The CEO-obsessed succession pro leading Disney’s search for Iger’s replacement

Now, he has to apply what he has learned on a big stage: the succession race at the House of Mouse.

The former Morgan Stanley chief executive is set to become chairman of Disney’s board in January, charged with executing a smooth and lasting transition to a new leadership regime, while righting past wrongs of a board that critics view as too deferential to Bob Iger.

During Iger’s two stints as Disney CEO, the board has repeatedly extended his contract and he struggled to step aside, contributing to years of uncertainty and a chaotic succession saga that has dinged investor confidence and raised the stakes for his ultimate baton passing. In late 2022, after a rocky interregnum when Disney was led by Bob Chapek, his handpicked successor, Iger returned for a second stint as CEO. The next summer, the board extended his contract through 2026.

Gorman and Iger speak regularly. The former Morgan Stanley CEO is focused on finding the right candidate to help Disney move past its reliance on its larger-than-life CEO and ensure it has a strong pipeline of leaders to help it succeed long term, people familiar with the matter said. The board has hired Heidrick & Struggles to lead the search for external candidates, some of the people said.

Gorman’s elevation to chair wasn’t initially planned when he joined Disney’s board earlier this year, according to people familiar with the matter. He will succeed former Nike CEO Mark Parker, a longtime board member who took on the chairman role in 2023 and is also executive chair at the sneaker giant, which is struggling with financial and executive turbulence.

Disney announced that Gorman, along with former Sky CEO Jeremy Darroch, were joining the entertainment giant’s board when it was under siege from activist investor Nelson Peltz, who unsuccessfully tried to persuade shareholders to add himself to Disney’s board.

One of Peltz’s chief criticisms of Disney was that the company had botched succession planning and that Iger was too close to the board. Disney said at the time that Iger had “no personal relationship" with Parker or other directors, and that he wasn’t responsible for appointing board members.

The board initially planned to name Iger’s successor next year, people familiar with the matter said, but on Monday Disney said it would select the next CEO in early 2026. That will give him more time to focus on executing his turnaround strategy and allow Gorman and the board to take a closer look at external candidates alongside internal contenders. Iger has said he is “definitely going to step down" at the end of his contract in late 2026.

“For better or worse, transitions become very personal," Gorman said in a January interview with The Wall Street Journal after his tenure as CEO of Morgan Stanley ended, and before he joined Disney’s board. He said at the time that the first step in a successful transition is having an incumbent who wants to leave, rather than being compelled to depart because of their age or tenure.

“Once you arrive at the decision that you want to leave, it’s much easier to embrace life after that and to support your successor and stay away," Gorman said in the interview.

Given Disney’s wide range of businesses, from parks to streaming, cable TV and sports, a key area of focus for Gorman will be finding a CEO who has the strategic chops to lead the company’s entire portfolio through a period of dramatic change, said Alan Schwartz, executive chairman of investment firm Guggenheim Partners. Schwartz has known both Gorman and Iger for years.“The most important thing is maintaining a total team culture," he said. “What I think James and the board will look at is which of the company’s leaders is being really thoughtful about that. Not just saying, ‘Here’s what my division needs,’ but ‘Here’s what the whole company needs.’"

Since returning to Disney, Iger has cut costs, helped the company achieve its first-ever streaming profit, sought to revitalize its studios and charted a digital future for ESPN.

Among the internal Disney executives seen as contenders for the top job are Josh D’Amaro, chairman of Disney’s experiences division, which includes its theme parks; Dana Walden, co-chairman of Disney’s entertainment unit, which includes all of the company’s nonsports TV and streaming operations; ESPN head Jimmy Pitaro; and Alan Bergman, co-chair of Disney entertainment.

Gorman helped Morgan Stanley’s board last year to decide between three internal candidates to succeed him. He stepped down as the bank’s CEO at the end of 2023, and in the spring said he will step down as executive chairman of Morgan Stanley’s board at the end of the year.

Gorman reaches out to almost all new chiefs named in the U.S. and elsewhere within several weeks of them landing the top job. He typically introduces himself and offers his wisdom as a fellow CEO if they want it.

Growing up with nine siblings in suburban Melbourne, Australia, Gorman watched as his engineer father navigated complex problems with what Gorman described in the January interview with the Journal as “enormous clarity of thinking" and the ability to “focus on things that matter, not things that don’t."

Gorman started working on Morgan Stanley succession during his first board meeting as CEO in 2010, sharing a list of people who could immediately succeed him if there were an emergency. After about five years, he updated the list, and then updated it again in 2020.

By then, Gorman and the board had started actively evaluating candidates. “We asked them for health checks, we asked them to tell us if there’s something we should know about their lives," he said, speaking on the “In Good Company" podcast late last year.

Morgan Stanley tested its CEO candidates by giving them different jobs: one was moved to run strategy, another to lead global technology. “We took them to forums and situations and put them on TV and showed them what the job of a CEO is really like and saw how they moved toward the flame," he said on the podcast. “Some people retreat from the flame and the fight, and some people move towards it."

Morgan Stanley ultimately chose Ted Pick to succeed Gorman. Gorman recommended to the board that the bank pay all three candidates awards valued at $20 million each “to show they were a team at the top of the company" that contributed to its market-share growth over the years.

Gorman has acknowledged that the CEO role is lonely at the top. Earlier in his career, he would find himself vomiting frequently from day-to-day stresses, he has said. Now, he recommends that CEOs find a way to manage their stress so that they don’t burn out and leave exhausted.

Gorman said on the 2023 podcast that he was looking for a board role that required real effort.

“I want something that is complicated. I like solving problems. I’m not interested in joining boards so I can attend board meetings and get paid for it," he said.

—Suzanne Vranica and Jessica Toonkel contributed to this article.

Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com, Emily Glazer at Emily.Glazer@wsj.com and Robbie Whelan at robbie.whelan@wsj.com