Disney Parks laying off 28,000 cast members

[hertamaniac]

Anyone that doesn't think these layoffs were plotted and scripted weeks/months ago is likely mistaken.

I think there were rounds of mid-senior level managers who met multiple times and determined the new budget, cuts and those positions that will be on a hold.

In our publicly listed technology company, we had a policy known as "CREAM". I asked my co-workers what is CREAM? It was merely code for a 10% mandatory layoff to occur every 3 quarters (and that was in a good financial year). It was designed so that the company would rotate out 10% of your employees to try and maintain the "cream of the crop" in the industry.

I understand the business side, but it was a brutal way to try and earn a long time salary.

 

[jknezek]

The execs restored their full salaries. These are very wealthy people couldn't take a cut into order to save these folks, some who had worked for Disney for decades.

Absolutely beyond shameful.

There is no way that executive pay cuts could cover 28,000 annual salaries and benefits. Does it look bad? Absolutely. But value of an employee is based on the cost to replace and current need. Disney clearly feels a need for their executives, not so much these 28K positions right now. And it's hard to argue.

Yes it's awful for all of the employees. My heart goes out to these people who are now facing financial hardship like so many others in our country. I hope they find satisfying employment and relief from the burden of financial uncertainty. But Disney hardly needs them right now. I will miss Yeehaw Bob, but POR may not reopen for a year or more. What is the point of keeping him on furlough? Let him take his act somewhere else if he can and maybe someday he will come back.

Anyway, some quick and dirty math. At $12/hr, every hour those 28K people worked was $392,000. They aren't all making Disney minimum, and I'm not including employer paid taxes or benefits, so true corporate expense every hour is probably over $500,000. That makes every 8 hour day a $4 million expense. On an annual basis, Chapek makes 2.5 million and Iger 3 million in salary. So Chapek was giving back 50%, 1.25 million and Iger all of his, 3 million. That's 4.25 million, or roughly 8.5 hours for 28k employees.

The average Disney exec makes between 150K and 200K, so a 25-30% cut was about 50K per year. Each executive cut paid for basically one and a half employees, provided the cut was permanent for a year. ($12X40=$480*4=$1920*12=$23,000. Plus 1/3 in taxes, benefits and employee expense on average is $34K for a $12/hr worker.

We don't know how many executives took pay cuts, but it wasn't 18,000. So, should Disney have restored Executive pay? Depends on how badly they want to retain those executives. Should they have used the executive pay cuts to keep on more employees? Depends if they need those employees. But the executive pay was a drop in the bucket compared to the total expense of 28,000 jobs.

I think our society is going to be very forgiving of companies for what happens during this pandemic. I don't think there is much of a downside to Disney to doing this, reputation or otherwise. It's sad, I feel awful, but in Disney's shoes? I'm making the same call right now.

 

[jknezek]

Anyone that doesn't think these layoffs were plotted and scripted weeks/months ago is likely mistaken.

I think there were rounds of mid-senior level managers who met multiple times and determined the new budget, cuts and those positions that will be on a hold.

In our publicly listed technology company, we had a policy known as "CREAM". I asked my co-workers what is CREAM? It was merely code for a 10% mandatory layoff to occur every 3 quarters (and that was in a good financial year). It was designed so that the company would rotate out 10% of your employees to try and maintain the "cream of the crop" in the industry.

I understand the business side, but it was a brutal way to try and earn a long time salary.

Good grief. I didn't know companies still subscribed to Jack Welch's Rank and Yank. That policy has been shown to be detrimental so many times it's amazing it's still going on.

 

[hertamaniac]

Good grief. I didn't know companies still subscribed to Jack Welch's Rank and Yank. That policy has been shown to be detrimental so many times it's amazing it's still going on.

We actually used this technique to lure top technology talent from other companies and then once we extracted the non-IP protected methodology from them, it was cut time. So we'd throw relocation packages, signing bonuses and the biggest gaff....stock options with high strike prices that would never come to fruition. It was a repetitive pattern.

Back on topic, this scenario with the CMs isn't remotely close to this. It was about cost-cutting measures and not the transfer of information.

 

[RamblingMad]

This is the K recovery that everyone is talking about. CA is a mess right now. These employees are going to have to move to find work.

 

[TheMaxRebo]

There is no way that executive pay cuts could cover 28,000 annual salaries and benefits. Does it look bad? Absolutely. But value of an employee is based on the cost to replace and current need. Disney clearly feels a need for their executives, not so much these 28K positions right now. And it's hard to argue.

Yes it's awful for all of the employees. My heart goes out to these people who are now facing financial hardship like so many others in our country. I hope they find satisfying employment and relief from the burden of financial uncertainty. But Disney hardly needs them right now. I will miss Yeehaw Bob, but POR may not reopen for a year or more. What is the point of keeping him on furlough? Let him take his act somewhere else if he can and maybe someday he will come back.

Anyway, some quick and dirty math. At $12/hr, every hour those 28K people worked was $392,000. They aren't all making Disney minimum, and I'm not including employer paid taxes or benefits, so true corporate expense every hour is probably over $500,000. That makes every 8 hour day a $4 million expense. On an annual basis, Chapek makes 2.5 million and Iger 3 million in salary. So Chapek was giving back 50%, 1.25 million and Iger all of his, 3 million. That's 4.25 million, or roughly 8.5 hours for 28k employees.

The average Disney exec makes between 150K and 200K, so a 25-30% cut was about 50K per year. Each executive cut paid for basically one and a half employees, provided the cut was permanent for a year. ($12X40=$480*4=$1920*12=$23,000. Plus 1/3 in taxes, benefits and employee expense on average is $34K for a $12/hr worker.

We don't know how many executives took pay cuts, but it wasn't 18,000. So, should Disney have restored Executive pay? Depends on how badly they want to retain those executives. Should they have used the executive pay cuts to keep on more employees? Depends if they need those employees. But the executive pay was a drop in the bucket compared to the total expense of 28,000 jobs.

I think our society is going to be very forgiving of companies for what happens during this pandemic. I don't think there is much of a downside to Disney to doing this, reputation or otherwise. It's sad, I feel awful, but in Disney's shoes? I'm making the same call right now.

I definitely think the optics of the timing of restoring the exec pay is poor.

To add to your point, some of the people impacted weren't making millions of dollars (as you pointed out) and their ability to pay bills etc was being impacted by this cut (and sure the people just laid off don't much care, but just to point out it wasn't like this just meant people weren't able to now buy the 4th yacht or anything, it was impacting many people day to day).

So perhaps they should have restored the lower level pay but not the higher level - though much of the very senior people get the bulk of their income from bonuses which are very likely to be very low or nothing this year.

So could they have done some different things? yeah ... was the timing poor? absolutely - but as you point out it wouldn't have saved a ton of the jobs and many of the execs had take a legit hit

 

[afan]

There is no way that executive pay cuts could cover 28,000 annual salaries and benefits. Does it look bad? Absolutely. But value of an employee is based on the cost to replace and current need. Disney clearly feels a need for their executives, not so much these 28K positions right now. And it's hard to argue.

Yes it's awful for all of the employees. My heart goes out to these people who are now facing financial hardship like so many others in our country. I hope they find satisfying employment and relief from the burden of financial uncertainty. But Disney hardly needs them right now. I will miss Yeehaw Bob, but POR may not reopen for a year or more. What is the point of keeping him on furlough? Let him take his act somewhere else if he can and maybe someday he will come back.

Anyway, some quick and dirty math. At $12/hr, every hour those 28K people worked was $392,000. They aren't all making Disney minimum, and I'm not including employer paid taxes or benefits, so true corporate expense every hour is probably over $500,000. That makes every 8 hour day a $4 million expense. On an annual basis, Chapek makes 2.5 million and Iger 3 million in salary. So Chapek was giving back 50%, 1.25 million and Iger all of his, 3 million. That's 4.25 million, or roughly 8.5 hours for 28k employees.

The average Disney exec makes between 150K and 200K, so a 25-30% cut was about 50K per year. Each executive cut paid for basically one and a half employees, provided the cut was permanent for a year. ($12X40=$480*4=$1920*12=$23,000. Plus 1/3 in taxes, benefits and employee expense on average is $34K for a $12/hr worker.

We don't know how many executives took pay cuts, but it wasn't 18,000. So, should Disney have restored Executive pay? Depends on how badly they want to retain those executives. Should they have used the executive pay cuts to keep on more employees? Depends if they need those employees. But the executive pay was a drop in the bucket compared to the total expense of 28,000 jobs.

I think our society is going to be very forgiving of companies for what happens during this pandemic. I don't think there is much of a downside to Disney to doing this, reputation or otherwise. It's sad, I feel awful, but in Disney's shoes? I'm making the same call right now.

Thank you for this great explanation! I've beem saying this off the board since they reinstated their salaries. It may look bad but it was never going to be enough to keep people's jobs.

 

[mikeamizzle]

Anyone that doesn't think these layoffs were plotted and scripted weeks/months ago is likely mistaken.

I think there were rounds of mid-senior level managers who met multiple times and determined the new budget, cuts and those positions that will be on a hold.

In our publicly listed technology company, we had a policy known as "CREAM". I asked my co-workers what is CREAM? It was merely code for a 10% mandatory layoff to occur every 3 quarters (and that was in a good financial year). It was designed so that the company would rotate out 10% of your employees to try and maintain the "cream of the crop" in the industry.

I understand the business side, but it was a brutal way to try and earn a long time salary.

How'd that work out for "your" company?

 

[WorldOfPooh]

Thank you for this great explanation! I've beem saying this off the board since they reinstated their salaries. It may look bad but it was never going to be enough to keep people's jobs.

It's all about perception though, goodwill and not soiling the brand.

 

[andyman8]

There is no way that executive pay cuts could cover 28,000 annual salaries and benefits. Does it look bad? Absolutely. But value of an employee is based on the cost to replace and current need. Disney clearly feels a need for their executives, not so much these 28K positions right now. And it's hard to argue.

Yes it's awful for all of the employees. My heart goes out to these people who are now facing financial hardship like so many others in our country. I hope they find satisfying employment and relief from the burden of financial uncertainty. But Disney hardly needs them right now. I will miss Yeehaw Bob, but POR may not reopen for a year or more. What is the point of keeping him on furlough? Let him take his act somewhere else if he can and maybe someday he will come back.

Anyway, some quick and dirty math. At $12/hr, every hour those 28K people worked was $392,000. They aren't all making Disney minimum, and I'm not including employer paid taxes or benefits, so true corporate expense every hour is probably over $500,000. That makes every 8 hour day a $4 million expense. On an annual basis, Chapek makes 2.5 million and Iger 3 million in salary. So Chapek was giving back 50%, 1.25 million and Iger all of his, 3 million. That's 4.25 million, or roughly 8.5 hours for 28k employees.

The average Disney exec makes between 150K and 200K, so a 25-30% cut was about 50K per year. Each executive cut paid for basically one and a half employees, provided the cut was permanent for a year. ($12X40=$480*4=$1920*12=$23,000. Plus 1/3 in taxes, benefits and employee expense on average is $34K for a $12/hr worker.

We don't know how many executives took pay cuts, but it wasn't 18,000. So, should Disney have restored Executive pay? Depends on how badly they want to retain those executives. Should they have used the executive pay cuts to keep on more employees? Depends if they need those employees. But the executive pay was a drop in the bucket compared to the total expense of 28,000 jobs.

I think our society is going to be very forgiving of companies for what happens during this pandemic. I don't think there is much of a downside to Disney to doing this, reputation or otherwise. It's sad, I feel awful, but in Disney's shoes? I'm making the same call right now.

All I’ll say is that the decision was necessary at the current moment, and I’m not sure many are arguing it isn’t. Some (like myself) are questioning the wisdom of issuing these mass layoffs while restoring full executive pay. Does Josh showing up at DTD save any jobs? No buts it’s about optics and how it makes affected CMs feel. Does restoring full exec pay save any jobs? Likely not but again it’s about optics and how it makes affected CMs feel. And as a matter of clarification, I think some are confused when we refer to “executive” paycuts. We’re not just talking about top corporate leadership here. The paycuts applied to almost all VPs, SVPs, Presidents, and Corporate Officers across the entire company. There are a lot of them, and they don’t make chump change. Would it have saved people’s jobs? I don’t know. I can’t tell you, but again, I just think you put out the wrong message to the public, the laid off CMs, and the remaining CMs. It makes sense that when you so heavily put out the ethos of “We’re all Cast Members” and then you make a decision that wholeheartedly contradicts that (you’re out of a job while my pay is expanded) that you’d be criticized. I think the criticism of the pay restoration is fair. Any criticism of laying people off (though coming from the right place) isn’t fair in the current climate (and to be honest, I don’t see many arguing the layoffs weren’t necessary).

Just as a matter of further clarification, these layoffs applied not just to hourly CMs but also management and other salaried employees as well as a variety of office and technical roles, so the “average savings” per hour is much higher. Also most CMs now make $13 an hour and were about to (today I think) move to $14 an hour.

Also, our society is always “forgiving” of lay-offs generally because we collectively have a very short memory. It’s also very easy to lose sight of the actual people make up these numbers. I’m certainly guilty of it (and I know many CMs), so I have to remind myself not to fall into that trap that my current security allows me of us just dismissing it as “necessary” devoid of any human consequence. Does that mean Disney shouldn’t have done it? Absolutely not. But if there’s anything they could’ve done to make it at least look better, they should’ve done it. That doesn’t make them evil. That makes them like every other major corporation, something they have always fought back hard against. That’s their branding decision, but you can’t have your cake and eat it too. I think it’s interesting when you look at companies like NBCUni (who has Comcast to support it), they issued even more sweeping paycuts and those are still in place.

 

[Disney Bobby]

Anyway, some quick and dirty math. At $12/hr, every hour those 28K people worked was $392,000. They aren't all making Disney minimum, and I'm not including employer paid taxes or benefits, so true corporate expense every hour is probably over $500,000. That makes every 8 hour day a $4 million expense. On an annual basis, Chapek makes 2.5 million and Iger 3 million in salary. So Chapek was giving back 50%, 1.25 million and Iger all of his, 3 million. That's 4.25 million, or roughly 8.5 hours for 28k employees.

Those salaries aren't correct. Iger made $65 million IN ONE YEAR in 2018. That's almost $36,000 per hour. Last year he made $48 million. Your salary amounts are base salaries, which are only a fraction of their income from Disney. And those cuts were just to base salaries. Absolute peanuts to these execs. They make tens of millions in bonuses, and they protected those bonus while cutting everyone else.

And according to this, Disney was sitting on over $23 BILLION in cash at the end of June.

https://www.investing.com/equities/disney-balance-sheet
And 2/3 of these folks were part time. $12 * 25 hours a week * 50 weeks a year, since most probably take a week or two off a year, comes to about $15k a year for those employees. I doubt their benefits packages are a lot, so let's just round up to $20k a year for these part timers. That comes up to about $375 million a year to keep those ~18,700 folks on board. Disney could easily absorb that. There was no need for a cut this large.

So, if a company has $26 Billion in cash sitting around and had no problem paying one person over $65 million for ONE YEAR and preserved their multimillion bonuses for this year, there is no excuse for this. NONE. Especially for a company that loves to get plenty of good press for inclusion and equality. Obviously, inclusion and equality doesn't mean much when it comes to reaping the financial success and security these employees played a big part in creating for the company, unlike the execs, who have already shared in more than their fair share of both.

 

[Disney Bobby]

Thank you for this great explanation! I've beem saying this off the board since they reinstated their salaries. It may look bad but it was never going to be enough to keep people's jobs.

Except, most of that isn't correct.

 

[mi*vida*loca]

Those salaries aren't correct. Iger made $65 million IN ONE YEAR in 2018. That's almost $36,000 per hour. Last year he made $48 million. Your salary amounts are base salaries, which are only a fraction of their income from Disney. And those cuts were just to base salaries. Absolute peanuts to these execs. They make tens of millions in bonuses, and they protected those bonus while cutting everyone else.

And according to this, Disney was sitting on over $23 BILLION in cash at the end of June.

https://www.investing.com/equities/disney-balance-sheet
And 2/3 of these folks were part time. $12 * 25 hours a week * 50 weeks a year, since most probably take a week or two off a year, comes to about $15k a year for those employees. I doubt their benefits packages are a lot, so let's just round up to $20k a year for these part timers. That comes up to about $375 million a year to keep those ~18,700 folks on board. Disney could easily absorb that. There was no need for a cut this large.

So, if a company has $26 Billion in cash sitting around and had no problem paying one person over $65 million for ONE YEAR and preserved their multimillion bonuses for this year, there is no excuse for this. NONE. Especially for a company that loves to get plenty of good press for inclusion and equality. Obviously, inclusion and equality doesn't mean much when it comes to reaping the financial success and security these employees played a big part in creating for the company, unlike the execs, who have already shared in more than their fair share of both.

It’s my understanding that 62 million of his “salary” was bonuses. His salary is actually 3 million.

 

[J-BOY]

This is the K recovery that everyone is talking about. CA is a mess right now. These employees are going to have to move to find work.

It’s the same in any affected resort. The issue with both Disneyland and Disney World is that the areas immediately surrounding them are entirely dependent on the presence of each resort. So many hospitality jobs, even those not employed by Disney, are predicated entirely on Disney operating at close to its normal capacity. Anyone still looking for a job in the same industry will need to look into the larger city nearby as a whole.

To be honest, though, the hospitality industry is currently DOA. Florida’s in better shape right now, but capacity and demand is significantly lower. It’s going to take years for anyone to recover fully. Most laid off employees are better off looking for employment in a different industry.

 

[rteetz]

It’s my understanding that 62 million of his “salary” was bonuses. His salary is actually 3 million.

Correct.

 

[Disney Bobby]

It’s my understanding that 62 million of his “salary” was bonuses. His salary is actually 3 million.

Correct. That's how they hide what they really get paid. He received over $65 million in total compensation for ONE YEAR. All of them are structured like that, and they always make the bulk of their money in bonuses. The salary is peanuts compared to the bonuses.

 

[WebmasterJackie]

I know it's probably already answered. Can anyone tell me how to help with the cast members pantry or how to make a money donation. My heart is acttally "broken" over this.

these cast members have made our family vacations "magical" over the years. It 's time to support them.

I did an interview with the cast member who started Cast Member Pantry and I've got all of the information on how to help them in the article I wrote on the DIS.

https://www.wdwinfo.com/news-storie...er-pantry-to-help-others-feed-their-families/

 

[rteetz]

Correct. That's how they hide what they really get paid. He received over $65 million in total compensation for ONE YEAR. All of them are structured like that, and they always make the bulk of their money in bonuses. The salary is peanuts compared to the bonuses.

What they gave up earlier this year were their salaries not the bonuses so they really couldn’t do much with the money saved from that to save CMs. It is bad optics but it certainly wasn’t going to be impactful much to change any of what happened.

 

[mi*vida*loca]

Will they even get bonuses this year? Don’t bonuses go by how well the company is doing?

 

[andyman8]

Will they even get bonuses this year? Don’t bonuses go by how well the company is doing?

If history is a guide, they’ll certainty get their bonuses. Maybe not as much as last year’s CEO bonus but still a massive amount.