The Walt Disney Company revealed that all of their top executives would forgo their bonuses for fiscal year 2020, along with the salary cuts announced last summer.
CEO Bob Chapek took over the company just days before the full scale shutdown of every Disney theme park, due to Covid-19. The pandemic shuttered movie theaters and docked Disney’s entire cruise line. Former CEO Bob Iger stayed on as Executive Chairman.
Chapek’s compensation for 2020 totaled $14.1 million, much lower than former CEO’s compensation for the previous two years which totaled $47.5 million in ’19 and $65.6 million in ’18. The former was somewhat inflated due to incentives provided by the company to keep Iger onboard beyond his contracted end date.
This means that current CEO Bob Chapek’s 2020 compensation was 3 1/3rd times less than previous CEO Iger’s compensation the year prior and more than 4 1/2 times less than Iger’s 2018 compensation.
Plenty of Disney fans have openly chastised Chapek for taking bonuses while laying off employees in the parks division, it appears now that that specific criticism was unfounded.
It is also worth noting that foregoing bonuses for an entire group of employees, regardless of their position, is not a simple task. These bonuses are contractually required and the Disney company risks being in breach of contract by withholding negotiated and agreed upon terms. While most parties can agree to modify contract terms, this is not always the case. Many of these compensation agreements were negotiated years ago and simply waving key provisions, such as earned bonuses, requires full consent of both parties and plenty of lawyering on both sides.
While the company’s direct to consumer division, which overseas their streaming services Disney+, Hulu, HotStar and ESPN+, has been a massive success so far, the box office, theme parks, and cruise lines have all been hobbled due to the pandemic. All of that has combined with the Disney’s slow decline amongst their linear networks as consumer’s continue to cut the cord in large numbers.
The company took a $7 billion hit in their theme park business, which caused them to lay off more than 32,000 cast members.
It has been reported that Executive Chairman Bob Iger and his wife have donated $5 million to small business impacted by the pandemic. Iger is reportedly in the running for an ambassador position within the Biden administration with either China or the United Kingdom.
Disney’s stock ended up today, closing at $172.26, more than doubling the stock’s 52 week low of $79.07. Mr. Chapek has maneuvered the Walt Disney Company through one of the most devastating period in our world’s history, more than doubling the company’s stock price amidst a global pandemic, and putting the company in a position where investors expect further growth once the pandemic is over, all while having his compensation cut by a third compared to his predecessor.