Time Warner Cable CEO’s $93 Million Exit Package Makes No Sense to This Customer

It wouldn’t surprise me if images of Rob Marcus, Time Warner Cable’s outgoing chairman and CEO, turn up at Bernie Sanders rallies in the coming weeks.

Marcus is poised to become the new face of excessive executive compensation. He’s expected to reap a windfall of $92.8 million following the completion of TW Cable’s merger with Charter Communications.

Marcus’ severance package is eye-popping given the length of time he served as CEO — just two and a half years. The combination of salary ($22.6 million), bonuses ($2.6 million), and stock awards ($67.1 million) he’ll reap works out to a little more than $100,000 a day since he became CEO on Jan. 1, 2014. That severance comes on top of the more than $9.5 million he earned in salary and bonuses in 2014 and the $8.5 million he took home in 2013, when he was president/COO.

Marcus assumed the reins of TW Cable at a time when it was in the midst of a takeover tug-of-war between Comcast and Charter Communications. Comcast won the first round in February 2014, but the deal cratered 14 months later in the face of fierce opposition from regulators. Barely a month had gone by before Charter clinched a deal to buy TW Cable and Bright House Networks in a $67 billion mega merger.

In other words, Marcus was handed the keys to a business that everyone knew was going to be sold. He was never under much investor pressure to articulate a vision for the company. He had to navigate a challenging merger environment, but the onus fell more on Comcast and Charter execs than on TW Cable.

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Soft Landings
Marcus figures to top other execs who left their jobs with a pile of dough.
$93m Rob Marcus: Time Warner Cable, 2016
$87m Neil Berkett: Virgin Media, 2013
$80m Tom Freston: Viacom, 2006
$58m Henrique de Castro: Yahoo, 2014

On Marcus’ watch, TW Cable did add video subscribers at a rate that defied conventional wisdom. Securities and Exchange Commission filings detail how Marcus and top execs were incentivized by the promise of additional bonuses if such additions reached a pre-set target. Filings also detail the rich retention bonuses handed to Marcus and other execs last year, when the Comcast merger was clearly doomed. With the promise of a whopping severance package, it’s hard to believe that Marcus needed another $8 million worth of stock options to ensure that he would stick around.

TW Cable defended the payout to Marcus as driven by huge share gains since the company was spun off from Time Warner in 2009. “His severance package largely consists of equity awards earned over the last several years, reflecting the increase in stock price benefiting all shareholders,” TW Cable spokesman Eric Mangan said.

My dismay at Marcus’ enormous payday stems not from my perspective as a journalist but as a consumer who has endured subpar service from Time Warner Cable. As one rival media CEO noted, for years the company has been run for shareholders, not consumers, with a lack of investment in infrastructure and innovation.

The technology is clunky and glitchy. The user interface of its electronic program guide and VOD offerings looks like it predates “The Sopranos.”

Time Warner Cable couldn’t manage to link my two accounts in different locations to a single email address, requiring that I set up separate online accounts for billing and service issues. (That means two more passwords I’ll never remember.) The service calls I’ve had from technicians in the past two years have included the classic cable-guy scenarios of not showing up at all; trying to convince me that the problem was with my equipment, not theirs; and having the service guy trash the company and its practices.

Hollywood is famous for its largess and golden parachutes for executives. Tom Freston left Viacom with an estimated $80 million in 2006 — but at least he’d devoted 25 years to building up MTV and the rest of its cable channels.

Marcus’ rich sendoff will surely spur more shareholder activism on executive compensation, which hopefully will echo in the ears of corporate board members.

Besides Marcus, the big winner in the Charter-TW Cable union is Charter CEO Tom Rutledge. The bar for TW Cable subscribers has been set so low, he’s got nowhere to go but up.

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