Dive Brief:

• Incoming Walt Disney Company CFO Hugh Johnston has doubled his annual salary as he departs PepsiCo to take on the role at Disney effective Dec. 4, according to regulatory filings.
• Johnston, a seasoned financial veteran who has logged 13 years in the food and beverage firm’s top finance seat, will receive a $2 million annual base salary from Disney upon taking the role according to a filing with the Securities and Exchange Commission, as compared to the $1 million base salary he collected in 2022 from PepsiCo, according to the company’s proxy statement.
• Johnston’s appointment comes as the entertainment company and its returning CEO, Bob Iger, are attempting to shore up Disney’s financials in the face of slumping subscriber numbers and challenges by activist investors.  

Dive Insight:

Along with his $2 million base pay, Johnston will receive a long-term incentive award with a target value of about 575% of his base salary as CFO for the Burbank, California-based Disney, according to the company filing.

Johnston will also be eligible for an annual performance-based bonus of no less than 200% of his base salary. As the bonus is dependent on achieving key performance objectives, the “actual amount payable as an annual bonus to Mr. Johnston may be less than, greater than or equal to the stated target bonus (and could be zero),” the company said in the filing.

On top of his $1 million base at the Purchase, New York-based PepsiCo, where he logged a collective, if not unbroken, 34 year tenure, Johnston’s 2022 compensation also included a long-time incentive award granted in March 2022 with a value of $7 million, comprising 66% of performance share units or common stock and 34% long-term cash awards, as well as a $2.8 million annual incentive award, according to the proxy.

PepsiCo pointed to Johnston’s key role in areas such as enabling the company to return $7.7 billion to shareholders and his delivery on “major enterprise transformation initiatives,” which generated about $1 billion in productivity savings, as key elements of his performance for the year.

A seasoned financial veteran who also serves on the boards of Microsoft and HCA Healthcare, Johnston is moving to Disney as the company tries to fend off investor doubt amid declining revenue in key segments and sweeping leadership changes.

Johnston’s appointment follows a series of abrupt senior leadership changes at Disney. Christine McCarthy, the company’s former longtime finance chief, announced in June that she would be stepping down for a medical leave of absence. This came after McCarthy played a pivotal role in the return of Bog Iger as CEO last November.

McCarthy’s departure — which left Kevin Lansberry, a 35-year veteran of Disney, in the interim CFO role — came after the entertainment company saw subscribers for its Disney+ streaming service plummet by approximately four million in its second quarter. The dip, the second consecutive quarter where subscribers fell, contributed to a shift in strategy in content creation for Disney which included a reduction in the amount of content available on its streaming platforms, McCarthy said as CFO at the time during the company’s earnings call in May.

Disney has also conducted several rounds of layoffs over the past year as it attempts to deal with numerous economic and geopolitical headwinds, including waning subscribers, losses in revenue for its streaming platforms, writers’ and actors’ strikes, a shareholder lawsuit and legal spats with Florida governor Ron DeSantis. In February, Disney announced a staff reduction of 7,000 employees or about 3.6% of its workforce, and cut 15% of its entertainment staff in April as well as moving to restructure its finance team.

These sweeping changes have left CEO Iger fighting to bolster the company’s results, as well as facing challenges for Disney’s leadership. Activist investor Nelson Peltz’s investment firm Trian Fund Management has launched a second attempt to win seats on the company’s board, backed by previous Marvel executive Ike Perlmutter, according to a recent report by Barron’s.

The Trian-Disney squabble could shed some light on the choice of Johnston as Disney’s incoming finance chief; Johnston has tussled with Peltz and his investment fund previously. Trian and PepsiCo fought a three-year tug-of-war as Peltz — whose fund owned a 1.3% stake in the food and beverage conglomerate at the time — moved unsuccessfully to break up the company, before Trian ultimately exited its stake in 2016, the Wall Street Journal reported at the time.

Fellow PepsiCo alum James Caulfield, himself a 30-year veteran of the firm, will succeed Johnston as finance chief effective Nov. 30, according to the company filing. Meanwhile, Lansberry will cease to serve as Disney’s interim CFO and will resume his role as EVP and CFO of the entertainment company’s Experiences division effective Dec. 4, Disney said. Disney is expected to report its third quarter results Wednesday.

PepsiCo declined to comment. Disney did not respond to requests for comment.