Disney Offering Voluntary Early Retirement Packages To Executives

EXCLUSIVE: As part of Disney’s cost-reduction efforts, the company is offering longtime executives early retirement. As laid out in an internal memo sent by Disney EVP and Chief People Officer Sonia Coleman this morning to employees ranked Director and above, the company is introducing Voluntary Early Retirement Offer (VERO), a time-limited, company-sponsored program that “will give 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 roles 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 are coming.

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“This is one of several actions we’re taking to reshape our organization, including involuntary staff reductions that have already begun in some areas and will continue into next year,” Coleman wrote in her memo, which you can read below.

The VEROs are a variation of voluntary buyouts, with age as a factor. Eligible for early retirement are U.S.-based executives of Director through EVP level across Disney Entertainment, ESPN, and Corporate — including those working outside the U.S. on a temporary assignment through DIESI — who meet the threshold of 65 points, calculated by adding up their age and the number of years they have worked for Disney, with a minimum age of 50 and at least 10 years at the company. The offer does not apply to employees on contract, which means that most high level Disney executives do not qualify.

The early retirement package includes separation pay of up to a year based on tenure and level. For the length of the severance period, the departing executives will be entitled to healthcare at employee rates.

The package also allows continued vesting of existing equity awards for the next three years, something Disney employees don’t get to keep when they exit Disney unless they retire. The offer comes with another perk that has been reserved only for Disney retirees upon leaving the company, continued Silver Pass access for life, providing free entry to the Disney theme parks outside of blackout dates.

Accepting the early retirement offer does not preclude those taking it from getting a new job. It does not include a non-compete or other restrictions on future employment at other companies, so those who get hired during or after their severance period will be able to keep the separation pay. If they are still on Disney’s health insurance at the time of them joining another company, they are expected to switch to 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 stressed that “participation is entirely optional” and “no eligible executive is required to elect the offer.”

Still, with layoffs expected to continue under an initiative launched by new Disney CEO D’Amaro to streamline operations, qualifying executives would likely be enticed to take VERO if they think their job is in danger. Voluntary buyouts always offer better terms than involuntary staff reductions.

In her memo, Coleman noted that the VEROs and the planned layoffs are part of the plan for “meaningfully reducing costs as part of our ongoing transformation” referenced on Disney’s most recent Aug. 5 earnings call.

In their Aug. 5 letter to shareholders, D’Amaro and Johnson noted that “we remain highly focused on reducing costs across the enterprise 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 mid-stream in this work and will provide future updates on our progress.”

The statement was reinforced by Johnson on the earnings 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 most affected 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 yeas. The March 2001 sweeping Disney reduction of 4,000 jobs globally came through a combination of voluntary buyouts and subsequent layoffs. In 2009, the company offered voluntary buyout packages to more than 600 executives at its U.S. theme parks unit.

Here is Coleman’s email:

Dear Leaders,

Over the past few years, we’ve made real changes to how we operate, and we’re still in that process. As you heard on our most recent earnings call, we’re focused on meaningfully 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’ve been evaluating a range of options, and the next phase includes introducing a Voluntary Early Retirement Offer (VERO) for a defined group of eligible executives.

I wanted you to hear about this directly from me before the program launches.
The VERO is a time-limited, company-sponsored program that will give 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’re taking to reshape our organization, including involuntary staff reductions that have already begun in some areas and will continue into next year.

By offering a voluntary retirement program, we hope to give eligible employees an opportunity to make a personal decision on their own terms before broader organizational decisions are finalized.
Eligibility has been determined based on established criteria.* Those who are eligible will receive separate, personalized communication with details about the offer, the election process, important dates, and available resources.

As leaders, you may receive questions from your teams or colleagues once the program is announced. So that every eligible executive gets the same accurate information, we ask that you direct any detailed questions about the offer to your HRBP or the dedicated People & Culture resources that will launch alongside it.

The program is designed around several important principles:

– A voluntary choice — Participation is entirely optional. No eligible executive is required to elect the offer.
– Recognition of years of service — The enhanced package includes Separation Pay, continued vesting of existing equity awards, healthcare support at active employee rates, and continued Silver Pass access.
– Time to make an informed decision  — Eligible executives will have a defined election window, followed by a confirmation period, allowing them to thoughtfully 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 program.

We recognize that retirement from the company is a deeply personal decision. For those who receive this opportunity, our goal is to ensure they have the information, time, and support needed to make the choice that is right for them.

We’re also mindful of what we’re asking of you, as you continue to lead and support your own teams while managing this news. Thank you for your continued leadership as we navigate this next chapter together and for helping ensure this process is handled with the care, respect, and professionalism our people deserve.

Sonia

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