In the realm of media giants, a concerning pattern has emerged regarding executive compensation. This issue, often veiled from public scrutiny, is now brought to light through an analysis of SEC filings, revealing that 16 out of 35 major media companies are compensating their top executives in a way that significantly deviates from industry norms.
When the CEO's compensation exceeds three times the average for the other four highest-paid executives, it raises a red flag. This phenomenon, prevalent in nearly half of the media companies, suggests a level of "hero-worship" where boards of directors lavish exorbitant sums on their top leaders, far surpassing the pay of other high-ranking executives.
Stock grants play a pivotal role in these outsized compensation packages. For instance, David Zaslav at Discovery Communications, Philippe Dauman at Viacom, Michael White at DIRECTV, David Calhoun at Nielsen, and Les Moonves at CBS have all received substantial stock awards. Entercom's CEO, David Field, stands out with a compensation package 25.4 times higher than the average for his company's other top executives, largely due to $7.9 million in stock grants.
This lopsided pay structure is not just a matter of excessive compensation; it also signals potential issues with corporate governance. Experts warn that such disparities can indicate a board too closely aligned with the CEO, or a belief in the CEO's superhuman ability to drive company success. This often results in the CEO receiving undue credit for positive outcomes and deflecting blame for poor performance, ultimately harming long-term shareholder value.
To provide a comprehensive view, the analysis focuses on the five most highly paid employees in each company, using the 2010 proxy statements. It's important to note that this data only covers publicly traded U.S. companies, leaving out privately held entities like Hearst and Sony. Additionally, the SEC rules may overlook highly paid individuals in subsidiaries, such as Universal Studios' Ron Meyer.
Here’s a breakdown of the companies with the most significant pay disparities:
- Entercom: David Field, CEO, received $9.1 million, 25.4 times the average for the other top executives. His compensation includes a significant stock grant component.
- Discovery Communications: David Zaslav, CEO, was compensated $42.6 million, 8.1 times the average. His compensation includes a 265% increase from the previous year.
- Viacom: Philippe Dauman, CEO, earned $84.5 million, 7.9 times the average. His pay includes a 149% raise, with a significant portion in stock and option awards.
- DIRECTV: Michael White, CEO, made $32.9 million, 7.2 times the average. His compensation saw a substantial rise, including stock and option awards.
- Nielsen: David Calhoun, CEO, received $14.2 million, 6.3 times the average. His pay jumped 125%, with a mix of salary, bonuses, and stock options.
These figures highlight the need for more balanced and transparent compensation practices, ensuring that executive pay aligns with overall company performance and shareholder interests.
Media sector leaders command staggering premiums
over their executive peers despite mixed results
Moonves at CBS secured $57.7 million despite
the underperformance of CBS Films division
His pay towers sixfold above other top executives
including $2.5 million for New York tax offsets
Bewkes of Time Warner took $26.3 million
amid declining HBO subscribers and CNN ratings
His compensation quadruples fellow executives' pay
even as the Harry Potter franchise concludes
Rovi's Amaroso enjoyed 96% stock surge
yet his $7 million package seems restrained -
still 4.5 times higher than colleagues' earnings
in the digital entertainment technology space
Martha Stewart's $5.9 million features
tax-deductible lifestyle perks including
$119k security and $55k weekend driver
while her company shares dropped 13%
AOL's Armstrong saw pay cut to $15.3 million
amid controversial HuffPost acquisition
and 2.6% stock decline - still quadruple
the average for other top executives
Warner Music's Cohen scored $6.5 million
despite industry struggles and stock dip
His pay combined with CEO Bronfman's
consumed 71% of top executive compensation
Live Nation's Azoff pocketed $22.8 million
including $10 million for Front Line interests
His rockstar package dwarfs peers by 3.5 times
accounting for 69% of top-five pay with Rapino
Sirius XM's Karmazin netted $9.9 million
after avoiding bankruptcy - triple the average
while Lionsgate's Burns received $6.9 million
post failed MGM merger defense tactics
Cable executive Britt at Time Warner Cable
earned $17.4 million as stocks soared 57%
His pay exceeded colleagues' by fourfold
amid industry broadband monopoly advantages
These compensation gaps range from 3.2 to 6 times
between CEOs and their leadership teams
raising questions about pay equity standards
across the media landscape's corporate suitesRobert Iger, who took the helm as CEO in 2005, had a banner year during the fiscal period that concluded in September. Under his leadership, Disney’s film division saw remarkable success with two of its movies, Toy Story 3 and Alice in Wonderland, each grossing over $1 billion. Additionally, ABC's television stations benefited from a surge in political campaign advertisements. The company's cable channels, including ESPN, also experienced a significant boost as the advertising market began to recover. In the improving economic climate, Disney managed to increase ticket prices at its theme parks while still attracting more visitors.
Reflecting this positive performance, Disney's stock price climbed by 21.6% over the year. Iger's compensation package also saw a notable rise, increasing by nearly 24% to a total of $29.6 million. This included a base salary of $2 million, stock awards totaling $7.4 million, option grants worth $4.4 million, cash incentives amounting to $13.5 million, pension improvements of $1.6 million, and other compensations totaling almost $800,000.
Iger's pay is 3.1 times higher than the average compensation for Disney's four other top executives.
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