Deadline: Disney Taps PepsiCo Veteran Hugh Johnston As CFO, A Rare Outsider In A Top Executive Role

Story from Deadline:

Disney today named Hugh F. Johnston, PepsiCo’s CFO and vice chairman, as its new chief financial officer, effective Dec. 4. He replaces interim CFO Kevin Lansberry, who will return to his position as EVP and CFO of Disney’s Experiences segment.

Lansberry stepped in on an interim basis after former CFO Christine McCarthy left abruptly earlier this year for family reasons. The appointment is a rare example of Disney tapping an outsider for a key executive position and it fills a key leadership role as Disney faces a number of challenges, financial and strategic.

The company is set to report its latest quarterly earnings on Wednesday.

The shares, which have fallen sharply this year, ticked up slightly in early trading but are off a bit late morning, at about $85 (vs $118 at their 52-week high). That’s prompted activist investor and Disney shareholder Nelson Peltz of Trianon Partner to make another run for a board seat or two when Disney’s proxy season starts. Iger is eyeing investment partners for ESPN and evaluating the future of ABC and linear television networks at the company. Disney will be buying Comcast’s stake in Hulu. The base price is $8.6 billion but the two sides have just started the process of valuing the streamer.

Like all companies, Disney is dealing with high interests rates and inflation.

Wall Street entertainment analyst Doug Creutz of TD Cowen called Johnston “a strong pick.”

“Our understanding is that he has been an adept communicator with the Street, particularly with regard to setting financial performance expectations,” he said in a note, adding, that “What’s fascinating about the selection is that we believe this is the first time since 1995 (!) that Disney has brought in an outsider to serve in a key executive role.”

That year, Disney actually tapped Michael Ovitz (from CAA) as president and Stephen Bollenbach (from Marriott) as CFO. Neither last very long. “To find the last time Disney successfully transplanted an outsider into a top executive role you really have to go all the way back to when concerned shareholders brought in Michael Eisner and Frank Wells to rescue the company back in 1984.”

At the current critical juncture, a “fresh perspective may do the company some good. The Disney culture is extremely strong, however, and Johnston likely has a fair amount of work ahead of him to integrate successfully,” Creutz said.

As CFO at Disney, Johnston, 62, will report directly to CEO Bob Iger and will lead the company’s worldwide finance organization, which includes corporate real estate, corporate strategy and business development, enterprise controllership, enterprise technology, financial planning and analysis, global product and labor standards, global security, investor relations, risk management, tax, and treasury.

“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.

Johnston started at PepsiCo in 1987, left in 1999 to join Merck & Co. as VP of Retail, and rejoined PepsiCo in 2002. His portfolio has included leadership of PepsiCo’s information technology function from 2015, PepsiCo’s global e-commerce business from 2015 to 2019, and the Quaker Foods North America division from 2014 to 2016.

Other leadership roles during his career there include EVP, Global Operations, President of Pepsi-Cola North America from 2007 to 2009, EVP, Operations, and SVP Transformation, CFO of PepsiCo Beverages and Foods, and SVP, Mergers and Acquisitions.

Iger extended his “sincere gratitude” to interim CEO Lansberry, “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.”

Johnston called Disney “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,.”

“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.”

An SEC filing noted details of the exec’s employment agreement. 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 Disney top 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.