CBS CEO Mel Karmazin locked in a $195 million gain when he exercised 10-year-old stock options last year, CBS revealed Thursday, and also collected $6 million in salary and bonuses.
On top of his $1 million annual salary and his regular $3 million annual bonus, Karmazin was paid a special $2 million bonus for completion of “significant goals” such as transformation of the company to a pure media enterprise, reducing the company’s debt level and increasing its stock price.
Smaller bonuses were paid to CBS chief financial officer Fred Reynolds and general counsel L.J. Briskman during the year, CBS said.
Karmazin also received 250,000 stock options with an exercise price of $29.8125, which gives them an immediate value of $2.5 million.
The CEO locked in the big gain when he exercised 6.1 million stock options that he had held since 1988, which were originally issued by the old Infinity Broadcasting (acquired by CBS in 1996 and spun out in a slightly changed form late last year). The options would have expired if Karmazin had not exercised them when he did.
The options carried such a big profit because their exercise price was 3¢ a share, compared to CBS’ stock price of $32 at the time of exercise. CBS stock has since run up to $39, increasing the options’ value even more.
Karmazin had to sell some of the stock to cover taxes on his gain, CBS said, although he won’t realize the profit until he sells the shares. He retains 4.2 million shares and another 3.9 million stock options, giving him the equivalent of 8.1 million shares or 1.1% of CBS’ outstanding stock.
Former CBS chairman Michael Jordan received a $6 million payout on his retirement from the company effective Dec. 31. His bonus for the year was reduced by half to $1 million, in addition to $1 million in salary, reflecting his withdrawal from active duties when he announced his retirement in the fall.
CBS Network prexy Leslie Moonves was paid his contractual $4 million in salary and bonus, the proxy showed.