Senator Elizabeth Warren, once again displaying her exceptional business acumen, has lashed out at Disney for the company’s recent layoffs which, ironically, occurred to due government forcing its theme parks to close in jurisdictions like California. Disney’s theme parks employed more than 100,000 people prior to the crisis.
Warren criticized the layoffs not by looking at what the government did to catalyze them, but rather by examining Disney’s financial decisions in the years leading up to the pandemic, according to Reuters.
She wrote in a letter to Disney Executive Chairman Bob Iger and Chief Executive Officer Bob Chapek on Tuesday: “I would like to know whether Disney’s financial decisions have impacted the company’s decision to lay off workers. It appears that – prior to, and during the pandemic – Disney took good care of its top executives and shareholders – and now is hanging its front-line workers out to dry.”
Warren seems to be unaware that Disney “front line workers” may also be shareholders in the company. But hey, how dare a company do what is in the best interest of its shareholders? We wonder if Warren, who was revealed to own stock in companies like IBM back in 2019, would urge companies of stock she held to make decisions that were bad for shareholders.
Regardless, she called Disney’s decision to pay dividends and buyback stock before the pandemic as “short sighted”. Meanwhile, the shares in IBM Warren was said to have held survived over the last half decade mostly on buybacks, tax breaks and financial engineering.
Warren, apparently unaware what the point of laying people off to save money is, also asked about whether Disney would cover healthcare premiums for the laid off employees. Meanwhile, “Disney has continued to provide healthcare benefits to furloughed workers for the last six months,” according to Reuters.
She also noted that Disney spent $47.9 billion on share buybacks from 2009 to 2018 and that Disney spent $5.4 billion on dividends in 2018.
Warren has said she wants an answer to her letter by October 27. We’re sure Disney, who is under no obligation to answer letters from anybody, will enjoy outsourcing their response to whatever PR firm they are paying using the money they saved by laying off their workforce.
Recall, about two weeks ago we noted that Disney was laying off 28,000 workers in its U.S. resort business. We noted then that although one could “understand” the plight of management, which is scrambling to boost cash flow after it saddled the company with record debt in recent years…
…it probably would make all those soon-to-be-laid off workers feel a little bit better if most of that newly issued debt hadn’t gone to pay for stock buybacks the benefited upper management.
“As heartbreaking as it is to take this action, this is the only feasible option we have in light of the prolonged impact of Covid-19 on our business,” Josh D’Amaro, the chairman of the parks division, said in a memo to workers at the time.
The cuts were made across the company’s various businesses including theme parks, cruise ships and retail businesses. While the layoffs also include executives, they focused on part-time workers: 67% of those getting a pink slip were part-time workers.
As part of its farewell package, Disney said it would offer benefits to the workers being cut, including 90 days of severance.