Frozen II ⭐️⭐️⭐️
Maybe these big companies are learning from the economic meltdown of 2008 and wanting to show us that the generously compensated executives are also feeling the pain of the employees far down the company chain. Most of these lower level employees have had their incomes reduced to $0, no thanks to layoffs.
It is probably not how the company’s leadership had planned to mark the one year anniversary of the $71.3 billion Disney-Fox merger, which was 10 days ago, on March 20. With Hollywood production shut down, theatrical releases on hold and amusement parks closed, Disney’s incoming CEO Bob Chapek this morning announced a salary reduction of 30% for EVPs and above, 25% for SVPs and 20% for VPs “until we foresee a substantive recovery in our business.” Chapek himself is taking a 50% pay cut, while executive chairman Bob Iger will forego 100% of his salary. All reductions are said to apply to base pay.Disney’s Executive Pay Cut Threatens To Deepen the Divide Between The Two Sides Of The Merged Company
This is good in theory, but not as applicable in reality. Salary is somewhat irrelevant for executives who make their lion’s share of wealth through stock options. Yes, they can lose millions of dollars on paper with stock price fluctuations, but they also can gain them back as the market juggernaut regains. Take a look at the Dow Jones historic trend over the last 40 years.
It goes up, dips a bit, goes up, dips, but overall it’s ascending over time. The precipice at the far right is where we are right now: economic uncertainty. Many businesses are closed, millions out of work, shelter in place everywhere, everybody knows it seems like we’re all doomed. This illustrates market reaction to falling off the mountain peak. You can see a similar dip near 2009 when Wall Street needed a bailout. The market might just tank to those levels or lower again. Time will tell.
I’m not trying to be snarky, but still stinging from articles that came out after the Wall Street bailout of the financial markets about executives getting golden parachutes and making double digit millions in severance packages, while their companies were saved from financial ruin by taxpayers. Why were we ever bailing out these rich executives? There needs to be provisions in place for companies which cannot award high level executives from cashing out on the taxpayer’s pocketbook.
Am hopeful, but wary, that a lesson has been learned and government bailouts when we’re essentially broke as a country (see: $2 trillion deal stimulus package receives bipartisan support, movie theater chains likely included) will not lead to more of these stories in the coming days, weeks or months when life starts returning to normal.