EXCLUSIVE: Media Moguls With Out-Of-Whack Pay Compensation

My previous post showed that a lot of media company bigwigs have pay that’s out of whack with the other 4 top executives whom the SEC requires these corps to list. Now I want to show the flip side — CEOs that don’t set off alarm bells with corporate governance experts. Top dogs like News Corp’s Chase Carey, Comcast/NBCUniversal’s Steve Burke, Cinemark’s Alan Stock, World Wrestling Entertainment’s Kevin Dunn, Dreamworks Animation’s Jeffrey Katzenberg, Dish Network’s Charlie Ergen, Netflix’ Reed Hastings, AMC Entertainment’s Gerardo Lopez, Regal Entertainment Group’s, and National Cinemedia’s Kurt Hall make no more than 3 times as much as the average for the 4 other top executives whose compensation is listed in the annual proxy statement to shareholders.  Let’s be clear: We aren’t saying that the executives below are fairly or unfairly paid. But they work at companies where the boards of directors at least seem to recognize that multiple people deserve the credit for the company’s performance:

1. Microsoft: B. Kevin Turner. Here’s an indication of how technology companies differ from most media ones: Executives in tech don’t depend so much on annual compensation. They typically own a lot of stock and profit when it appreciates. So CEO Steve Ballmer, who owns nearly 4.8% of Microsoft’s shares, is the lowest paid top executive listed in Microsoft’s proxy, with $1.4 million in compensation for the fiscal year that ended in June.  Turner, the COO, is the highest with $7.9 million ($645,000 salary, $2.0 million bonus, $5.3 million in stock awards and $9,790 in other compensation). His pay was up 13.3% in a fiscal year when Microsoft shares were up 23.5%. His pay is a mere 1.2 times higher than the average for Microsoft’s 4 other highest paid executives.

2. Cinemark: Alan Stock. Like a lot of movie exhibition executives, Stock – who has been CEO since 2006 — spent last year on nuts and bolts chores: The company restructured its debt, and arranged financing to install digital and 3D projectors. It also tangled with IMAX, which charged that Cinemark violated contract terms as it built theaters with its Cinemark XD large screens. (They settled the disputes in January.) Shares of the No. 3 theater chain appreciated 23.6%, while Stock’s compensation rose 86.2% to $4.2 million ($621,417 salary, $2.6 million stock awards, $828,556 in cash incentives, and $114,289 in other compensation). But they spread the wealth in the executive suite: Stock’s  pay was 1.4 times higher than the average for Cinemark’s 4 other top executives.

3. World Wrestling Entertainment: Kevin Dunn. Talk about a smackdown. The company still doesn’t appear to have a distributor for the WWE Network cable channel it’s been talking about launching for more than a year. The company’s stock price declined 7.5%. And Connecticut’s Attorney General, Democrat Richard Blumenthal, defeated former WWE CEO Linda McMahon, the Republican candidate, in their contest to replace Chris Dodd in the U.S. Senate. Dunn, the EVP for Television Production, saw his salary decline 9.8% to $1.8 million ($746,154 salary, $680,400 stock awards, $351,000 cash equity, and $8,000 in other compensation). That’s just 1.5 times higher than the average for WWE’s 4 other top executives.

4. Dreamworks Animation: Jeffrey Katzenberg. Last year was the first in which the company that CEO Katzenberg helped to launch in 1994 released three films: How To Train Your Dragon, Shrek Forever After, and Megamind. But profits fell as the box office revenue couldn’t make up for losses at the company’s online business and Broadway’s Shrek The Musical. Dreamworks shares fell 26.8%, and Katzenberg’s compensation declined 71.3% to $6.7 million ($2.4 million in stock awards and $4.3 million in option awards). Others also took a hit, leaving Katzenberg’s pay 1.5 times higher than the average for the other 4 top executives.

5. Dish Network: Charlie Ergen. The founder and CEO of Dish Network in 1980, when it was known as EchoStar, Ergen is one of the media world’s most interesting and inscrutable executives – all the more so now that he has bought Blockbuster out of bankruptcy. He faced a tough year in 2010 as the No. 2 satellite company struggled to hang on to its disproportionately low income subscribers and engaged in a bitter legal battle with TiVo over DVR patent rights. Dish shares fell 6.1% while Ergen’s pay dropped 20.2% to $797,909 ($600,000 salary and the rest in other compensation, mostly for personal use of the corporate plane). That’s 1.8 times higher than the average for Dish’s 4 other top executives. But they don’t control more than 90% of the company’s voting shares, the way Ergen does.

6. Scripps Networks: Kenneth Lowe. Folks at the home of lifestyle cable channels including HGTV and the Travel Channel breathed a sigh of relief last year as the ad market improved. The company owns 69% of the Food Network and Lowe, who has been Scripps’ CEO since 2008, would love to buy the remaining 31% that Tribune owns. But he had little to complain about in a year when his stock price rose 23.9% and his compensation was up 18.8% to $8.3 million ($1.2 million salary, $1.6 million stock awards, $1.4 million option awards, $1.8 million cash incentives, $1.7 million in improved pension, and nearly $600,000 in other compensation). That’s 1.9 times higher than the average for Scripps’ other 4 top executives.

7. Comcast/NBCUniversal: Steve Burke. The numbers are a little misleading here. Yes, the NBCU president’s salary was only 2 times higher the average for Comcast’s 4 other top executives. In the year when Comcast landed NBCU, and its stock rose 28%, he received a 2.2% raise to $34.7 million ($2.2 million salary, $3 million bonus, $10.1 million in stock awards, $4.8 million in option awards, $8.7 in cash incentives, $3.5 million improved pension, and $2.4 million in other compensation). But Comcast’s compensation was lopsided as the other 4 top executives included CEO Brian Roberts’ $31.1 million and then CFO Michael Angelakis with $22.9 million. The 3 accounted for 84% of all the compensation.

8. Apple: Timothy Cook. The simple calculation for the Apple COO’s salary, 2 times higher than the average for the other 4 executives, also masks important nuances. The list of top 5 executives includes CEO Steve Jobs who only collected $1. Three other executives each made about $29.8 million. In a year when shares for the maker of the iPad and iPhone rose 54.3%, Cook saw his pay rise from $1.6 million in 2009 to $59.1 million ($800,016 salary, $5 million bonus, $52.3 million in stock awards, $900,000 in cash incentives, and $58,306 in other compensation).  

9. Netflix: Reed Hastings. 2010 was the year that the perception of Netflix evolved from that of a DVD-by-mail provider into a forward-looking Internet video streaming powerhouse. That left many in Hollywood wondering whether Netflix is friend or foe – and put a spotlight on Hastings, an affable former Marine and Peace Corps volunteer who co-founded the company and has been CEO since 1998. With Netflix shares up 209%, Hastings’ pay doubled to $5.5 million ($519,231 salary, $5 million option award, and $414 in other compensation). That’s 2.1 times higher than the average for the next 4 highest paid executives.

10. News Corp: Chase Carey. Once again, the compensation story for the fiscal year that ended last June needs context. In his first year as COO, replacing Peter Chernin, Carey made $26 million ($8.1 million salary, $15 million bonus, $2.9 million in improved pension, and $32,482 in other compensation). That’s 2.1 times higher than the average for the other 4 top executives. But that group includes CEO Rupert Murdoch who made $22.7 million – about the same as his pay in 2009 – in a year when News Corp shares appreciated 37.9%. He and Carey had 61% of the pie leaving Fox News chief Roger Ailes with about $14 million (down from $22.1 in 2009) and Rupert’s son James with $10.3 million.

11. AMC Entertainment: Gerardo Lopez. This could be an important year for Lopez,  a former Starbucks executive who became AMC’s CEO in 2009. His privately held company has filed to go public. Investors would be taking a gamble at a time when overall attendance is sliding. But AMC boasts that it’s still poised to grow: It has 361 theaters and 5,203 screens, mostly in big cities and suburbs. It’s also the biggest owner of IMAX venues and says it accounts for as much as 20% of the box office revenues for all major studios. Lopez made $1.8 million last year ($700,003 in salary, $400,000 bonus, $674,240 in cash incentives, and $66,220 in other compensation). That’s 2.2 times higher than the amount for AMC’s 4 other top executives.

12. Regal Entertainment Group: Amy Miles.  The company’s former CFO won the top job in 2009, but had a hard time last year persuading investors to buy a ticket to her show. Regal shares fell 14.1% as Wall Street wondered whether theaters had scared buyers away by charging high prices for 3D films. Concerns also grew that studios would depress admissions by introducing films to cable and satellite premium VOD just two months after they first appear in theaters. Miles’ pay fell 8.6% to $3.7 million ($750,000 salary, $1.7 million in stock awards, $750,000 in cash incentives, and $509,221 in other compensation). That’s 2.4 times higher than the average for the other 4 top executives.

13. New York Times: Arthur Sulzberger. How bad is the situation at The Times? Last month Lazard Capital Markets analyst William Bird initiated his coverage of the company by telling investors to sell. With the company’s newspapers losing ground faster than its digital properties are growing, he wrote, “we view NYT as an investment in a declining annuity.” That comes off of a year when the Times’ stock price fell 19.4%. Few are more concerned than Sulzberger, who became chairman in 1997. His family controls the company. But his compensation remained flat last year at $6 million ($1.1 million salary, $151,925 stock awards, $906,434 option awards, $2.5 million cash incentives, $1.3 million pension improvement, and $108,412 in other compensation). That’s 2.6 times higher than the average for the 4 other top executives.

14. National Cinemedia: Kurt Hall. These are the guys to picket if you hate the ads that theaters show before the movie trailers. NCM is the leader with backing from AMC, Cinemark, and Regal. But it happens to be a growing  business, and its stock price rose 20.2% last year. That was good news for Hall, the former Regal co-CEO who landed the top job at NCM in 2005. His salary remained flat, though, at $4.2 million ($735,420 salary, $1.3 million stock awards, $1.1 million in option awards, $1 million in cash incentives, and $35,928 in other compensation). That was 2.8 times higher than the average for NCM’s 4 other top executives.

15. AT&T: Randall Stephenson. A smooth-talking former financial whiz from Oklahoma, CEO Stephenson is now in the business of persuading federal regulators to approve AT&T’s $39 billion deal to buy T-Mobile. That would seem to kill any thought that the company might supplement its U-verse television service by buying a satellite company such as Dish Network. Last year AT&T slowed its spending to build out U-verse, although it remains an active challenger to cable. The company’s stock rose 4.6% last year – mostly due to the strength of its wireless phone and broadband business. Stephenson’s pay fell 6.8% to 27.3 million ($1.5 million salary, $12.7 million in stock awards, $494,731 in option awards, $5.1 million in cash incentives, $7.1 million improvement in pension, and $417,410  in other compensation). That’s 2.9 times higher than the average for the other 4 AT&T top executives.

16. LIN TV: Vincent Sadusky. The owner of TV stations and Web sites in 17 markets rises and falls with the ad market. And last year, as sales improved, it rose — with its stock up 14.7%. That worked for Sadusky, the former CFO of Telemundo who became LIN’s CEO in 2006. His pay increased 180% to $5.5 million ($613,076 salary, $280,000 bonus, $3.6 million stock awards, $840,000 cash incentives, $5,390 in improved pension, and $174,298 in other compensation). That’s 2.9 times higher than the average for LIN’s 4 other top executives.

17. Gannett: Craig Dubow. Like the New York Times, Gannett is racing to make money in the digital world as its core newspaper business shrinks. Despite improvements in ad sales at the company’s TV stations, and widespread furloughs and layoffs, Gannett shares fell 3.5%. But compensation for Dubow, who’s been CEO since 2005, doubled to $9.4 million ($980,769 in salary, $1.8 million bonus, $1.7 million stock awards, $3.4 million in option awards, $1.5 million improvement in pension, and $159,465 in other compensation). In addition to the company provided car and some personal use of its plane, the proxy says that executives can enjoy “Company-provided lunch during working hours, as needed.” Dubow’s pay is 3.0 times higher than the average for the 4 other top executives.

18. Charter Communications: Michael Lovett. The cable company once controlled by former Microsoft executive Paul Allen is still licking its wounds from its 2009 bankruptcy and the years leading up that were marked by insufficient investment in new technology and customer service.  Lovett, who became CEO in early 2010, is trying to clean up the mess. The company began trading again, on NASDAQ, in September.  Lovett was paid $10.9 million ($1.2 million in salary, $2.2 million bonus, $3.7 million in option awards, $3.7 million cash incentives, and $68,442 in other compensation). That’s 3.0 times higher than the average for the 4 other top executives.

19. Verizon: Ivan Seidenberg. Cable companies can relax: There’s no more talk at Verizon about expanding its FiOS TV service to markets that it hasn’t already entered. Like AT&T, the phone company would rather invest in its wireless business. That focus, and Apple’s decision to let Verizon have its own iPhone, contributed to a 7.3% increase in the stock price. The salary for Seidenberg, who’s been CEO since 2000, rose 3.6% to $18.2 million ($2.1 million salary, $11.2 million in stock awards, $3.9 million in cash incentives, $264,610 improvement in pension, and $707,644 in other compensation). That’s 3.0 times higher than the average for the 4 highest paid other employees listed in the Verizon proxy.