I was a little late to the news but Digital Domain recently announced company wide pay cuts for employees. From what I’ve been told there was a recent meeting about the announcement that was met with a heavy amount of criticism. Some feel the timing is a bit suspect given that management announced this before the holidays and have given a deadline for everyone to agree to these new terms shortly after.

An ad hoc group of DD employees have banded together to start a site called VFX United.

Regardless of how you feel about the issue the matter comes down to simple leverage and I’m a bit surprised that DD’s new owners at Galloping Horse and Reliance Mediaworks are trying to make this risky move. Much of the talent will simply quit and move on during the middle of the projects that may not be able to finish. Also Reliance Mediaworks, while owned by an Indian billionaire, has already been losing a huge amount of money. Last quarter they lost $40 million dollars. I guess a $30 million dollar write down on Digital Domain would be considered an improvement. However, they may see an opportunity with current conditions. Some big facilities like Rhythm and Dneg have been through some heavy layoffs and Imageworks is forcing many workers to move to Vancouver.

Furthermore, Galloping Horse has been trying to play the pay cuts in the media as an “incentive-based salary system.” Apparently workers are being offered a pay cut and a chance to earn their rate back with a bonus that will ultimately be the employer’s option. No word if any execs are taking a pay cut. Anyone willing to believe in that would have been willing to take a significant amount of their salary last year and buy stock in the disaster that was Digital Domain Media Group. Just to note, it seems not much has changed from DDMG. Galloping Horse put in a bid and won rights to make The Legend of Tembo which the shut-down Florida unit was working on and they’ll again attempt to implement some sort of training program for Chinese students.

The workers at Digital Domain have until this Monday to accept the pay cuts or be fired even though many of them are on productions and term contracts. Below is a previous letter sent to some employees:

As you are aware, Digital Domain 3.0, Inc. and its wholly-owned subsidiary Digital Domain Productions 3.0 (BC), Ltd. (collectively, the “Company”) has been taking steps to improve the operational efficiency of the Company, out of necessity, since emerging from bankruptcy. Unfortunately, new economic pressures have changed the Company’s economic situation further, and actions taken previously were not enough to strengthen the Company’s financial position in the near term. As such, Company has determined that employee compensation reductions are necessary at this time.

We are informing you that your salary [rate] will be reduced by __%. Commencing on the effective date your position and salary [rate] will be as follows:

Title of Employee: _______________

Base Salary [Rate]: $_____ per hour

Effective Date: January 7, 2013

In the event that you are employed by Digital Domain Productions 3.0, (BC) Ltd. as a temporary foreign worker, the Company reserves the right to adjust the Effective Date if a required approval from immigration authorities with respect to the adjustment in employment terms set forth in this letter has not been received by the Effective Date.

Please sign below indicating that you understand and accept the salary reduction terms set forth above and acknowledge that this constitutes an amendment to any Production Contract, Staff for Show Contract, or any other agreement under which you provide services to the Company. Please return the original letter to Human Resources. If you decide not to accept the salary reduction terms as set forth above, the Company will accept your resignation from employment effective on the last business day before the Effective Date.

Should you have any questions or concerns, please do not hesitate to contact Human Resources.

Soldier On.

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