gave Lyndon B. Johnson grief about being on the other side of the political spectrum. In later decades, financial contributions have been on both sides of the political spectrum. They also appoint executives to interact with both sides politically. None of this makes Disney the unique brand it is today. It just makes Disney another corporation. Support causes you believe in, and stay out of the politics that divide and tear people apart.

Equity & Inclusion Means Compensating Fairly

Disney has compensated C-Suite executives well since Michael Eisner and Frank Wells back in the 1980s. This is opposite of Walt and Roy who too often took of their own personal funds to invest in the future. When executives earn too much, it can play out how a CEO views compensation, equity in pay, monetary investments in general, and simply the value of their own employees. CEOs were paid 351 times as much as a typical worker in 2020. According to Marketwatch, the ratio is 644 to 1 at the Walt Disney Company in 2020. Disney talks inclusion. But you can’t have inclusion without equity. And you can’t have any real form of equity with this sort of pay gap.

In summary, if Disney seems at times rudderless, it is probably because it is mirroring a country and a world which seems rudderless. Like Disney, we need to “follow the compass of our hearts” and act with integrity. In the end what wins hearts and minds is by serving others, inspiring others, and giving to others.

Souvenirs for You & Your Organization

• What is going on in my organization that is obscuring me from staying centered on the customers I serve?
• Are you led by the right leaders? Are you yourself a right-fit leader? What do you need to be better?
• How are you putting skin in the game, even with how you are compensated? Are you re-investing in your own organization?
• How do politics support or obscure my ability to live up to the values and standards I hold?
• Am I fair in compensating those who work with me and for me? Does my compensation illustrate that equity is relevant to me?

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