Disney to furlough some 'non-essential' U.S. employees from April 19 in wake of coronavirus shutdown after top execs take a paycut

• e-mail

Walt Disney Co said Thursday it will start furloughs of non-essential U.S. employees across the company on April 19 in response to the global coronavirus outbreak that has shut down or disrupted its media and theme park businesses.

Disney had committed to full pay and benefits for all employees through April 18 despite the closure of theme parks, halting of film and TV production, and the shuttering of movie theaters.

'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,' a Disney representative said in a statement.

Furloughs will begin April 19, the statement said.  

An employee cleans the grounds behind the closed gates of Disneyland Park on the first day of the closure of Disneyland and Disney California Adventure theme parks as fear of the spread of coronavirus continue. Some Disney staff will now be furloughed from April 19

The devastating effects on the economy from the Covid 19 pandemic can be seen in Anaheim, California home to Disneyland, which is empty of cars. The company announced some staff will be furloughed

Disney Chairperson Robert Iger announced Monday he will forgo his entire multi-million dollar salary just days before the company announced that some of its U.S. staff with be furloughed

All impacted workers will remain Disney employees through the furlough period and will receive full healthcare benefits. Disney will pay the cost of employee healthcare premiums.

The company did not say how many employees would be affected. 

Workers were originally told that plans were to reopen parks from April 19 but the rapidly escalating outbreak in the U.S. is now expected to see gates closed for a longer period. 

Similary, Universal Studios previously extended it parks reopening deadline to April 18 and will pay employees up to that date. 

SeaWorld Entertainment said Friday that it furloughed more than 90 percent of employees as of April due to park closures. 

Agency workers line up at The Orange County food bank to collect food that they will deliver to clients. The effects of the Disney shutdown have been felt the most in California and Florida

People line up for food at Colette's Children's Home ion Huntington Beach. The devastating affects on the economy from the Covid 19 pandemic can be seen in Anaheim, California home to Disneyland. Empty streets and closed hotels surround the world famous theme park

The statement added that workers to be furloughed would also be able to schedule paid leave before it began. 

'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,' it said. 

On Monday, Walt Disney Co. Executive Chairman Bob Iger announced he will forgo his entire multi-million dollar salary and other top executives will take pay cuts amid the coronavirus pandemic. 

Disney CEO Bob Chapek revealed the announcement in a memo emailed to staff members. 

Iger, 69, will waive his entire salary after raking in a staggering $47.5million in the last fiscal year. In the 2018 fiscal year, Iger made $65.8million.

His base salary is $3million, but a cash bonus and stock awards helped raise his financial takeaways.

Iger, who was CEO for 15 years before taking on his current position in 2020, is worth an estimated $690 million.   

Chapek will take a 50 percent pay cut per his memo. His base salary is $2.5million, with an annual target bonus of $7.5million and an annual long-term incentive grant of $15million. 

It's unclear if the 50 percent reduction will apply to his base salary or to his entire compensation. 

Disney Chairperson Bob Iger is to wave his salary for the year as the company struggles

Disney CEO Bob Chapek: 'While I am confident we will get through this challenging period together and emerge even stronger, we must take necessary steps to manage the short- and long-term financial impact on our company'

Additionally, Chapek said that vice presidents, senior vice presidents and executive vice presidents will also take pay cuts. 

'Effective April 5, all VPs will have their salaries reduced by 20%, SVPs by 25%, and EVPs and above by 30%,' he wrote, Variety reports. 

'This temporary action will remain in effect until we foresee a substantive recovery in our business,' he added. 

Chapek said the pay cuts were a result of the coronavirus pandemic and a necessary step for long-term financial management.

He cited the recent closure of Disney theme parks and hotels, halted productions and stalled operations.   

Chapek said: 'The pandemic is also having a devastating impact on the global and U.S. economies, and it’s hitting businesses like ours particularly hard.

'In a matter of weeks, we’ve experienced widespread disruption across our company, with our domestic parks and hotels closed indefinitely, our cruise line suspended, our film and TV production halted and theatrical distribution delayed both domestically and internationally, and our retail stores shut down. 

'While I am confident we will get through this challenging period together and emerge even stronger, we must take necessary steps to manage the short- and long-term financial impact on our company.' 

The company warned its investors of potential economic downfalls in a regulatory filing with the Securities and Exchange Commission, per The Hollywood Reporter. 

'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 company wrote. 

On Sunday, union leaders for California and Florida's Disney parks had sent a letter to the company demanding an update on the current status. 

'After going all day, and evening, yesterday without having any meaningful conversation about the resort closure and the impact it is having on the cast, more action was felt necessary,' wrote members of Workers United Local 50. 

Florida is set to be hit the hardest by the company's closures with an estimated one in 50 of the state's residents, and as many as six per cent of those working in surrounding central Florida, employed by Disney and it resorts.

One positive in Disney's back pocket is the streaming service Disney+, which apart from some program postponements - like Marvel's The Falcon and the Winter Soldier - it is relatively unaffected. 

The number of Americans filing new claims for unemployment benefits last week shot to a record 6.6 million - as layoffs increased because of the virus and more states enforcing stay-at-home orders.

New claims for unemployment benefits rose to 6.65 million in the week ending March 28, according to figures released by the Department of Labor on Thursday.

The number of first-time applications for jobless benefits was double the previous record of 3.3 million new claims filed for the week ending March 21.

It means that roughly 10 million Americans have lost their jobs and filed for unemployment in the two weeks that the coronavirus started rapidly spreading across the country.

Among the latest companies to announce changes because of the virus was General Electric, which said it was sending home half of its aviation unit's engine-manufacturing staff for a four week furlough, reports CNBC.

The decision impacts thousands of jobs at GE, as the company is also known, which had already said it would cut 10 per cent of its aviation unit, which affected roughly 2,600 workers.

Medical device maker Boston Scientific also said Thursday it was to cutting pay for many of its roughly 36,000 global employees by 20 per cent for the next 90 days, primarily due to the postponement of elective surgeries caused by the pandemic and its impact on the company's balance sheet. 

Retailers including Macy's, Kohl's Corp and Gap Inc said on Monday they would furlough tens of thousands of employees as they prepare to keep stores shut for longer. 

Meanwhile, three retail companies that were praised for saying they would continue paying their workers have come under fire after some employees have complained the claims were misleading, reports Buzz Feed.

Ann Taylor, American Eagle and Anthropologie all had announced they would continue paying workers in some way after shuttering their stores.  

Workers said they received little or nothing after the chains cut their scheduled shifts before the closures and promise of continued pay were announced.