Disney Execs taking pay cuts/foregoing salaries amid Coronavirus

[Blurr]

Hey guys, I saw reports from multiple sources yesterday that the Disney execs are taking paycuts and Iger is even forfeiting his entire yearly salary to help compensate for financial losses amid all this craziness. Via Business Insider:

"..Disney's top executives, including executive chairman Bob Iger and chief executive Bob Chapek, are taking pay cuts as the coronavirus pandemic continues to ravage the media giant's stock and impede its operations globally...

..Iger will forgo his full salary, the company announced on Monday in a memo to employees...

The pay cuts will start on April 5 and remain in place "until we foresee a substantive recovery in our business," Chapek wrote in the memo to Disney employees that was reported by multiple outlets on Monday...

...Chapek, who became CEO in February, will reduce his salary by half.

Other execs will take pay cuts too:

• Vice president salaries will be reduced by 20%
• Senior vice president salaries by 25%
• Executive vice president salaries by 30%..."

I say good on them. I've made the comparison between Disney and Nintendo before (Nintendo's execs taking pay cuts when the going gets tough instead of firing employees) and said I wished the former could be more like the latter and even though it's because of a global pandemic, I still feel like giving credit where credit is due. As I read more and more reports about the amount of debt the company is accruing during this lock down and seeing some of the permits that have come out lately, it becomes even more clear to me that even though Disney makes enough money to make Scrooge McDuck envious, they invest a substantial amount back in to all aspects of their company and spend big too. Having the curtain pulled back a little bit in these times is making me believe more and more that some of my previous beliefs such as "Disney should just build x, y and z! They're Disney, they can afford it!" might be less grounded with all the logistics and realities that are slowly coming into the light for me. I'd always thought of Disney as this sort of infinite money generation machine but now I'm starting to see that even they aren't immune to rough patches so there's probably more thought process that goes into approving certain changes around the parks than I realized (heck, especially if the emergency exit stair project at Space Mountain is costing upwards of a million dollars alone).

Obviously there's also something to be said about the amount of money some of these higher execs are getting if they can afford the pay cuts and carry on like normal but I'm still happy to see this decision being made before Disney simply leaving their front line Cast Members out in the cold. I realize that possibility is very much still in play but I'm glad to see they're trying to do everything they can to push that possible decision back as this fluid situation unfolds.

What do you guys think about Iger, Chapek, etc. taking pay cuts and foregoing their salaries?

[Golden Zephyr]

I think that it's a positive thing that they're taking this action. I believe they're trying to help the lower levels cast members as much as they can and I think it's good on Disney for doing so.

[biggsworth]

This is a solid move as long as they can find it in their hearts to not lay people off at the lowest levels and continue to pay them. So many companies are bailing on their employees. I can understand small businesses but the big major corps need to help where they can from the executive level. They ride on their salaries during the good times this is when their workers need them to be the leaders they should be. Kudos for Disney leading the way here IMO.

[Mr Wiggins]

It's good to see that Disney is at last joining the numerous corporate executives across the country who are taking pay cuts.

To put their move in perspective, here's a quote from one of the many stories on this topic that ran last week:


Why CEOs are giving up their salaries during the coronavirus crisis

New York (CNN Business) Coronavirus has hit companies hard and fast over the past several weeks — prompting calls for industry bailouts and dramatic measures to cut costs. Among the steps some major corporations are taking to mitigate the consequences of the outbreak are pay cuts to CEOs and other top executives.

Executive pay cuts alone aren't likely to have a significant impact on companies' bottom lines or provide a boost to lower-paid employees further down the org chart. But they send an important message.

"A lot of it is symbolic," Itay Goldstein, professor of finance University of Pennsylvania's Wharton School, said. "When we come into a crisis like the one we have right now — where it's a difficult time for the economy, for workers, people are losing their jobs, people don't know what to expect — I think for CEOs to come out and say, 'We are going to give up our pay,' it's a signal that they are sharing the pain."

Airlines and travel companies, one of the industries hit hardest by the outbreak early on, were among the first to take such a step, including Delta (DAL), Alaska (ALK), United Airlines (UAL) and others, which all announced CEO pay cuts, and other executive compensation reductions.

Marriott (MAR), the world's largest hotel chain, said last week that CEO Arne Sorenson will not take home any salary for the rest of the year, and the rest of the executive team will take a 50% pay cut. The announcement came at the same time that the company said it would begin furloughing what could be tens of thousands of hotel workers, from housekeepers to general managers.

Online travel company Booking Holdings (BKNG) said Monday that CEO Glen Fogel, as well as the CEOs of the company's three brand divisions, would forgo his salary. Booking's board directors also volunteered to give up their cash retainers.

On Wednesday, Dick's Sporting Goods (DKS) also announced its CEO Ed Stack and President Lauren Hobart will forgo their salaries, except for an amount covering company-provided benefits. The company's other named executive officers will take a 50% reduction in base salary.

Other companies, including Ford (F), GE (GESLX) and Lyft (LYFT) have taken similar steps....

"Every single dollar, euro, bhat, etc., counts in this effort to ensure we can continue to be the leader in online travel on the other side of this crisis, said Booking's Fogel said in a letter to employees Monday. "Every employee has a responsibility to contribute to our cost-saving efforts and be as efficient as possible."

But at companies of that size, while CEOs and other top executives generally bring home millions of dollars, their salaries are insignificant relative to the company's overall revenue — certainly not enough to keep a distressed operation's finances afloat, Goldstein said. Many of the companies are taking other steps, too, such as changing their operating schedules and cutting unnecessary capital expenditures.

However, the pressure on top executives to take some sort of action may be particularly high at the moment.

The amount of money that top executives at big corporations make relative to other workers has been a growing conservation since the 2008 recession, when federal officials mandated that companies publicly disclose that ratio. And the gap has continued to expand in recent years. Even Abigail Disney, granddaughter of company co-founder Roy Disney, called out the Disney CEO for his massive pay package.

Delta CEO Ed Bastian's total pay in 2018, for example, makes 184 times the median of the total compensation of all employees, according to the company's most recent proxy statement.

Coronavirus also hit at the same time most companies are calculating yearly bonuses for executives and other staff from the prior year, making it a particularly awkward time to lay off employees, said Eric Talley, professor of law and faculty director of the Millstein Center at Columbia University.

Although a CEO foregoing their salary typically won't mean game- changing savings for their company, it's still a move workers likely want to see.

"It's about having an appropriate tone at the top," Talley said. "There might be companies that did really well in 2019 and suddenly your company has hit a brick wall. So at the same time you're laying off a bunch of rank and file employees, you're awarding yourself (millions in bonus pay). It just doesn't look very good."

[Stormy]

I think it's great as long as their salaries are being directly diverted to pay wage continuations for hourly/low salary employees. Not to fund dividends or to make the books 'look good' to the stockholders or otherwise improve Disney's 'bottom line'.

[jcruise86]

Good thread! Micechat at its best.

(And I'm not being sarcastic this time. )

[micromind]

Are these pay cuts salary only or both salary and bonus?

A pretty fair number of CEOs rake in a relatively small salary and a huge bonus.

[Mr Wiggins]

Are these pay cuts salary only or both salary and bonus?

A pretty fair number of CEOs rake in a relatively small salary and a huge bonus.

According to the Hollywood Reporter it's only the base salary:

"Chapek's base salary as CEO is $2.5 million, with an annual target bonus of $7.5 million, and an annual long-term incentive grant of $15 million. The 50 percent pay cut applies to his base salary, not to his entire compensation package."

[Eagleman]

According to the Hollywood Reporter it's only the base salary:

"Chapek's base salary as CEO is $2.5 million, with an annual target bonus of $7.5 million, and an annual long-term incentive grant of $15 million. The 50 percent pay cut applies to his base salary, not to his entire compensation package."

another words= he still can shop , at the 99 cent store

[Eagleman]

I think that it's a positive thing that they're taking this action. I believe they're trying to help the lower levels cast members as much as they can and I think it's good on Disney for doing so.

IMO the

salaries should have been cut years ago anyway !
Specially CEO IGER.....

[Stormy]

According to the Hollywood Reporter it's only the base salary:

"Chapek's base salary as CEO is $2.5 million, with an annual target bonus of $7.5 million, and an annual long-term incentive grant of $15 million. The 50 percent pay cut applies to his base salary, not to his entire compensation package."

Really???? So he's only giving up $1.2M out of $22.5M? If that's the case and they're touting it as some big 'gesture' on his part, that's disgusting.

[micromind]

Really???? So he's only giving up $1.2M out of $22.5M? If that's the case and they're touting it as some big 'gesture' on his part, that's disgusting.

No kidding!!