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H’w’d resists pay fray

Congloms tell SEC to stay mum on sums

Pay packages are nobody’s business.

That’s essentially what major entertainment congloms are telling the Securities and Exchange Commission in response to its proposal that exec compensation, down to stars and division heads, become public knowledge.

Viacom, CBS Corp., Walt Disney, News Corp. and NBC Universal Monday entreated the SEC to ditch the proposal, which would force them to disclose just how richly they reward their three highest-paid employees.

Current regs require companies to disclosure pay packages only for corporate officers like CEOs and chief financial officers. Media companies are in a tizzy, since the new reg could include the compensation of studio heads, TV personalities, even actors and directors — information that’s often delicate and considered proprietary.

“Existing pay packages with non-executive officers were not structured with an eye to public disclosure … and both the interested employee and the company receiving the services have settled, and legitimate, expectations in the confidentiality of the pay packages,” the media companies wrote in a letter filed with the SEC.

The agency posted its proposal in January. Monday was the last day for public comment on a bundle of propositions aimed at providing investors more details and transparency on company compensation.

There are dozens of comments posted on the SEC Web site, including one from DreamWorks Animation CEO Jeffrey Katzenberg. He feels disclosing the richest packages would “cause significant morale issues.”

“It is inevitable that some employees will take issue with their respective rankings,” he wrote, “and create unnecessary and counterproductive strife with their fellow employees and the company.”

(James Stewart reports in his book “Disney Wars” that former Mouse topper Michael Eisner discouraged Katzenberg’s quest to become chief operating officer of Disney because his compensation would have to become public.)

Katzenberg and others also insist the info would jeopardize a company’s ability to retain key staffers by giving rivals the ability to “cherry-pick the company’s most valuable employees.”

The media giants said they’re particularly concerned with talent deals with production companies, producers, writers and others that take myriad forms, including complex contingent compensation and profit-sharing.

Applying traditional disclosure principles “will raise a host of uncertainties when applied to the very different compensation arrangements that prevail with high-paid talent employees,” they said in their letter.

But some compensation experts think talent deals aren’t the issue. It’s more about packages for division heads and other full-time employees who can make tens or hundreds of millions — well above a CEO paycheck.

It could be Paramount chief Brad Grey. Or Michael and Roger King of CBS’ King World. It could be a surprise — an old name with lingering financial connections that surface.

“I don’t think you have anything to worry about unless there are a lot of clunkers out there, and I’m sure there are going to be,” said James Reda of pay specialists James Reda & Associates.

Sometimes, folks deserve the big bucks, but not always. Companies “may be overpaying … and it would be better for investors to know that,” Reda said. They “couldn’t sweep it under the rug.”

The historic logic for disclosing corporate executive pay — currently, the five-highest salaried are named — is that these people often sit on the board of directors, which sets top executive pay, and could theoretically have a conflict of interest.

Companies argue that’s not an issue with any other employees, so none should be listed.

But in a time of shareholder activism, investor groups say it’s about how a company chooses to allocate financial resources and if it does so wisely.

Oddly, the SEC proposes to include not the actual names of the three highest-paid executives, but only their job descriptions. Companies argue it would still be obvious who they are.

Reda said the SEC is nodding to fear of predators, like kidnappers, who target very high-net-worth individuals.

Separately, several studies on 2005 CEO pay were published Monday. USA Today found median ’05 pay among chief executives running most of the nation’s 100 largest companies soared 25% to $17.9 million, dwarfing the 3.1% average gain by typical American workers.

The Wall Street Journal saw pay rise $15.8% to $6 million in a much larger sample of 242 companies. It said the average return to shareholders was 6.8%.

Big media companies — once in pole position — were far from top tier as media stocks lagged. News Corp.’s Rupert Murdoch and Comcast’s Brian Roberts ranked 47th and 48th in USA Today, at $23.4 million and $23.2 million in total compensation.

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