EXCLUSIVE: As part of Disney’s cost-cutting efforts, the company is offering its long-serving executives early retirement. As set forth in an internal memo sent by Disney Executive Vice President and Chief People Officer Sonia Coleman this morning to employees at the rank of Director and above, the company is introducing the Voluntary Early Retirement Offer (VERO), a limited-time company-sponsored program that “will provide eligible executives the opportunity to retire now with an enhanced retirement package that recognizes their service and contributions.” The offer comes amid ongoing layoffs, with the elimination of 1,000 positions announced in April, followed by a round of cuts in July, and Disney CEO Josh D’Amaro and CFO Hugh Johnston telling investors earlier this month that more will follow. “This is one of several actions we are taking to reshape our organization, including involuntary staff reductions that have already begun in some areas and will continue next year,” Coleman wrote in his memo, which you can read below. VEROs are a variation of voluntary acquisitions, with age as a factor. Eligible for early retirement are U.S.-based Director up to EVP level executives at Disney Entertainment, ESPN and Corporate, including those working outside the U.S. on a temporary assignment through DIESI, who meet the 65-point threshold, calculated by adding their age and the number of years they have worked for Disney, with a minimum age of 50 and at least 10 years with the company. The offer does not apply to contract employees, meaning most high-level Disney executives do not qualify. The early retirement package includes separation pay of up to one year depending on seniority and level. During the severance period, outgoing executives will be entitled to healthcare at the employee rate. The package also allows for continued vesting of existing stock awards over the next three years, something Disney employees cannot retain when they leave Disney unless they retire. The offer comes with another benefit that has been reserved only for Disney retirees upon leaving the company: continued access to the Silver Pass for life, which provides free admission to Disney theme parks outside of blackout dates. Accepting the early retirement offer does not prevent those who accept it from getting a new job. It does not include non-competes or other restrictions on future employment at other companies, so those who are hired during or after their severance period will be able to keep their separation pay. If they still have Disney health insurance at the time of joining another company, they are expected to switch to the health coverage provided by their new employer. Eligible executives will have “a defined election window,” the length of which is unclear, followed by a confirmation period. Coleman noted that “participation is entirely optional” and “no eligible executive is required to elect the offer.” Still, as layoffs are expected to continue under an initiative launched by new Disney CEO D’Amaro to streamline operations, qualified executives would likely be tempted to take on VERO if they believe their job is in jeopardy. Voluntary buyouts always offer better terms than involuntary staff reductions. In his memo, Coleman noted that the VEROs and planned layoffs are part of the plan to “significantly reduce costs as part of our ongoing transformation,” referencing Disney’s most recent earnings call from Aug. 5. In their Aug. 5 letter to shareholders, D’Amaro and Johnson noted that “we remain highly focused on reducing costs across the company to create incremental capacity to invest for growth and are evaluating a variety of levers, including reductions in labor and SG&A.” [Selling, General & Administrative expenses]”, adding, “We are halfway through this work and will provide future updates on our progress.” Johnson reinforced the statement on the earnings conference call later that day. After D’Amaro in April revealed layoffs affecting up to 1,000 employees, Disney in July eliminated several hundred positions, with Pixar and National Geographic among the divisions hardest hit by the cuts. In terms of early retirement packages, this is the first such offer in recent memory. There have been a couple of voluntary buyouts over the past 25 years. Disney’s sweeping reduction of 4,000 jobs worldwide in March 2001 came through a combination of voluntary buyouts and subsequent layoffs. In 2009, the company offered voluntary buyout packages to more than 600 executives in its U.S. theme parks unit. Here’s Coleman’s email: Dear Leaders: In recent years, we’ve made real changes to the way we operate and we’re still there. process. As you heard in our most recent earnings call, we are focused on significantly reducing costs as part of our ongoing transformation, so we can continue to invest in the areas that will drive our future growth: content, technology and experiences. We have been evaluating a variety of options and the next phase includes the introduction of a Voluntary Early Retirement Offer (VERO) for a defined group of eligible executives. I wanted you to hear this directly from me before the launch of the program. will provide eligible executives the opportunity to retire now with an enhanced retirement package that recognizes their service and contributions. This is one of several actions we are taking to reshape our organization, including involuntary staff reductions that have already begun in some areas and will continue over the next year. By offering a voluntary retirement program, we hope to give eligible employees the opportunity to make a personal decision on their own terms before broader organizational decisions are finalized. Eligibility has been determined based on established criteria.* You will receive separate personalized communication with details about the offer, the selection process, important dates and available resources. You may receive questions from your teams or colleagues once the program is announced. So that all eligible executives get the same accurate information, we ask that you direct any detailed questions about the offer to your HRBP or the dedicated People and Culture resources that will be launched alongside it. eligible executive to elect the offer.– Recognition of years of service: The enhanced package includes separation pay, ongoing vesting of existing equity awards, healthcare support at active employee rates, and ongoing access to the Silver Pass.– Time to make an informed decision: Eligible executives will have a defined election window, followed by a confirmation period, allowing them to carefully consider what is right for them.– Dedicated support throughout the process: Comprehensive materials and a dedicated support team will be available to answer questions and help eligible leaders understand the offer. program. We recognize that leaving the company is a deeply personal decision. For those who receive this opportunity, our goal is to ensure that they have the information, time and support necessary to make the decision that is right for them. We are also aware of what we ask of you, as you continue to lead and support your own teams as they manage this news Sonia.
