At first glance the compensation for Michael White listed in DirecTV‘s new proxy statement looks like a big pay cut. But it may simply reflect an accounting fluke: The satellite company gave him $12M in option awards in …
Media CEOs don’t run their companies by themselves. Having looked at chiefs whose pay is out of whack, and those who are paid the most, here are others of note: the five best compensated company chairs, COOs, CFOs, and General Counsels as well as 10 other execs with standout compensation. We find that the five highest paid chairs collectively made $106.5M (+4.1% vs. 2011), with the COOs at $136.2M (+7.5%), CFOs at $77.9M (-15.0%), and General Counsels at $42M (+6.4%). Keep some caveats in mind with these results: I looked only at chairs who aren’t also CEOs, and there aren’t that many. (To avoid duplication, I combined the compensation that Sumner Redstone collected at CBS and Viacom, and that Charles Dolan received at Cablevision and AMC Networks.) Also, it’s often hard to define the roles that execs play. For example, Disney and Comcast don’t list a COO and Comcast’s CFO is also the Vice Chairman. So these compensation figures from company proxy statements can help you to see how the media power elite stack up, but only tell part of the story. Finally, remember that the SEC requires companies to provide compensation information for their five top executives. It’s safe to assume that several unlisted execs at big companies were paid more than some listed execs at smaller ones. Here’s how some of media’s top non-CEOs fared in 2012:
No surprise about who topped the list of 2012′s highest paid CEOs at the media companies whose compensation practices I track most closely. (See here for an explanation). CBS’ Les Moonves returns to the head of the pack with $62.2M, even though his package was 11.1% smaller than it was in 2011. That was an anomaly: The top 20 collectively made $542.7M, up from $416.6M in 2011, according to company proxy statements filed at the SEC. It took $25.9M to crack the Top 10 — last year Time Warner Cable’s Glenn Britt made it with $16.4M. The most notable change in this year’s list vs 2011 is the jump by Liberty Media’s Greg Maffei to No. 2 from No. 28 as his company adjusted stock options just in case the feds change the corporate deduction this year for performance-based compensation.
Yahoo’s Marissa Mayer also joins the top 10 following her move there from Google. Her appearance also highlights a quirk in this year’s list which has more CEOs than companies: Yahoo had three CEOs last year (Mayer is still there) and there were two apiece at Sirius XM (James Meyer replaced Mel Karmazin) and Cinemark (Tim Warner is now in charge). Also, remember that this list just includes corporate CEOs, not division chiefs or board chairs. I’ll be back soon with a list of the highest-paid media execs. The numbers on the right are the amount in millions of dollars for the total compensation as reported by each company.
Here’s our list of 2012′s highest-paid media CEOs:
A few weeks ago I listed the media company CEOs whose pay is way out of whack with other execs in the same company. But if you think that all media chiefs receive such special treatment, then you also need to look at this list: Here are the CEOs whose 2011 compensation packages were more in line with their colleagues. They were below the threshold that makes corporate governance experts worried — typically when the top dog is paid more than 3 times the median for the other executives whose pay must be listed in the proxy statement sent to shareholders and the SEC. The tallies usually include the top 5 execs. As my previous posts explained, a growing body of research (including this study, this one, and this one) shows that companies with out-of-whack pay over time often suffer from problems including groupthink that can result in bad decisionmaking and a low stock price.
On the list below you’ll find CEOs whose pay doesn’t raise a red flag on that one criterion. But let’s be clear: We aren’t saying that they are fairly or unfairly paid. Indeed, many governance experts have criticized pay packages for some of the people here — including Comcast’s Brian Roberts, News Corp’s Rupert Murdoch, and Netflix’ Reed Hastings. The numbers simply show that the boards of directors seem to recognize that multiple people deserve the credit for the company’s performance.
EXCLUSIVE: Here’s information you need to know if you’re a Big Media investor, or simply want to understand how power works in this star-obsessed industry. This is Deadline’s second annual list of CEOs whose pay is most out of whack — meaning that the company board pays him or her far more than other top execs. The metric can tell you a lot about the dynamics of power at a company. Corporate governance watchdogs say that it’s a red flag when directors pay the CEO more than three times the median compensation for other leaders named in the annual proxy statements filed at the SEC. By that measure, 18 out of 30 media companies that I tracked and that have filed 2011 data fail the test — in many cases miserably.
What does it mean when there’s a gross imbalance? When it persists over time, then it could indicate that directors are in the chief executive’s pocket and don’t ask tough questions. But it’s still worrisome even if they honestly believe the top dog has skills that can’t be easily replaced. Talented up-and-comers usually split from companies where the CEO is treated as a demigod. Researchers also find that at companies with lop-sided pay, people are more likely to give the chief all the credit when things go well, and find others to scapegoat when they don’t. Sooner or later, the blend of unchecked power and groupthink damage the company’s performance — and the stock price.
If you’re a Netflix investor, you might want to reach for some pills to control your blood pressure. Although the home video company lost 62.5% of its market value last year, CEO Reed Hastings did just fine — as did all of the other top executives named in the proxy that Netflix filed today at the SEC. True, Hastings’ salary was cut 3.7% to $500,000. The document says that the Compensation Committee “took into account the Company’s performance during 2011 and reduced the Chief Executive Officer’s total compensation by $1.5 million.” But Hastings shouldn’t feel much pain. His stock option award was up nearly 76% to $8.8M. All of the company’s other top execs also made more in 2011 than they did the previous year — collectively they were up 27.6%. Hastings’s compensation accounted for 40% of the pay for the company’s five top execs. His take was about 2.7 times the average for his colleagues. Corporate governance activists become skeptical when the CEO
News Corp Stung By Shareholder Advisory Services Urging Investors To Reject James Murdoch And Other Board Candidates
Things could be interesting in Los Angeles on Oct. 21 when News Corp holds its annual shareholders meeting. Advisory firm Institutional Shareholder Services recommended today that stock owners reject 13 of News Corp’s 15 board members, including the three Murdochs: Rupert and his sons James and Lachlan. Joel Klein, who runs News Corp’s Education Division, and Accel Partners’ James Breyer were the only nominees deemed acceptable by ISS. The firm says that while the News Of The World phone-hacking scandal ”is perhaps the most visible and severe example of the failure of board stewardship, it is part of a mosaic of failures of board independence, oversight, and responsiveness to shareholder concerns stretching back at least to 2004, when the company reincorporated from Australia to Delaware.” The report probably won’t affect the outcome of the shareholder vote: Due to News Corp’s dual stock arrangement, the Murdoch family controls about 40% of the voting shares even though it owns just 12% of the equity. Rupert’s ally, Prince Alwaleed bin Talal, controls an additional 7% of the votes.
News Corporation says that it “strongly disagrees” with ISS’ recommendations because the “disproportionate focus” on the scandal is “a disservice to our stockholders.” The company adds that ISS “failed to consider that the Company’s compensation practices reflect its robust performance in FY 2011 driven by its broad, diverse group of businesses across the globe.”
EXCLUSIVE: This is exactly the kind of information that shareholders of Big Media need to know but rarely see. It’s considered a red flag when any public company pays one of its bigwigs – usually the CEO – three times more than the average for the four other top executives which the SEC requires them to list. So I’ve taken proxy statements and done the computations and discovered that at least 16 of 35 companies failed that test. Often miserably. Nearly half of the media company compensation packages disclosed so far for 2010 show a startling degree of hero-worship as boards of directors pay their top dogs sums that far exceed what the pay was for other top execs in the company.
Stock grants accounted for big chunks of the compensation for those who top this list, including Discovery Communications CEO David Zaslav, Viacom CEO Philippe Dauman, DirecTV CEO Michael White, Nielsen CEO David Calhoun, and CBS chief Les Moonves. Radio station owner Entercom was off the charts: CEO David Field’s $9.1 million compensation was modest by media company standards but still 25.4 times bigger than average for the company’s other four executives. It includes $7.9 million from stock grants that only pay off if Entercom shares rise to hit certain target prices.
Still, corporate governance experts who focus on what’s often called “CEO centrality” say that an out-of-whack pay package is bad news for shareholders. It indicates that the board of directors may be in the pocket of a CEO – or believes he or she has near super-human power to help the company succeed. In either case, the board is likely to give the CEO all the credit when things go well, and blame others when they go badly. Research shows that usually hurts the stock price over time.
I’ll track this and other measures of lop-sided pay as other media companies release information for 2010. But there are a few things to keep in mind: The SEC reporting rules only cover the top-paid executives of publicly traded U.S. companies. That means we probably won’t know how much privately held Hearst pays CEO Frank Bennack, or how much Japan’s Sony pays CEO Howard Stringer. It also means that we’ll miss a lot of highly paid people who work at subsidiaries of a big company; Universal Studios’ Ron Meyer may be a big deal in Hollywood, but he was a relatively small fish last year at parent company General Electric.
To make comparisons in our list here as fair as possible, we looked at the compensation for the five most highly paid employees for 2010. Sometimes companies report the pay for more than five people — for example, when a top executive is replaced during the year a corporation will include the incoming and outgoing person’s compensation. And the pay data given the SEC can spike in a year when an executive cashes in stock or collects deferred compensation. So here’s how the companies stack up, with the top paid executive’s 2010 reported compensation and comparison to the average (median) pay for the four other highest-paid honchos:
1. Entercom: David Field. The son of company founder Joseph Field became CEO in 2002, about 15 years after leaving his job as an investment banker at Goldman Sachs. Field made $9.1 million last year – the total of his $791,723 salary, $444,308 bonus, $7.9 million in stock, and $28,000 in other perks including medical insurance premiums. That’s a 348% raise in a year when company shares appreciated 53.2%. Though considered a strong operating executive, his salary stands out because it’s 25.4 times higher than the $358,692 average for the four other top executives listed in Entercom’s proxy statement. Field’s salary and the $3.9 million paid to CFO Stephen Fisher accounted for 93% of the $14 million that Entercom paid to its top five executives.