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The Walt Disney Co. said Monday that executive chairman Bob Iger will forgo his entire salary, and recently named CEO Bob Chapek will take a 50 percent pay cut to his base salary amid the coronavirus pandemic, according to an email from Chapek sent to employees obtained by The Hollywood Reporter.
The news comes days after the company made the decision to keep all North American theme parks closed until further notice. Other executives at Disney will also take salary cuts, according to the email.
Iger has been among the top paid executives in the entertainment and media sector. In the latest fiscal year, he earned $47.5 million as chairman and CEO, down from $65.6 million in fiscal 2018.
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.
Additionally, Chapek’s email on Monday said, “Effective April 5, all VPs will have their salaries reduced by 20 percent, SVPs by 25 percent and EVPs and above by 30 percent.”
He continued: “As we navigate through these uncharted waters, we’re asking much of you and, as always, you are rising to the challenge and we appreciate your support. Your dedication and resilience during this difficult time are truly inspiring and it gives me renewed confidence that will we come through this crisis even stronger than before, we have so many times in our company’s history.”
In a Monday afternoon filing with the Securities and Exchange Commission, Disney outlined specifics about its financial move.
“Mr. Iger has agreed to forgo, through the last payroll period in the Company’s current fiscal year, receipt of all but that portion of his base salary necessary to fund, on an after-tax basis, his contributions to continue to participate in the Company’s health benefits plan,” the filing stated. “He is also waiving his right to receive his car allowance payable during the same period the salary waiver is in effect.”
It continued: “Mr. Chapek will forgo receipt of 50% and each of Mr. Braverman, Ms. McCarthy, Ms. Parker and Ms. Mucha will forgo receipt of 30% of the base salary that would otherwise be payable under his or her employment agreement for as long as the Company determines to continue in effect salary reductions generally for its executives. The salary waivers will not modify other rights under the applicable employment agreements determined by reference to the officer’s base salary; such provisions will continue to be applied based on the stated base salary payable under the applicable agreement.”
The filing concluded, “Additionally, except for the amount of compensation for paid time off, the reductions are not intended to reduce any Company employee benefit provided to such officers that is determined by reference to the base salary payable, except as may be required at law.”
On March 19, Disney warned investors that its financials would take a hit due to the pandemic. “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.
The conglomerate announced Friday that Disneyland and Walt Disney World would be closed until further notice due to the coronavirus outbreak, which as of Saturday has had over 600,000 confirmed cases and caused over 30,000 deaths worldwide.
The parks’ shopping districts and hotels were also closed, along with all North American Disney stores. Disney Paris was closed, too.
“While there is still much uncertainty with respect to the impacts of COVID-19, the safety and well-being of our guests and employees remains The Walt Disney Company’s top priority,” the company said in a statement. “As a result of this unprecedented pandemic and in line with direction provided by health experts and government officials, Disneyland Resort and Walt Disney World Resort will remain closed until further notice.”
Disney added that it “has been paying its castmembers since the closure of the parks, and in light of this ongoing and increasingly complex crisis, we have made the decision to extend paying hourly parks and resorts castmembers through April 18.”
That news came a day after union leaders for both Disney parks sent letters to the company which demanded an update as staff was becoming more and more anxious with uncertainty. Universal Studios previously extended its parks reopen date to April 19 and will pay employees to that date.
March 30, 1:40 p.m. Updated with information from Monday’s SEC filing.
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