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The Source of Disney’s $1,000 Employee Bonus

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American companies giving employees bonuses

The Walt Disney Company (DIS) plans to hand out $1,000 in one-time cash bonuses to thousands of its employees. About 125,000 employees are expected to benefit from the plan, which the company therefore estimates will cost $125 million.

Disney’s employee bonus plan adds the company a growing list of American corporations that have, in recent weeks, announced bonuses to employees. The list includes mobile operators AT&T (T) and Verizon (VZ), jet maker Boeing (BA), retailer Walmart (WMT), and lenders Bank of America (BAC) and Wells Fargo (WFC).

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Savings from tax cuts

The bonuses these American companies are giving to employees are due to savings from the recent tax reform. In December, President Trump signed into law a bill reducing the US corporate tax rate on profits generated domestically to 21% from 35%. The tax rate on foreign profits reduced to a maximum of 15.5% from 35%.

As a result of the tax cut, Comcast (CMCSA) also announced that it was giving out a bonus of $1,000 to each of its 200,000 eligible employees. The company also said it plans to invest $50 billion in infrastructure development over the next five years.

Boosting employee morale

Eligible Disney employees are scheduled to receive the bonus in March and September. These bonus payments should impact the company’s costs in 1Q18 and 3Q18. Disney’s costs and expenses were roughly $41.3 billion in fiscal 2017.

The bonuses could help Disney boost morale, which is important as the company prepares to swallow the assets it recently agreed to purchase from Twenty-First Century Fox (FOX) for $52.4 billion.

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