Iger, 60, has been at the head of the Walt Disney Company since September 2005 when he took over for ousted CEO Michael Eisner.
The definite end to Iger's tenure suggests the eventual promotion of one of his two closest lieutenants, either Jay Rasulo, 55, the chief financial officer, or Tom Staggs, 50, chairman of the parks division. The two veteran executives swapped jobs in late 2009 in a move that groomed both to take over one day.
Iger, a former weatherman, rose through the ranks of ABC. As CEO, he has orchestrated some of the company's biggest acquisitions, including the $7.4 billion purchase of animated movie studio Pixar in 2006 and the $4.2 billion acquisition of comic book giant Marvel in 2009.
In 2010, Iger was awarded a pay package valued at $28 million, up 30 percent from a year earlier.
Iger's contract had been set to expire in January 2013. He received no upfront signing bonus for his new contract.
According to a securities filing, Iger will receive an annual salary of $2.5 million, up from $2 million, and an incentive bonus target of $12 million per year through fiscal 2015, up from the target of $10 million earlier.
Disney's fiscal year ends in late September or early October.
His annual stock grants bonus target was also set higher, at $15.5 million through fiscal 2015, up from $9 million.
Disney shares were down 33 cents, or 1 percent, to close Friday at $31.70.
Disney is the parent company of ABC7.
The Associated Press contributed to this report.