Summary List Placement
Sen. Elizabeth Warren is calling Disney out for its executives’ “hefty compensation packages” in the midst of large layoffs at the firm.
Disney was one of many firms to cut executive pay when the pandemic hit — the company announced in an internal memo in March that Executive Chair Bob Iger’s salary would be cut by 100%, and CEO Bob Chapek’s by 50%. In late August, Hollywood news site Deadline reported that Disney’s pay cuts were coming to an end. While the reinstatement of pay has not been confirmed by Disney, such a move would mean pay would return to pre-COVID levels.
Disney’s pre-pandemic compensation
Before the pandemic, Disney paid its executives well. We can look at Disney’s 2019 compensation to get a better view of Disney’s executive pay.
The chart below splits out 2019 total compensation as reported in Disney’s latest proxy statement. In 2019, the average total reported compensation for Disney’s proxy officers was $18.6 million — the CEO at the time, Bob Iger, had total reported compensation of almost $50 million. Long-term incentive compensation, which is fully variable and based on Disney’s performance, according to its proxy, made up more than 30% of total reported compensation for each executive.
Note that the executives shown below are executives as of the 2019 proxy statement and titles may have changed since then. For example, Iger is no longer CEO, as the position is now held by Chapek.
Again, the chart above shows 2019 compensation, and is not a prediction of how Disney will pay executives in 2020 as a majority of Disney’s executive pay is based on the performance of the firm.
Warren’s letter to Disney, and Disney’s response
Almost one month following the reported reinstatement, Disney announced it would lay off 28,000 employees. In an October 13th letter to Chapek, Warren challenged the reported decision to reinstate pay alongside thousands of employees losing their jobs.
“In the years leading up to this crisis, your company prioritized the enrichment of executives and stockholders through hefty compensation packages, and billions of dollars’ worth of dividend payments and stock buybacks, all of which weakened Disney’s financial cushion and ability to retain and pay its front-line workers amid the pandemic,” Warren wrote.
“I would like to know whether Disney’s financial practices have impacted the company’s decision to lay off workers and whether your company plans to extend health care or other critical benefits and protections to laid off employees.”
The questions in Warren’s letter ranged from clarifications about the 28,000 layoffs (Disney’s announcement did not specify which employees would be laid off except that 67% were part-time employees) to how these decisions were made, to asking for confirmation that executive pay really had been reinstated in full.
Chapek responded earlier this week, noting development of strict health protocols that allowed them to reopen Disney World, according to the letter. The letter referenced an article in The New York Times that outlined union leaders’ commendation on the reopening.
“The State of California’s unwillingness to lift restrictions that would allow us to responsibly reopen Disneyland have resulted in an even deeper percentage reductions in our workforce there as compared to our operations in Florida where capacity limitations due to social distancing requirements also resulted in some reductions,” Chapek wrote.
The letter also said that financial decisions in the last few years were “wholly unrelated to the need to lay off workers.”
Warren posted a follow-up statement on Twitter: “Disney won’t answer my questions because it has no good answers for why it spent its emergency fund handing out billions of dollars to wealthy executives and shareholders, and then left workers holding the bag.”
The pandemic has wreaked havoc on the amusement park giant. Disney parks closed indefinitely in March, and while Disney World reopened in July, the park giant still reported a loss of $5 billion in April, May and June while parks were shut down.