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Senator Elizabeth Warren and Disney Spar Over Executive Pay and Layoffs

Senator Elizabeth Warren has slammed Disney over its recent layoffs. In an open letter to the company, Warren criticized the decision to layoff cast members while also having executive pay restored shortly before the layoffs. She also strongly criticized other business decisions made by the company.

“In the years leading up to this crisis, your company prioritized the enrichment of executives and stockholders through hefty compensation packages, and billions of dollars’ worth of dividend payments and stock buybacks, all of which weakened Disney’s financial cushion and ability to retain and pay its front-line workers amid the pandemic,” Warren wrote. She included several references in the footnotes on this in her five-page letter.

Warren continued with concern for the future of the cast members that Disney has had to let go saying,  “While I appreciate that your company has continued to provide health-care benefits to furloughed workers for the past six months, thousands of laid-off employees will now have to worry about how to keep food on the table as executives begin receiving hefty paychecks again.” Warren continued by saying, “I would like to know whether Disney’s financial decisions have impacted the company’s decision to lay off workers and whether your company plans to extend health care or other critical benefits and protections to laid-off employees.”

The letter comes as Disney has laid off 28,000 cast members due to the economic impact of COVID-19. In announcing the layoffs, part of the blame was laid on the inability of Disney to reopen the Disneyland Resort due to the current lack of guidelines for reopening in California. Both Disney and California Governor Gavin Newsom have made cases for why the parks should or shouldn’t reopen. Disney puts forward that they have successfully reopened all of their other theme parks globally with reasonable health and safety protocols that have prioritized the safety of guests and cast members. The reopenings have not led to any COVID-19 outbreaks from the parks. Governor Newsom contends that it isn’t safe to reopen the parks and he will not allow theme parks in California to reopen until it is safe to do so.

Warren counters Disney’s layoffs explanation in her letter saying that it “fails to acknowledge Disney’s short-sighted business decisions that reduced its capital, including spending billions of dollars to repurchase its own shares over the last decade, (2) rewarding its shareholders through billions of dollars in dividend payments, and (3) showering its top company executives with over-the-top compensation packages and salaries — which reportedly were restored several weeks before the September layoff announcement. Disney has spent tens of billions of dollars on share buybacks in recent years, spending $47.9 billion repurchasing its own common stock from 2009-2018 – a practice that is known to turn excess company cash into higher stock prices for the benefit of shareholders.”

Disney responded with a statement saying, “Senator Warren’s misinformed letter contains a number of inaccuracies. We’ve unequivocally demonstrated our ability to operate responsibly with strict health and safety protocols in place at all of our theme parks worldwide, with the exception of Disneyland Resort in California, where the State has prevented us from reopening even though we have reached agreements with unions representing the majority of our Cast Members that would get them back to work.”

Warren concluded her letter by asking questions that she would like answered by October 27, 2020. They include: “Which types of Disney employees will be laid off per Mr. D’Amaro’s September 29, 2020 memo?; What was the anticipated monthly total cost of wages for these employees?’ Do any of these employees have recall rights? If so, will these individuals retain their seniority if rehired by Disney?; How were decisions made with regard to which employees would be laid off?; What is the total value of stock buybacks made by Disney in each quarter starting in FY 2016?; To what extent did this increase the stock’s value, and to what extent did it benefit top executives and members of the Board?; How much has Disney paid its shareholders in dividends in each year since 2017?; To what extent did this benefit top executives and members of the Board?”

It is unknown if Disney intends to respond to Senator Warren’s questions beyond the statement released today. Disney has provided benefits for furloughed cast members since it closed its theme parks in March. The layoffs also largely focused on part-time and seasonal cast members. With the Disneyland Resort continuing to remain closed and other Disney theme parks operating at reduced capacity, Disney continues to navigate its way through this economic storm.

DAPS MAGIC will continue to follow this story and provide updates as they become available.

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