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Do Media Chiefs Deserve the Lavish Pay Packages They Rake In?

It’s good to be the king, Mel Brooks famously joked in “History of the World: Part 1.”

When it comes to the entertainment business, he was especially right. There’s never been a richer time to wear the crown at the media conglomerates that churn out the world’s most popular television shows and movies. CBS’ Les Moonves, Discovery’s David Zaslav and Time Warner’s Jeff Bewkes each took home salary and compensation packages in 2017 that dwarfed those of Silicon Valley pashas such as Apple’s Tim Cook ($12.8 million) or Facebook’s Mark Zuckerberg ($8.9 million), despite the fact that Cook’s and Zuckerberg’s companies boast far greater market share and cultural cachet.

“It’s a warped economic system,” says Rosanna Landis Weaver, program manager of the CEO Pay Program at shareholder advocacy group As You Sow.

To be fair, the job is fraught with peril. Many of these media chiefs are navigating a rapidly changing world order, one in which movie attendance is slipping in popularity and cable cords are being cut. If that’s not enough, there’s a massive wave of consolidation afoot among the traditional media giants, as a way to compete in the direct-to-consumer space with streaming powerhouse Netflix.

“Looking back, it will be interesting to see whether or not the companies that managed all the changes the best were the ones with the highest-paid executives,” says Landis Weaver.

Variety Media Moolah Cover
CREDIT: Variety

Certain structural particularities may be to blame for the lavish pay packages, compensation experts say. Companies including Fox, Viacom and Comcast have dual-class stock, giving the controlling shareholder nearly absolute authority. “A dual-class structure insulates leaders from performance concerns,” says corporate governance expert Charles Ellison. “In these companies there’s almost no oversight by the board, and the controlling shareholder has the ability to appoint all the companies’ directors and control debate on compensation.”

It also means that they establish a baseline for media executive compensation, creating a keeping-up-with-the-Joneses atmosphere for companies without dual-class structures, such as Disney and Time Warner.

From the media’s most powerful executives to Hollywood’s biggest stars, an inside look at the money at the top of the industry.
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There are signs, however, that the good times are ending. Moonves’ and Bewkes’ current homes may quickly become part of vaster media enterprises. CBS is engaged in tortuous merger talks with Viacom that could leave Moonves either out of a job or in control of a much bigger company. Time Warner is trying to get court approval for its sale to AT&T. Disney agreed to vacuum up much of Fox’s film and television assets, leaving Rupert Murdoch’s empire a shell of its former self. And Lionsgate appears eager to sell itself to the highest bidder. If all this comes to pass, in 12 months we could be looking across a radically altered media landscape.

There are also rumblings of dissatisfaction among stockholders. In March, for instance, Disney shareholders voted down a nonbinding endorsement of Bob Iger’s pay package, a rare rebuke to the powerful CEO. Last month, the City of Birmingham Relief and Retirement System, a shareholder in Netflix, filed suit against the streaming giant, accusing it of giving overly generous bonuses.

“No board member ever got in trouble for saying yes to a CEO pay package,” notes “The CEO Pay Machine” author Steven Clifford. “These boards tend to be made up of other CEOs or former CEOs, and you might not be invited to other boards if you stand in the way of someone’s raise. There are a lot of reasons to vote yes, and not many to vote no.”

Before the media landscape gets upended or shareholders take up pitchforks, click here for a breakdown of some of the prominent pay packages from the top ranks of entertainment executives, and get a quick rundown below.

 

LEslie Moonves
chairman, president and CEO, CBS Corp.
2017 compensation median employee compensation pay ratio to median employee 2017 Total Shareholder Return five-year average annual compensation
$69.3 million
-0.3%
$116,654 595 -6.2% $64.0 million
Jeff Bewkes
chairman and CEO, Time Warner
2017 compensation median employee compensation pay ratio to median employee 2017 Total Shareholder Return five-year average annual compensation
$49.0 million
+50.2%
$75,217 651 -3.7% $35.7 million
David Zaslav
president and CEO, Discovery Communications
2017 compensation median employee compensation pay ratio to median employee 2017 Total Shareholder Return five-year average annual compensation
$42.2 million
+13.6%
$80,858 522 -18.4% $56.7 million
Bob Iger
chairman and CEO, The Walt Disney Co.
2017 compensation median employee compensation pay ratio to median employee 2017 Total Shareholder Return five-year average annual compensation
$36.3 million
-17.3%
NA NA +7.8% $41.2 million
Jon Feltheimer
CEO, Lionsgate
2017 compensation median employee compensation pay ratio to median employee 2017 Total Shareholder Return five-year average annual compensation
$35.3 million
+223%
NA NA NA $26.4 million
BRIAN ROBERTS
chairman and CEO, Comcast Corp.
2017 compensation median employee compensation pay ratio to median employee 2017 Total Shareholder Return five-year average annual compensation
$32.5 million
-1.3%
$71,006 458 +17.5% $33.2 million
Rupert Murdoch
executive chairman, 21st Century Fox
2017 compensation median employee compensation pay ratio to median employee 2017 Total Shareholder Return five-year average annual compensation
$29.3 million
-15.3%
NA NA +8.6% $30.0 million
REED HASTINGS
chairman and CEO, Netflix
2017 compensation median employee compensation pay ratio to median employee 2017 Total Shareholder Return five-year average annual compensation
$24.4 million
+5%
$183,304 133 +55.1% $16.6 million
BOB BAKISH
CEO, ViAcom
2017 compensation median employee compensation pay ratio to median employee 2017 Total Shareholder Return five-year average annual compensation
$20.3 million
NA
NA NA -25.2% $49.8 million
Most of the information here comes from the proxy statements and reports that the Securities and Exchange Commission requires publicly traded U.S. companies to file each year. Overseas companies such as Sony, and privately held ones such as MGM, do not file and are not included in our tally. The SEC filing requirements are designed to help people compare information from different companies. But there are some caveats:
Companies file reports for their fiscal years. Most coincide with the calendar year, but several do not: Lionsgate’s fiscal year ends in March; Fox’s ends in June; Disney’s and Viacom’s end in September. Our data is from their most recent annual filings. • Our data about the composition and ages of company boards also reflects the information included in the latest proxy statements. • The SEC recently began to require companies to disclose a median employee compensation figure, along with a ratio derived from that total paid to the principal executive officer. Since this is new, we have figures from only those companies whose fiscal year closed at the end of December 2017. • Although our list focuses on CEOs, for Fox we included executive chairman Rupert Murdoch instead of CEO James Murdoch. Rupert was the highest-paid executive officer and is widely seen as the company’s key decision-maker.

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