Bob Iger, left, and Bob Chapek of Disney
Charley Gallay | Getty Images; Patrick T. Fallon | Bloomberg | Getty Images
Disney Executive Chairman Bob Iger will forgo his salary and new CEO Bob Chapek will take a 50% pay cut because of the impact of the coronavirus pandemic, according to an internal email obtained by CNBC.
The Hollywood Reporter first reported on the email from Chapek to employees.
Other Disney executives will take pay cuts as well, Chapek said in the email. Employees at the vice president level will have their salaries reduced by 20%, senior vice presidents by 25% and executive vice presidents and above by 30%, according to the email.
Iger has long been among the top paid executives in the entertainment and media industry. In 2019, the former Disney CEO earned $47.5 million, down from $65.6 million in fiscal 2018.
Chapek’s base salary is $2.5 million, according to his employment agreement for his new role as Iger’s successor as CEO. He is also eligible for incentive-based compensation including a $7.5 million annual target-based bonus and an annual equity-based long-term incentive grant of $15 million. It’s not immediately clear which part of his compensation will take the 50% reduction.
Earlier this month, Disney warned investors that the coronavirus pandemic had affected so many of its business segments that it had become too challenging to estimate its future performance.
Disney already had to postpone one film from its second-quarter slate — “Mulan” — and almost all of its third-quarter releases as theaters shutter across the country. Disney’s fiscal calendar is shifted, so the second quarter is January to March and the third quarter is April to June.
Disney isn’t just a studio. It also has a number of other segments of its business that have been hit by the outbreak. Its parks, experience and products segment, which includes its theme parks, hotels, cruise line and consumer products arm, is likely to take a big hit as well.
Its theme parks across the globe are closed indefinitely since large gatherings have been restricted around the world.
It’s unclear how the closure of the two California Disney parks will impact the opening of the Avengers Campus expansion at California Adventure. The new land was expected to open in July. It is unknown if workers have been able to continue working on the project.
Additionally, Disney’s robust television business has seen productions shut down and with sports leagues postponing their seasons, its ESPN channel is without its traditional slate of content.
One bright spot could be its new streaming service Disney+, which launched in the U.S. and a few other countries in November. The platform is filled with some new content, but its biggest feature is its extensive library of past Disney content.
While some of upcoming Disney+ programming like “The Falcon and the Winter Soldier” has seen production delays because of the coronavirus, for the most part, the service has remained relatively unaffected.
As more people are forced to stay home during this outbreak, Disney could see a bump in subscriptions. As of February, Disney reported having 26.5 million paying subscribers for Disney+.
Investors are also wondering if Disney will hasten the rollout of the subscription service to other countries in order to capitalize on the number of people who are unable to leave their homes.
-CNBC’s Julia Boorstin contributed to this report.
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