COVID-19: Disney Furloughing Parks & Resort Employees, Slashing Executive Pay

The Walt Disney Company announced it is furloughing non-essential employees of its Disney Parks, Experiences and Products division – which includes theme parks, resorts and stores – beginning on April 19.

In a letter to employees, known in Disney jargon as cast members, the company said “With the utmost care and consideration, we are instituting a temporary, short-term furlough for executive, salaried and non-union hourly Cast Members based in the U.S. with the exception of those whose roles or projects are crucial to maintaining our operations during this closure period, effective April 19,”

Cast members will continue to receive their full heatlhcare benefits, and Disney will pay both the employee and company premiums.

The furlough program will not impact the Disney Aspire program, under Disney pays the full cost of college for cast members enrolled in participation universities and education/training programs.

Once the furlough begins, affected cast members will be able to apply for unemployment benefits, which have been augmented by an extra $600 per week under the recent $2 trillion economic stimulus bill.

177,000 cast members work for the Disney Parks, Experiences and Products employs approximately 177,000 cast members worldwide. It’s unclear at this time how many of those are being furloughed. Last year, the division accounted for 37% of Disney’s $69.6 billion in total revenue.

Although the furlough’s initial impact is on non-union cast members, the company will begin talks with the various unions that represent cast members. About 90% of the Disneyland Resort’s approximately 31,000 cast members are members of various unions.

“As part of our commitment to our collective bargaining agreements we will be setting up meetings today with the unions,” the letter stated.

Disney has been paying its idled cast members since closing its theme parks, and committed to doing so through April 18, for a full five weeks of pay.

Here is a full statement from Disney:

“The COVID-19 pandemic is having a devastating impact on our world with untold suffering and loss, and has required all of us to make sacrifices. Over the last few weeks, mandatory decrees from government officials have shut down a majority of our businesses. Disney employees have received full pay and benefits during this time, and we’ve committed to paying them through April 18, for a total of five additional weeks of compensation.

“However, with no clear indication of when we can restart our businesses, we’re forced to make the difficult decision to take the next step and furlough employees whose jobs aren’t necessary at this time. The furlough process will begin on April 19, and all impacted workers will remain Disney employees through the duration of the furlough period. They will receive full healthcare benefits, plus the cost of employee and company premiums will be paid by Disney, and those enrolled in Disney Aspire will have continued access to the education program. Additionally, employees with available paid time off can elect to use some or all of it at the start of the furlough period and, once furloughed, they are eligible to receive an extra $600 per week in federal compensation through the $2 trillion economic stimulus bill, as well as state unemployment insurance.”

The belt tightening is taking place from top-to-bottom. Earlier in the week, Disney announced it was significantly reducing executive compensation in response to the COVID-19 epidemic, which has closed Disney theme parks since mid-March and is costing Disney hundreds of millions in revenue.

In an e-mail to cast members, Disney CEO Bob Chapek wrote that effective April 5, “all VPs will have their salaries reduced by 20 percent, SVPs by 25 percent and EVPs and above by 30 percent.” Chapek himself is taking a 50% pay cut in his $2.5 million base salary.

Iger has led the company to its position of dominance in entertainment, media and tourism. In the most recent fiscal year, he earned $47.5 million.

In his e-mail, Chapek said, “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 its filing with the Securities and Exchange Commission, the company said the cuts will remain “for as long as the Company determines to continue in effect salary reductions generally for its executives.”

“This reality has been sobering to all of us,” executives from Disney Parks, Experiences and Products wrote in a letter to staff today. “As difficult as this decision was, we know it was the right one to help protect our cast members, our guests and our communities.”

Earlier this week, Disney announced the theme parks closure would continue indefinitely, although its hotels in the Disneyland Resort are accepting reservations for June 1 and beyond.

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