The tal­ent, the ac­tors and di­rec­tors and writ­ers, they’re be­ing paid a lot of money. In in­dus­tries where the tal­ent makes a lot of money, the CEO makes a lot of money as well.”

China Daily (Canada) - - FRONT PAGE -

They’re not Hol­ly­wood stars, they’re not TVper­son­al­i­ties and they don’t play in a rock band, but their pay packages are in the same league.

Six of the 10 high­est-paid US CEOs last year worked in the me­dia in­dus­try, ac­cord­ing to a study car­ried out by ex­ec­u­tive com­pen­sa­tion data firm Equilar and The As­so­ci­ated Press.

The best-paid chief ex­ec­u­tive of a large Amer­i­can com­pany was David Zaslav, head of Dis­cov­ery Com­mu­ni­ca­tions, the pay-TV chan­nel op­er­a­tor.

His to­tal com­pen­sa­tion more than quadru­pled to $156.1 mil­lion in 2014 af­ter he ex­tended his con­tract.

Les­lie Moonves, of CBS, held on to sec­ond place in the rank­ings, de­spite a drop in pay from a year ear­lier. His pay pack­age to­taled $54.4 mil­lion.

The re­main­ing four CEOs, from en­ter­tain­ment gi­ants Vi­a­com, Walt Dis­ney, Com­cast and Time Warner, have ranked among the na­tion’s high­est-paid ex­ec­u­tives for at least four years, ac­cord­ing to the Equilar/As­so­ci­ated Press pay study.

One rea­son for the high level of pay in the in­dus­try is that its CEOs are deal­ing with well-paid in­di­vid­u­als.

“The tal­ent, the ac­tors and di­rec­tors and writ­ers, they’re be­ing paid a lot of money,” said Steven Ka­plan, a pro­fes­sor of fi­nance at the Uni­ver­sity of Chicago Booth School of Busi­ness.

“In in­dus­tries where the tal­ent makes a lot of money, the CEO makes a lot of money as well.”

Pay packages for CEOs over­all grew for the fifth straight year in 2014, driven by a ris­ing stock mar­ket that pushed up the value of ex­ec­u­tive stock awards. Me­dian com­pen­sa­tion for the heads of Stan­dard & Poor’s 500 com­pa­nies rose to a record $10.6 mil­lion, up from $10.5 mil­lion the year be­fore, ac­cord­ing to the Equilar/AP pay study.

Peer pres­sure is an­other fac­tor driv­ing up ex­ec­u­tive com­pen­sa­tion.

The board mem­bers re­spon­si­ble for set­ting CEO pay typ­i­cally con­sider what the heads of sim­i­lar com­pa­nies are mak­ing. If pay for one goes up, it will likely go up for oth­ers.

For the chief­tains of me­dia, there are also other fac­tors boost­ing pay.

Sev­eral work at com­pa­nies where a few ma­jor share­hold­ers con­trol the vote.

The me­dia mag­nate Sum­ner Red­stone con­trols al­most 80 per­cent of the vot­ing stock at CBS and Vi­a­com. Be­cause of his large hold­ings, Red­stone can eas­ily over­ride the con­cerns of other in­vestors about the level of CEO pay. Dis­cov­ery’s vot­ing stock is heav­ily in­flu­enced by the broth­ers Si and Don­ald Ne­w­house and John Malone, an­other in­flu­en­tial in­vestor in the me­dia in­dus­try.

At Com­cast, which owns NBC and Uni­ver­sal Stu­dios, CEO and Chair­man Brian Roberts con­trols a third of his com­pany’s vot­ing stock. That means he has sub­stan­tial in­flu­ence on the pay that he is awarded.

Com­cast had no com­ment when con­tacted by the AP for this story.

All of the me­dia ex­ec­u­tives have tried, with vary­ing de­grees of suc­cess, to max­i­mize the value of their com­pany’s en­ter­tain­ment brands on­line and on mo­bile de­vices.

For ex­am­ple, Moonves at CBS launched the se­ries Un­der the Dome — based on the Stephen King novel — both on the net­work and on the Ama­zon Prime stream­ing ser­vice. Be­sides reach­ing on­line cus­tomers, the move helped off­set pro­duc­tion costs. The com­pany, whose shows also in­clude NCIS and The Good Wife, has at­tracted 100,000 cus­tomers to “CBS All Ac­cess,” an on­line sub­scrip­tion plat­form that costs $6 a month. Time Warner, un­der CEO Jef­frey Bewkes, launched HBO Now, which streams shows to com­put­ers, tablets and smartphones for $15 a month.

At Dis­ney, CEO Robert Iger has bol­stered rev­enues through canny ac­qui­si­tions.

The pur­chase ofMarvel in 2009 is reap­ing div­i­dends with block­buster su­per­hero movies. Avengers: Age of Ul­tron, pulled in al­most $190 mil­lion in its open­ing week­end, mak­ing it the sec­ond-big­gest US movie open­ing ever. Dis­ney’s pur­chase of Lu­casFilms in 2012 means it also owns the highly lu­cra­tive Star Wars fran­chise, with the next in­stall­ment sched­uled for re­lease in De­cem­ber.

Dis­ney spokesman David Jef­fer­son said in an e-mail that Iger’s pay award “re­flected the com­pany’s out­stand­ing fi­nan­cial per­for­mance”, and cited its record earn­ings. He also said that dur­ing Iger’s ten­ure Dis­ney has re­turned more than $51 bil­lion to stock­hold­ers through share buy­backs and div­i­dends.

Me­dia stocks have climbed strongly the past five years.

An in­dex of me­dia com­pa­nies in the S&P 500 in­dex has risen 194 per­cent com­pared with a gain of 94 per­cent for the broader S&P 500.

Dis­cov­ery’s stock price has climbed al­most five­fold since it started trad­ing as a public com­pany in Septem­ber 2008.

Zaslav, who has led Dis­cov­ery since 2007, saw his com­pen­sa­tion rise last year af­ter he ne­go­ti­ated a new con­tract that will keep him at the com­pany un­til 2019.

Last year’s pay pack­age in­cluded $145 mil­lion in stock and op­tions awards, $6 mil­lion in cash bonuses, $3 mil­lion in base salary, and $1.9 mil­lion in perks.

The com­pany has pushed its chan­nels over­seas where pay TV pen­e­tra­tion is grow­ing faster than in the US.

Last year, Dis­cov­ery also grabbed a con­trol­ling stake in Eurosport In­ter­na­tional, mak­ing a bet on live sports. The move into Euro­pean sports has set the stage for re­newed growth over­seas.

Zaslav has done a ter­rific job, said Chris Marangi, port­fo­lio manager at GAMCO In­vestors Inc, which holds more than $150 mil­lion in Dis­cov­ery stock.

Dis­cov­ery de­clined to com­ment for this story when con­tacted by the As­so­ci­ated Press.

The pay pack­age of Vi­a­com CEO Philippe Dauman re­flects “solid fi­nan­cial re­sults, ex­e­cu­tion on key op­er­a­tional goals and a re­turn of $3.9 bil­lion to stock­hold­ers through stock buy­backs and div­i­dends”, com­pany spokesman Jeremy Zweig said in an e-mail.

Top ex­ec­u­tives are get­ting paid more be­cause much of their com­pen­sa­tion comes from bonuses linked to their com­pany’s fi­nan­cial and stock per­for­mance. Only a small part of their pay comes from their base salary.

Struc­tur­ing pay this way is in­tended to align the ex­ec­u­tives’ in­ter­ests to that of the com­pany and to en­cour­age long-term strate­gies.

Be­cause cor­po­rate earn­ings have grown con­sis­tently, with a near six-year ex­pan­sion of the econ­omy, ex­ec­u­tives have met or beaten their earn­ings tar­gets gen­er­ally.

Earn­ings-per-share for the av­er­age S&P 500 com­pany rose 7.7 per­cent in 2014, ac­cord­ing to data from S&P Cap­i­tal IQ. Rev­enue-per­share climbed 4 per­cent.

“There should be a strong link be­tween pay and per­for­mance. The mar­kets were up in 2014 so it makes sense that (com­pen­sa­tion) was go­ing in the same di­rec­tion,” said Bess Joffe, man­ag­ing direc­tor of cor­po­rate gov­er­nance at TIAA-CREF, an as­set man­age­ment com­pany.

“We would also ex­pect, in a down­turn, for the com­pen­sa­tion num­bers to fall.”

The gap be­tween pay for CEOs and that of the av­er­age worker nar­rowed slightly last year, be­cause av­er­age wages crept up more than CEO pay did.

A chief ex­ec­u­tive made about 205 times the av­er­age worker’s wage, com­pared with 257 times the year be­fore, ac­cord­ing to AP cal­cu­la­tions us­ing earn­ings statis­tics from the La­bor Depart­ment.

That gap was still much wider than six years be­fore, dur­ing the re­ces­sion, when ex­ec­u­tives earned 181 times the av­er­age worker’s pay.

The no­tion that ev­ery CEO is a vi­sion­ary in the mold of Steve Jobs, who led Ap­ple, or Bill Gates, who co-founded Mi­crosoft, is chal­lenged by some.

“There are su­per­star CEOs that def­i­nitely are the driv­ing force of the com­pany, but while they are out there, they are rare,” said Charles El­son, a cor­po­rate gov­er­nance ex­pert at the Uni­ver­sity of Delaware.

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