Sources say the amended company contracts use the word “temporary” to describe salary reductions of 20 percent to 30 percent but offer no firm end date.
A battle is brewing between Disney executives and senior leadership over the company’s pay cuts that were disclosed March 30.
Multiple sources tell Hollywood Insight that the affected executives at the vp, senior vp and executive vp level are upset that the salary cuts were decided unilaterally and represent a 20 to 30 percent slash in their earnings. More alarmingly, the amended contracts sent to these executives provide no end date, and employees were given only two days to sign.
That move has sparked a backlash across the global conglomerate, which touted the cuts as necessary “as we navigate through these uncharted waters.” Chairman Bob Iger will forgo his entire salary and recently named CEO Bob Chapek will take a 50 percent reduction to his base salary as Disney grapples with the novel coronavirus pandemic.
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). In a filing with the Securities and Exchange Commission, Disney also noted that “Mr. Iger…is also waiving his right to receive his car allowance payable during the same period the salary waiver is in effect.” That gesture didn’t go unnoticed by some, whose total annual compensation is in line with the cost of a luxury vehicle.
A Disney source dismissed the grumblings, telling Hollywood Insight, “Much of the company has ground to a halt because of this pandemic, and for these people to complain in the face of so much suffering in the world is just incredibly selfish and sad.”
Sources say the amended Disney contracts use the word “temporary” to describe the cuts, which are effective immediately, but offer no firm end date. Some believe that the virus crisis, at least as defined by its impact on Hollywood, could easily last 18 months. That’s the amount of time experts believe will be needed before a vaccine is available to the masses.
Sources say the amended contracts “are pretty much voluntary.” However, the expectation is for executives to sign. If an executive doesn’t sign, he or she is taking a risk with regard to future career mobility within the studio and the prospect of potential bonuses.
Disney contracts differ slightly from those of executives who came from Fox, which Disney acquired last year. Disney cites a 10-week period of time before the company can extend or suspend a contract for so-called force majeure or provisions covering disruptions due to acts of God. By contrast, Fox contracts don’t include force majeure language.
Representatives who have pushed back on behalf of their executive clients have been met with a Disney business affairs department unwilling to negotiate.
Like the rest of Hollywood, Disney has been hammered by the coronavirus crisis, which has exploded to more than 1 million cases worldwide and some 50,000 deaths. On March 28, the company announced all its theme parks worldwide would be closed until further notice due to the outbreak. Tentpoles like Mulan and Black Widow have been pulled from their release dates and rescheduled, while a number of film productions have shut down — costing up to $350,000 a day per film.
Disney announced April 2 that it will furlough staffers “whose jobs aren’t necessary at this time” beginning April 19. The Wall Street darling has been bracing for a stock hit and warned investors last month that its bottom line is poised to be impacted significantly. “There has been a disruption in creation and availability of content we rely on for our various distribution paths, including most significantly the cancellation of certain sports events and the shutting down of production of most film and television content,” the conglomerate wrote in a regulatory filing with the SEC.
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