A reported divide between Disney executives and senior leadership is reportedly at play over pay cuts that were first announced on March 30, as part of the company’s response to the COVID-19 pandemic.
At issue are amended contracts that describe the salary reductions as temporary, but offers no set date as to when the cuts end, according to The Hollywood Reporter.
The salary cuts are reportedly 20 to 30 percent of the earnings of affected executives at the vice president, senior vice president, and executive vice president level. There’s some dissension over being given just two days to sign amended contracts, and over salary cuts being decided unilaterally with no end date provided, THR reported.
Walt Disney Company Chairman Bob Iger is foregoing his entire salary and CEO Bob Chapek will take a 50% reduction to his base salary.
But all is not as it seems, as bonuses are a large part of the compensation package for Iger and Chapek.
More from THR:
A Disney vp typically earns somewhere between $150,000 and $200,000 in base pay, according to sources, while an executive vp’s salary can top $700,000, depending on the department (marketing, distribution and creative executives historically make more than corporate functions). Some employees also are compensated via Disney stock.
But those familiar with the new reductions — 20 percent for vps, 25 percent for senior vps and 30 percent for executive vps — note that the bulk of Iger and Chapek’s compensation will remain untouched because the cuts only apply to their base salaries. In the case of Chapek, his base is $2.5 million, but his annual target bonus is $7.5 million and his annual long-term incentive grant is $15 million.
Likewise, Iger’s base salary in the most recent fiscal year was $3 million, but he earned $44.5 million in additional compensation, which would remain intact (Iger’s additional compensation is largely based on the company’s performance and likely will not match that figure this year).
Adding to upper echelon angst is Iger “waiving his right to receive his car allowance payable during the same period the salary waiver is in effect,” according to a reported filing with the Securities and Exchange Commission.
As THR noted, this irked those whose total annual compensation is more in line with the cost of a luxury vehicle.
A Disney source did not have any sympathy for the grumblings of upper management.
“Much of the company has ground to a halt because of this pandemic,” the source told the entertainment news outlet. “And for these people to complain in the face of so much suffering in the world is just incredibly selfish and sad.”
On Thursday, the Walt Disney Co. announced in a letter to non-union, salaried and executive employees that it will furlough employees “whose jobs aren’t necessary at this time,” beginning April 19.
Employees were being paid since the parks shut down in mid-March.
Orlando Business Journal shared a statement from a Disney spokesperson:
The COVID-19 pandemic is having a devastating impact on our world with untold suffering and loss, and has required all of us to make sacrifices. Over the last few weeks, mandatory decrees from government officials have shut down a majority of our businesses. Disney employees have received full pay and benefits during this time, and we’ve committed to paying them through April 18, for a total of five additional weeks of compensation. However, with no clear indication of when we can restart our businesses, we’re forced to make the difficult decision to take the next step and furlough employees whose jobs aren’t necessary at this time. The furlough process will begin on April 19, and all impacted workers will remain Disney employees through the duration of the furlough period. They will receive full health care benefits, plus the cost of employee and company premiums will be paid by Disney, and those enrolled in Disney Aspire will have continued access to the education program. Additionally, employees with available paid time off can elect to use some or all of it at the start of the furlough period and, once furloughed, they are eligible to receive an extra $600 per week in federal compensation through the $2 trillion economic stimulus bill, as well as state unemployment insurance.
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