Disney CEO’s Huge 2014 Pay Package

bobigerfDisney CEO Bob Iger had an impressive compensation package for 2014. His total take rose 35% over 2013 to $46.6 million. Now that pales in comparison to some of Michael Eisner’s massive compensation packages (back in 1997 Eisner received over $575 million when you include stock options he exercised, another year was over $200 million) but it’s also just as obscene when compared to what the average front-line cast member makes.

Matthew over on the Etckt blog does the math and discovers that the average yearly pay for a cast member is $16,664.16 based on an average hourly wage of $9.32 and working 1788 hours a year. (That’s not quite full time of 40 hours a week, which would be 2080 hours or $19385. We’ll use that number on this post). Either number is still under the poverty level for a family of four ($23,850 a year as set by the US Govt). That means that in order to make a living wage, these cast members need to take on extra hours or work multiple jobs to make basic minimums in the USA.

In comparison, Iger earned $23,335 an hour. That’s a disparity of 2500 to 1. As Matthew says,

“I understand that rich boards like to reward rich CEOs for their hard work and Disney’s stock has been performing well as of late, but to have that disparity between executives and their lowest paid employees is shameful. The damage it does to the morale of the cast members is incalculable and should be stopped across corporate America. I understand that people should be able to attain a level of success in this life, but to have a CEO making almost 2800 times that of their lowest paid employee should be a crime.”

I urge you to read Matthew’s whole article where he takes Disney’s executives to task over the obscene disparity in pay. Is there really any other word to describe it than obscene?

mickey-cast-members

Even if Disney raised the base pay for front-line cast members to $10 an hour and average pay to $11.50 that would just barely meet the standards for poverty level. The contract just signed by Walt Disney World’s largest union will eventually raise base hourly wage to $10 in 2016. Disney should do more and sooner, not just because it’s good for cast member moral and helping them take care of their families, but because it will also help the parks attract a more professional workforce, something that becomes more difficult every year as Central Florida’s other parks also increase their wages and hire more workers.

An interesting aside to this news: Iger actually holds both the CEO and Board Chair at Disney, although he is originally was going to transition out of the CEO role by 2016, he just extended his rule until at least 2018. Which led to another detail that started floating around this weekend, Jay Rasulo, current CFO and one of the top two candidates to succeed Iger, has reportedly not signed his contract extension. This could be a sign that current parks chair Tom Staggs is now the lead candidate and that Rasulo doesn’t plan on sticking around if he doesn’t get the CEO position. Something to keep an eye on at least.

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12 thoughts on “Disney CEO’s Huge 2014 Pay Package

  1. Sean

    That’s nothing. When the economy collapsed my former department cut our hours back to save money so they didn’t have to fire any of our higher ups. So instead of cutting the pay of people who were making to much money they cuts ours instead. Kinda sucked having to lose those several thousand dollars a year and they lost nothing.

  2. Matthew

    John, just so you know, I used that number of 1788 from the Organisation for Economic Co-operation and Development’s calculations for 2013. Although a 40 hour work week equates to 2080, that is generally not the number used when calculating comparative hours worked around the globe. Their numbers may be more reflective of the actual hours worked versus the theoretical since they take into account sick days, vacation, etc. in their final values. I have even seen 1960 hours used as a baseline for many new businesses to base rate calculation upon. Regardless of whichever number used, it still comes to the same conclusion, in my opinion. Again, nice piece on a topic I think we both agree is an important one.

    1. John Frost Post author

      Yeah, I knew about 1788. But I went with the more conservative 2080 because even with it, it’s still shocking and it doesn’t leave any doors open for naysayers.

  3. Dylan Malone

    While I appreciate the sentiment and agree that America, and indeed the entire globe, suffer from a disturbing and even dangerous hyper concentration of wealth (See the news articles today about how the top 1% of the planet’s population is for the first time in modern history now controlling more than half of all the planet’s wealth), I think you’re grossly overstating the case. First, by your own numbers, Eisner was paid more than 12x more in 1997 dollars what Iger was paid last year — so we’ve come a long way.

    Second, why must a front line cast member make enough money to support a family of four on one income? These are generally unskilled labor positions (though I love a great cast member, and am so grateful for the many fine ones I’ve met over the years), and most unskilled laborers do not earn a wage sufficient to single handled support a family. At this income level, if you want a family of four, you’re likely to need a dual income household.

    Third, what about free admission, tickets for friends and family and the many discounts Disney cast members receive, which are just the unconventional benefits (many cast members have health coverage, retirement, etc.). Not to mention, not all Disney cast members work for anywhere near minimum wage: Disney of course employees many of the world’s most talented creative staff, scientists, engineers, etc. and they are paid accordingly.

    Fourth, even among those making only ~$10 an hour in a theme park, those eager to earn more are often able to work for overtime and holiday pay.

    I sympathize with your concerns. But Disney isn’t a particularly unfair employer, and Iger is indeed a talented CEO. Back in the 1980’s Ben & Jerry’s Ice cream had that famous rule that no employee could make more than 5x what the lowest paid worker earned, capping CEO pay at $81,000, but they’ve long ago abandoned that rule. We need a fair system of taxation in America, better schools, and more focus on science and technology training so that more can live a better quality of life. But Disney is a reasonably responsible corporate citizen, and I’m proud to spend my leisure dollars their year after year.

    1. Andy

      The reason the poverty line for a family of 4 is used is because from 1940 to 1980 most families were supported by one income. The majority of employment in this nation has typically been low skill jobs so I do not see that as a reason why people should have to live in poverty. Even if everybody has a degree you will still need people to preform the work that is low skill. What I see you saying is that those people deserve to live in poverty.

      1. Dylan Malone

        I said no such thing Andy. I’m a fairly liberal guy and support more equitable distribution of wealth via a more fair taxation system and better educational opportunities. However, capitalism is hardly a failure, and jobs are going to pay what the market can realistically support. Low skill wages are always going to be a fraction what high-skill wages are, and in fact, within reason, that’s a good thing. It’s HARD to become a physician, an engineer, or a master animator. It works to society’s benefit that those positions are incentivized. If you could make surgeon salaries while running the Small World attraction at WDW, why bother to become a surgeon?

        No, you’re twisting my words. My argument is valid. Disney is an above average employer, and a good company.

  4. Bob Brinkman

    ” At this income level, if you want a family of four, you’re likely to need a dual income household.”

    Which then requires the hiring of babysitters and other things. Why shouldn’t someone be able to support their family by working 40 hours a week? I mean, it is a bit calvanistic isn’t it, to blame the person’s poverty on the job they have? Across the country people work two, sometimes even three, jobs just to pay rent.

    “Second, why must a front line cast member make enough money to support a family of four on one income?”

    How about this… The US Minimum wage was designed to be a LIVING wage. As designed, a person making minimum wage was supposed to be above the poverty line and able to support themselves. I don’t think anyone is arguing that a person making minimum wage should be driving a Jaguar and eating caviar, but they should be able to house, feed, and clothe themselves.

    1. Bob Brinkman

      It is also worth noting that $16,664 is just above the poverty line for a single parent with child. The poverty line for a family of four is over $23k.

      Why should anyone working be subjected to poverty in the richest country in the world?

  5. prb

    I support a family of 6 on one income, but to do that, I made the choice to give up my Disney career of several years. I worked my tail off to get educated and trained, taking and working several jobs with low pay and benefits but which equipped me for later opportunities.. I was very blessed along the way and have a happy home life. But education, training, hard work, and a long-term view are the keys. Settling into the first non-skilled, high-school-diploma-or-GED job and demanding it somehow allow a person to support a household of 4 is ridiculous in the extreme. Life is a series of choices, and no one has the right to choose Disneyland or Taco Bell or crossing guard as a career and to expect to support an ample household on it.

    Incidentally, more of us could support a home if we had reasonable expectations for what that home should entail. I didn’t get a cell phone until less than 4 years ago. We still have a 13 year old projection television. The cracked tile in the bathroom waits until we can save a little to fix it. Our two paid off cars are both more than 10 years old. My 13 year old laptop plays DVDs–and our working VHS player still plays tapes. I can’t think of the last time we took the kids to a movie–but we play board games and go to the park and go on walks all the time.

    I sympathize with struggle–believe me, I do. I started a minimum wage job at age 14 (with a school approved work permit and everything) peeling potatoes and emptying ash trays. After 6 years off and on at Disneyland (as a CT), I still made less than $1 over minimum wage. I waited tables in a state that allowed the federal minimum for tip earners ($2.13 per hour) and where the boss had to supplement the hourly wage at times because tips were so low. But the three things I so often see missing from those working at the bottom are the willingness to find an avenue to better working, the patience to follow that road, and the willingness to sacrifice what is required on the way (manicures, cell phones, late-model cars, cable, etc., all come readily to mind).

    Iger makes too much. I find compensation which is so high the earner could not possibly spend it if he wanted to to be repulsive. There is a point which comes much earlier than $45 million where additional money can make no difference whatever to your basic lifestyle and customary living. But I find it repulsive as a generally pervasive way of doing things–I don’t begrudge him the personal success. Though I would admire him greatly if he would refuse the 90+% which he cannot possibly need.

    End of rant. Sorry for the length. Feel free to disregard.

    1. Andre

      Yes to everything you said.. “Settling into the first non-skilled, high-school-diploma-or-GED job and demanding it somehow allow a person to support a household of 4 is ridiculous in the extreme. Life is a series of choices, and no one has the right to choose Disneyland or Taco Bell or crossing guard as a career and to expect to support an ample household on it.”

  6. Chuck

    I take offense to the fact that you people think that running an attraction is a “no skill” job. Let me see any of you run a multi-million dollar ride system in your non skilled way, It takes a lot of training and skill to run one of those attractions, And not kill someone and to know what to do in an ride stop or emergency. Just because you have a degree in something dosnt give you the right to tell all those people that they are non-skilled. Disney is a huge company that use to treat the castmember very well, not so much any more, they continue to take things away from them. It use to be “A happy cast makes a happy guest” the guest are not so happy now, If Disney would treat cast better all around and pay more and be a leader instead of a follower in the industry things would be better for cast and for the guest. Walt would be very disgusted in how this company has turned its back on the cast…it’s sad that when profits are up best in years that the thank you gift is a $1.00 Christmas ornament. How would you feel as a share holder WOW great job this year … Here’s your plastic PVC Mickey Mouse…They need to make more money…..

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