The Walt Disney Company is a nearly 100-year-old giant global conglomerate, including holdings in theme parks, hotels, film studios, television stations (such as ESPN) and numerous other properties. Disney announced this week that it will furlough roughly 100,000 employees, representing about 50% of the company’s employees.
The beloved brand and household name is confronting serious threats to its business due to the COVID-19 outbreak. Disney’s core businesses depend on travel, vacations and entertainment. Due to business closures and stay-at-home orders, people are unable to attend Disney amusement parks, stay at the hotels, screen Disney movies in theater or watch their favorite sports teams play on the ESPN channel.
With an anticipated sharp decline in revenue, the company claims that it’ll save around $500 million dollars a month by jettisoning a massive amount of workers. Many of them work at the company’s theme parks, which drew enormous crowds—up until now. Disney’s Parks and Resorts division is substantial and accounted for about 35% of its revenue in 2019.
In a gesture to help out the impacted workers, Disney said it’ll pay 100% of health insurance costs for up to a year. In addition to the theme park workers, other divisions (such as the movie studio and TV divisions) will also downsize employees.
According to CNBC investment bank UBS research analyst John Hodulik said, “We believe Parks’ profitability will be impaired for a longer period of time given the lingering effects of the outbreak.” Hodulik contends, “The economic recession plus the need for social distancing, new health precautions, the lack of travel and crowd aversion are likely to make this business less profitable until there is a widely available vaccine.”
Although workers are being furloughed, the executive suite is doing just fine—financially.
Some Disney executives have made it known that they’ve taken salary cuts or elected to reject their salary for certain defined periods of time. Disney Chairman Bob Iger (who up until recently was the CEO) will forgo his $3 million salary for this year. Back in May 2019, Forbes estimated Iger’s net worth to be at about $690 million. Current Disney CEO Bob Chapek will forfeit half of his $2.5 million base salary.
The salary declination is a brilliant public relations move; however, it’s somewhat disingenuous and conveniently leaves out an important fact—the two executives will still accept massive bonuses and long-term incentives that dwarf their salaries. Iger earned about $65.6 million in 2018 and $47 million last year. To put this number into perspective, it’s 900 times higher than the median Disney worker’s earnings. Chapek should earn an annual bonus of “not less than 300%” of salary, along with an incentive award of “not less than $15 million.”
Abigail Disney is the granddaughter of Disney cofounder Roy Disney. She is a vocal critic—especially on Twitter—of Bob Iger’s lush compensation, especially as it relates to the pay of Disney rank-and- file workers.
In a Twitter attack on Tuesday, the social warrior heiress bashed Disney’s decision to furlough theme park employees. Her fury was also aimed at the company’s policies, which included paying out large dividends to shareholders.
Abigail Disney, who is worth an estimated $120 million, called out and eviscerated Disney executives who took home big bonuses.
She strongly feels that the company was mismanaged in not planning ahead for adversity and previously enacting a stock buyback program, which enhanced the value of the top executives’ total compensation.
shrinking, a very few, very affluent people own a great deal and the majority have relatively little. What is more, as their wealth has grown, the super-rich have invested heavily in politicians, policies and social messaging to pad their already grotesque advantages,” she said.
We are currently seeing this play out with other companies too. Congress passed a multitrillion-dollar stimulus package that bailed out a number of poorly managed companies that should have been allowed to seek bankruptcy protection. Instead of saving money for any potential disasters, they squandered billions of dollars of exorbitant bonuses and buying back stock, which pushed their respective company’s stock share prices higher. This action highly inflated the value of executive stockholdings.
Meanwhile, the average American is given a one-time $1,200. If you’re unemployed, you’ll get an extra $600 per month for four months. The lion’s share of the money intended to go to small businesses was quickly usurped by large restaurant chains, Ivy League universities and other big companies that took advantage of loopholes.
Abigail Disney may be onto something. Things need to change, as this bad behavior is simply being reinforced and continues to repeat itself about every 10 years.
Calls to Disney for comment were unreturned.