Massachusetts Senator Elizabeth Warren is asking Disney some tough questions following the entertainment giant’s decision to lay off 28,000 park employees at the end of September. Warren wrote a letter on Monday addressed to Walt Disney CEO Bob Chapek and chairman Bob Iger about the reasoning behind the layoffs.
The letter is five pages in total, but Sen. Warren gets to the heart of the matter right away:
“I write to express concern about The Walt Disney Company’s (Disney) recent decision to lay off 28,000 workers during an economic recession while reinstating pay rates for highly compensated senior executives,” Warren wrote. “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.”
Disney has been pushing California Governor Gavin Newsom to provide guidelines for re-opening its theme parks in the state after more than six months of shutdown. Newsom has resisted the push thus far, but has begun to look into options for re-opening those parks.
Warren says in her letter that Disney’s explanation for the layoffs “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, rewarding its shareholders through billions of dollars in dividend payments, and 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,” Warren notes. “A practice that is known to turn excess company cash into higher stock prices for the benefit of shareholders.”
Warren also calls out $5.4 billion in dividend payments to shareholders and $336 million in compensation for top executives in the years leading up to the pandemic.
Warren puts a number of questions directly to Chapek and Iger. She starts by asking who will be laid off and why, and how re-hiring will work. The senator then shifts to asking how much value the stock buybacks have added to the company and how those buybacks enriched top executives, board members, and shareholders.
Disney sidestepped the questions in its response to the letter with a statement that first aired on CNBC’s Closing Bell program.
“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 [sic] 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,” said a Disney spokesperson.
In essence, Warren asked Disney executives to explain why they can’t pay employees who need the money after spending the last few years making shareholders even wealthier, and Disney ignored the question, instead repeating what we’ve heard them say over and over in recent months–they want to reopen Disneyland, and believe they can do so safely, despite the state government’s reservations.