Should Kathleen Kennedy be fired from Disney?
I’ve seen many, many YouTubers commenting on this very topic. In fact, this topic has had so many commentary videos, it’s probably consuming at least 10% of YouTube’s traffic. Just take a look for yourself. Anyway, because this topic is so widely being discussed, let me take the time to write an article here that describes most likely why she hasn’t yet been fired.
Contracts and Obligations
The biggest elephant in the room is also the most obvious, contractual obligations. It’s clear that most YouTubers really don’t understand the business of hiring executives. Executive leaders are always hired under contract. Contracts require both parties to fulfill their obligations as listed within the contract. It’s how employment contracts work.
However, there’s a snag here. Disney didn’t hire Kathleen Kennedy directly. Ms. Kennedy was already an employee of LucasFilm when Disney acquired the LucasFilm property… and this is the snag.
LucasFilm hired Kathleen Kennedy before the purchase took place. This meant that Kathleen was brought on board to Disney as an existing executive of LucasFilm. Why is this important?
Two Contracts
There are actually two contracts at play here with regards to Kathleen’s employment under LucasFilm.
- The 2012 $4 billion George Lucas and Disney buyout contract
- Kathleen Kennedy’s own employment contract with LucasFilm
In fact, it’s important to understand that George likely put Kathleen in charge of LucasFilm for the expressed intent of keeping the property sane after Disney purchased it. With that goal in mind, it’s very likely that LucasFilm hired Kathleen into a very long (and open ended) employment contract. What that means is that it is likely Kathleen’s choice whether the contract continues. As long as terms are written into the contract that allow this, Kathleen can remain at LucasFilm possibly for as long as she wishes.
The second side of this is the purchase contract. If George was smart enough to hire Kathleen for a very long stay at LucasFilm under Disney, then he likely also included provisions for her to stay employed for a specified period of time within the purchase contract also.
To do this, he likely wrote in a poison pill rider… probably written into both Kathleen’s employment contract and into the purchase agreement.
Putting this all together
With two contracts reinforcing each other, that means that should one or the other be breached, both contracts then fail to meet their obligations… which means that both contracts are breached and then outs for the contracts apply.
For the purchase contract, that could mean that the LucasFilm property (and any new work under it) reverts to ownership by George. This is a pretty big poison pill rider. I wouldn’t put this one past George. Not only would he get to walk away with $4 billion from Disney, he could also walk away with LucasFilm also. I’m pretty sure Disney wouldn’t find that poison pill attractive.
With Ms. Kennedy’s contract breached, Disney would likely have to pay her out a hefty golden parachute. A golden parachute rider requires the employer to pay out a huge sum of money upon failure to live up to contractual obligations. Because it’s very possible that both contracts are legally bound together, this means Disney is being held over a barrel with Kathleen Kennedy.
Not only might LucasFilm return to ownership under George, Kathleen may also get a huge payout (perhaps millions of dollars) if Disney fires her. It’s a very tough poison pill, but one I could easily see George requiring.
In other words, Disney can’t fire her. Should Disney fire her, both contracts dissolve and then penalties from both contracts apply against Disney.
Legal Obligations
Because contracts are very specific, should Kathleen personally breach the terms of her LucasFilm employment contract, then Disney may have cause to fire her.
Unfortunately, George probably wrote extremely loose and favorable terms for Kathleen and extremely unfavorable terms for LucasFilm into her employment contract intentionally. He did this knowing he would soon be selling LucasFilm to Disney. That means that Disney is in a very unfavorable situation with Kathleen. It means that Disney likely can’t fire her without a whole lot of legal things happening all at once.
Kathleen can breach the terms of her contract by doing something illegal. For example, if she’s accused and found guilty of inappropriate sexual misconduct, almost every employment contract allows releasing executives for breaking laws. That means Kathleen would need to violate laws for Disney to release her without Disney breaking any other terms of any other contracts.
Even then, George might still attempt to recover LucasFilm citing a breached purchase agreement.
Disney and Agreements
Disney likely agreed to the terms of both agreements more or less because they didn’t have a choice if they wanted LucasFilm. To get LucasFilm, they not only had to agree to the terms in the purchase agreement, they also had to agree with Kathleen’s employment terms as part of acquiring LucasFilm.
Kathleen’s Tenure
There could be an end in sight to Kathleen’s employment contract. It seems that in 2012, George may have set her employment terms to 6 years with the ability to extend. In 2018 and according to the Hollywood Reporter, she exercised her right to extend her employment contract and extended it by 3 years to 2021.
In 2021, Disney and Kathleen would again renegotiate her LucasFilm contract, which (depending on contract terms) could allow Disney to rewrite her contract to Disney favorable terms, place her directly under Disney and get rid of any poison pill riders in the process. A new employment contract would then allow Disney to fire her with impunity. Extending an existing contract doesn’t get rid of any poison pill riders.
It is entirely possible that Kathleen can extend her employment contract indefinitely with LucasFilm. However, it’s also possible that George did put a hard date limit on the type and number of extensions. Once her ability to extend ends, she will be required to strike up a new contract with Disney directly and those contract terms won’t be as favorable to her situation.
However, Disney could choose not to renew her contract at all and allow it to expire… at which point Disney could dismiss her. However, the unfavorable terms in the purchase contract could prevent that. It depends on what was written into the purchase agreement terms.
If George placed a timer on the purchase terms such that Disney can’t dismiss Kathleen while that timer is in place, then that means Disney must extend her contract until that purchase agreement timer runs out.
A contract timer works like this. The purchaser must remain in good faith under the terms of the agreement for a specified period of time, such as 10 years. The good faith part may include a bunch of agreed upon stipulations, such as keeping certain people employed during that period of time. If any of the stipulations are breached, the good faith terms no longer apply and the contract is considered breached.
What this means for Disney is that George Lucas could reacquire ownership of LucasFilm if Disney breaches these timer’s terms… and that is contingent on Kathleen’s employment contract. Even if Kathleen’s contract expires, Disney may be forced to craft a brand new contract to continue to employ her until the purchase agreement timer expires.
If Disney, again, extends her contract in 2021 for another 3 years, then this timer situation is likely the case. They can’t afford to lose LucasFilm and let it revert back to George Lucas ownership… and on top of this, pay Kathleen a huge sum of money from her Golden Parachute. Not only does that give George Lucas a potful of money, he also gets his former property back with new films in the portfolio to boot and Kathleen gets even more money.
Disney’s Response
Basically, a situation like what I surmise above (while a bit legally convoluted) may very well exist between George, Kathleen and Disney. Contractual terms can sometimes be unwieldy beasts and no side wants to breach those terms, particularly when looking at the downsides.
If any of what I suggest actually legally exists, this is why Kathleen Kennedy is still employed at LucasFilm cum Disney and cannot be fired. That doesn’t mean Disney can’t sideline her or take her off projects because these things may not be specified on the contracts, but those specifics which are in the contracts must be adhered to.
Only Disney, Kathleen, George and all of the lawyers involved understand the minute details of both the purchase contract and Kathleen’s LucasFilm employment contract (and how they both interrelate).
YouTubers
I get why YouTubers rail on Ms. Kennedy. I get why they want her fired. I get why they produce their videos stating all of this. However, these naïve YouTubers really don’t understand business or contractual obligations in the business world, particularly when it comes to executives and acquisitions.
While fans can continually call for Kathleen to be fired over her handling of the Star Wars property, it’s very unlikely to happen while contractual obligations are still in play. Kathleen herself would be stupid not to sit back and let the money roll in while she pretends to do a job for Disney. With such convoluted contracts, Kathleen is sitting pretty no matter what she does… short of breaking the law. She can completely turn LucasFilm and Star Wars inside out and pretty much Disney can do little to stop her, at least until any timers expire.
Once Ms. Kennedy understood the extremely favorable situation (if similar to what’s described above) that George arranged for her, she could pretty much torch Star Wars and Disney couldn’t really do anything about it. What Kathleen has done for Star Wars isn’t at all pretty. But, it’s not illegal and it’s possible there’s very little Disney can do to kick her out of the organization. Granted, she has turned a tidy sum for Disney, at least for the latest trilogy films, even as bad as they are. Disney can’t fault her for not making Disney money. As a result, Kathleen is likely still living up to her end of the employment agreement with LucasFilm.
Should Disney fire Kathleen Kennedy?
As long as unfavorable contractual obligations exist for Disney, no. Disney and Disney’s lawyers fully understand the ramifications of firing her. Until they can fire her without tripping contractual clauses, they’re going to let her sit in her comfy Disney office, using her comfy Disney chair pretending like she knows what the hell she’s doing.
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What is an inclusion rider?
As Francis McDormond spoke while accepting her Oscar, she left the audience with two final words, “inclusion rider”. What is it? Let’s explore.
Hollywood Contracts
Being a Hollywood actor, director, writer, cinematographer, producer or other cast or crew requires signing a contract with the production for employment. Contracts, as we all know, are legal agreements that you legally agree do whatever is stipulated within the contract. If you’re an actor, you’ll act. If you’re a producer, you’ll produce…. and so on.
However, there are also other items that can be added to contracts to make them sweeter, such as getting a percentage of the back end. The back end could include residuals from such things as box office sales, merchandising, video sales, rentals, etc etc. These can make whatever that person got paid even sweeter. If the production does well, that percentage of the back end could mean an even bigger paycheck. It’s always reasonable to try and negotiate percentages in productions, and while many lead actors and actresses try, getting that deal isn’t always possible. Negotiation of a back end deal is a form of rider. However, this is not the type of rider of which Francis McDormond speaks.
Affirmative Action
Before Affirmative Action began, minorities didn’t get their fair share of consideration during the hiring processes in many companies. Affirmative Action was created to ensure that employers remain equal opportunity for anyone who chooses to apply for a position. This means that an employer cannot turn away anyone for the position solely based on race, creed, color or national origin (among others). The idea is that everyone must be considered for the position equally so long as they have the necessary skills and qualifications. What does this have to do with an ‘inclusion rider’? Everything..
Inclusion Rider
Hollywood is facing its biggest upheaval in many, many years. With the fall of Harvey Weinstein (and many others), Hollywood faces much scrutiny over unfair practices in productions against not only minorities, but also against women. In particular, McDormand refers to the fact that women have been unfairly treated in Hollywood for far too long. Not only in the sex object perspective, but also from a pay perspective. Francis McDormand’s comment conveys a ton of information in those two words.
An inclusion rider is a legal addition to a contract, specifically, a movie production contract, to ensure that women are fairly compensated and properly represented within the production. However, there’s a whole lot more veiled in these two words. In particular, McDormand’s comment was intended toward the Hollywood A-Listers who command not only a high salary, but a lot of negotiating power when it comes to their employment contracts.
Basically, an inclusion rider means hiring folks into the production in all capacities that represent all ages, creeds, colors, races, lifestyles, genders and so on. Unfortunately this also means sometimes shoehorning cast members into a production who don’t fit the story or setting of the film. For example, the most recent Fantastic Four is a very good example of the use of an ‘inclusion rider’ on the cast. This production hired a black actor for Johnny Storm. This is so far out of place from the original FF comics, it actually made no sense. Basically, that film version took extreme liberties from the the source material of Fantastic Four and rewrote that Susan Storm was adopted into a black family! This was never the case in the comics. In the comics, Susan and Johnny Storm were actual siblings, not adopted siblings and not from a mixed race family. Unfortunately, the production shoehorned in this black actor into this role without thinking through if it made any sense to the source comic material. This is when an ‘inclusion rider’ goes way too far and gets in the way of the casting for the production. To be fair, that casting mistake (and it was a relatively big one) was actually one of the lesser problems with that film version of Fantastic Four. Though, it didn’t help either.
The second example is Star Wars: The Force Awakens. J.J. Abrams intentionally requested a diverse set of ethnicities to be represented in the Star Wars reboot. However, because these stories didn’t exist, casting these characters wasn’t as big of a problem like The Fantastic Four. However, by The Last Jedi, the production had shoehorned the newest character, Rose, played by the Asian female actress, Kelly Marie Tran. Apparently, the production thought they didn’t yet have enough ethnicities represented and threw in yet another another character at a time when the production already had too many characters in the cast. The Rose character just doesn’t work. Sure, they added an Asian female actress, but that was too little, too late for the China audience. China had already written off the latest Star Wars as stupid way before Rose joined the cast. The casting of Rose did not in any way help sway China to accept these newest Star Wars films.
Is an inclusion rider good or bad or even necessary?
I’ll leave that for you to decide. However, from my perspective, the source story material should always rule the roost. An inclusion rider should never attempt to shoehorn diversity in actors or actresses simply because it’s politically correct. If you’re a producer who’s adapting an existing novel to the big screen that contains primarily white male characters as the leads among similar background characters, you shouldn’t recast them using to black, Asian, Latino or female roles just because of an inclusion rider. You should also not include extras who are demographically out of place or who don’t make sense for the source story. The source material should always be upheld for casting as the source story dictates. If you can’t cast a film the way the book is written, you should find another book to translate to film that fits your casting ideals.
Rewriting the source material’s story just to fulfill an inclusion rider is not only heavy handed, it’s insanely stupid, insipid and likely to cause the production to flop. The characters in a book are written to be a certain way and that’s why the story works. If you’re adapting that book to film, you should make sure that you’re being faithful to the source material which doesn’t include changing genders or the ethnicity of any character in a book just to fulfill an inclusion rider. Stick with the source material or expect your movie to fail at the box office.
See: Fantastic Four (2015) and Ghostbusters (2016) to understand just how badly ‘inclusion riders’ can affect your final product.
If you’re writing an original story for film, then by all means write the story so that the characters can be cast in the way that makes the most sense for your production’s inclusion riders. But, don’t bastardize an existing book or adaptation just to fill the cast with random genders and ethnicities that don’t make logical sense for the story or the setting.
As for whether an inclusion rider is even necessary is entirely up to the actor to negotiate. If you feel it’s important for your participation in the film, then yes. But, what’s really more important is you doing your best work possible with the cast who’s hired. Putting unnecessary demands on the producers might, in the long run, hurt your career longevity. That decision, however, is entirely up to you.
Best Production Possible
As a producer, don’t tie your production’s hands unnecessarily by adding stipulations that limit the potential quality of your project. You want your project to succeed, right? Then, keep all of your options open. Adding an inclusion rider that limits your hiring practice may, in fact, limit your production’s chances of succeeding. Don’t limit your production solely to hire under-represented minority groups. Do it because it makes sense for the film’s story and to make that story’s setting more authentic, not because you have an inclusion rider present.
Hiring Values
As for your behind-the-scenes production crew, by all means, hire as diverse as you possibly can. The more diverse the better. As with any business, and don’t kid yourself that a film production isn’t a business, diversity in hiring applies just as much the crew as any other employee in any other business. Diversity in hiring should be included in any capacity that your film needs. Of course, these folks are all behind the camera. However, hire smart, not diverse. This means that you don’t hire just because you want diversity. Hire because the person has the right skills for the job… which means, don’t turn away well qualified Caucasian candidates just because you want to hire diverse. Hire each one of your positions because the candidate offers the skills you need to get the job done, not because of an inclusion rider. Hire for skills, not diversity.
For the cast members in front of the camera, always hire the cast that makes the most sense for the story and produces the most authentic results. Don’t hire diversely just to fill a quota because you feel that an ethnic, lifestyle or gender group is underrepresented on film. That’s the wrong reason to hire a cast. Hire a cast that makes proper sense to tell the story. If that means diversity, great. If it means all white females or all black males, then that’s what the story needs. The story should dictate the cast, not an inclusion rider.
Original Hollywood Sign photo by raindog808 via Flickr using CC 2.0 license
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