|By Jason Garcia, The Orlando Sentinel,
Fla.McClatchy-Tribune Regional News
January 22, 2009 - The Walt Disney Co. offered buyouts Wednesday to more than 600 executives at its U.S. resorts -- including 313 in Orlando -- as the company struggles to cut costs amid a worsening recession.
The company planned to hand-deliver buyout packages to 619 executives, each of whom will have until Feb. 6 to decide whether to accept.
Disney said it will resort to layoffs if too few employees voluntarily walk away.
"We hope to achieve our goals with the VSP [voluntary separation plan], but an involuntary layoff with a lesser severance package will be required if our goals are not met," Jayne Parker, senior vice president of human resources for Walt Disney Parks and Resorts, wrote in a letter to the affected executives.
In a written statement, Disney blamed the move on the country's hobbled economy. The parks-and-resorts division is particularly vulnerable as consumer spending is squeezed by sinking home values, rising unemployment and tightening credit.
Analysts at Morgan Stanley estimate that combined attendance at Walt Disney World and Disneyland will drop 7 percent this year.
"Given the continued uncertainty of the economic environment, we must manage our business even more productively," Disney spokeswoman Leslie Goodman said in the statement. "This immediate action is designed to allow us to deliver an outstanding guest experience and remain focused on achieving long-term growth."
Disney declined to reveal the savings it hopes to achieve through the buyouts. It also would not provide details of the terms of the packages, though individual offers depend on length of service and other factors, such as pension accrual.
The buyouts were offered to 313 executives in Orlando at Walt Disney World, Disney Vacation Club and Disney Cruise Line.
In Southern California, 193 were offered buyouts in Glendale, where the company's Imagineering unit is based, along with 91 at Disneyland in Anaheim and 22 at Disney corporate headquarters in Burbank.
Disney said the buyout offers apply to most director-level-and-above employees at its domestic parks. Only a few executives with overriding contracts or other special circumstances are exempt.
The buyouts were announced less than a week after Disney revealed it had awarded Chief Executive Officer Robert Iger a $30.6 million compensation package in fiscal 2008. Iger was also awarded $25 million in stock options after he signed a new five-year contract in early 2008.
Disney has adopted a series of cost-cutting measures throughout the company in recent months as the economy has deteriorated, affecting its theme parks.
Disney World, for example, has reduced showings of the "Fantasmic!" laser-and-fireworks evening show in Disney's Hollywood Studios to twice a week, eliminated dining with characters at Liberty Tree Tavern in the Magic Kingdom, and ended the "Pocahontas and Her Forest Friends" show in Disney's Animal Kingdom.
Disney also has rolled out steep discounts in hopes of enticing wary consumers to travel. On Nov. 6 -- the same day it announced that fiscal fourth-quarter profit fell 16 percent from a year earlier -- Disney announced a promotion in which customers who book four nights in one of its hotels could get another three nights free.
But Wall Street is increasingly skeptical that Disney can weather the recession unscathed. Morgan Stanley analysts earlier this month reduced their earnings estimates for Disney from $2.05 a share to $1.92 a share, in part because of fears that the discounts will erode its hotel revenue.
Analysts also suspect that weakening consumer spending will batter advertising sales at the Disney-owned ABC television network. There is even concern that the company's longtime profit-driver, ESPN, could be vulnerable because of its heavy exposure to ad revenue from the auto industry.
It was unclear Wednesday whether Disney's executive cuts could be a precursor to broader job losses across Disney World's approximately 62,000-employee work force.
Eric Clinton, president of Unite Here! Local 362, which represents about 5,000 Disney workers, said he has heard anecdotal reports of reduced hours for some employees. But he also said the union's contract should protect workers from across-the-board cuts.
"Of course, our folks are concerned," said Clinton, whose union members include attractions workers, ticket takers and janitors. But he added, "The contract provides guarantees on hours and job security."
Jerry Aldrich, general manager of Amusement Industry Consulting in Orlando, said trimming executive ranks could help spare hourly workers from cuts.
"I think this is maybe a way of avoiding [cuts to] the lower level," Aldrich said. "And those people are the ones who actually provide the guest service."
Jason Garcia can be reached at firstname.lastname@example.org or 407-420-5414.
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