Top paid CEOs see pay pack­ages plum­met in rout

The Pak Banker - - COMPANIES/BOSS -

Top-paid media chief ex­ec­u­tive of­fi­cers Les Moonves, Bob Iger and David Zaslav, three of the best-com­pen­sated CEOs in the U.S., saw their jumbo pay pack­ages cut by tens of mil­lions of dol­lars in a two-day stock rout.

The re­spec­tive CEOs of CBS Corp., Walt Dis­ney Co. and Dis­cov­ery Com­mu­ni­ca­tions Inc. were among the 40 high­est-paid U.S. ex­ec­u­tives last year, ac­cord­ing to the Bloomberg Pay In­dex. Op­tions and re­stricted shares in their pack­ages have slumped since Dis­ney's dis­ap­point­ing earn­ings Tues­day led to the worst two-day drop in the S&P 500 Media In­dex since 2008.

Media-in­dus­try pay has out­paced other sec­tors in re­cent years, ac­cord­ing to data com­piled by Bloomberg. Buoyed by eq­uity awards, ex­ec­u­tive com­pen­sa­tion surged as media stocks, mea­sured by the S&P in­dex, rose more than four­fold since global eq­ui­ties bot­tomed in March 2009. "If the stock mar­ket in the sec­tor is com­ing down, peo­ple ex­pect to see the pay com­ing down as well," said Robin Fer­ra­cone, chief ex­ec­u­tive of­fi­cer of Fari­ent Ad­vi­sors LLC, a com­pen­sa­tion con­sul­tant. "In­vestors want to see ex­ec­u­tives in the boat with them."

Moonves's pay has fallen by $4.3 mil­lion from the $50.8 mil­lion it was worth at the end of 2014, ac­cord­ing to data com­piled by Bloomberg. Zaslav, who runs the small­est of the three com­pa­nies yet had the big­gest pay­check last year, is down $16.4 mil­lion.

The stocks tum­bled on mount­ing con­cerns over so-called cord-cut­ters, peo­ple who drop tra­di­tional pay-TV pack­ages cost­ing about $90 a month for less-ex­pen­sive online stream­ing ser­vices like Net­flix Inc., un­der­min- ing a busi­ness model that has sus­tained the TV in­dus­try for decades. Media com­pa­nies rely on two sources of rev­enue: sub­scriber fees and advertising. Net­flix, whose bil­lion­aire CEO Reed Hast­ings doesn't earn enough to rank among the top 200 in pay, jumped to a record high as the media stocks tanked. Hast­ings was awarded $7.6 mil­lion last year, more than half in stock op­tions. The value of that pack­age has tripled in value to $23.5 mil­lion.

Zaslav, who leads a com­pany with more than $6 bil­lion in rev­enue, was awarded $94.9 mil­lion last year, mostly in eq­uity. That made him the 10th-high­est-paid U.S. ex­ec­u­tive, ac­cord­ing to the in­dex, ahead of Ap­ple Inc.'s Tim Cook, CEO of the most-valu­able U.S. cor­po­ra­tion, and Doug McMil­lon, head of Wal-Mart Stores Inc., the largest U.S. com­pany based on sales.

Moonves ranked 36th in CEO pay last year. One of the big­gest losers over the past few days has been Vi­a­com Inc., owner of Com­edy Cen­tral and Nick­elodeon, which de­clined 21 per­cent and is now down 41 per­cent for the year. The drop has cut the value of CEO Philippe Dauman's pay pack­age by $7.7 mil­lion from $36.5 mil­lion at the end of fis­cal 2014. He is ranked 61st.

Even with the losses in re­cent days, Dis­ney's Iger is still up $6.1 mil­lion to $57.5 mil­lion from the es­ti­mated value of his pay at the end of the com­pany's fis­cal year in Septem­ber. Since then, Dis­ney stock is up 22 per­cent. Iger is the 35thhigh­est-paid U.S. ex­ec­u­tive, the in­dex shows.

Cash still makes up a large chunk of media CEO pay, shel­ter­ing the ex­ec­u­tives from mar­ket swings. Moonves re­ceived $28.5 mil­lion in salary and bonus last year, Iger and Dauman re­ceived $25.3 mil­lion and $23.9 mil­lion, re­spec­tively, and Zaslav col­lected $9.1 mil­lion.

Awarded pay mea­sures what a com­pen­sa­tion com­mit­tee in­tended to pay an ex­ec­u­tive, not what was re­ported by the com­pany in the sum­mary com­pen­sa­tion ta­ble. It in­cludes salary, cash bonuses and stock awards re­ceived dur­ing the fis­cal year that are val­ued as of that year-end's stock price. It ac­counts for changes in the value of pen­sions, and in­cludes perks such as club dues and per­sonal use of cor­po­rate jets.

Still, fall­ing eq­uity val­ues won't be the only prob­lem for the media CEOs if in­vestors' fears are right and the busi­ness is in de­cline. Bonuses tied to earn­ings are also likely to im­plode. "If earn­ings fall but pay doesn't, in­vestors are go­ing to cry foul," Fer­ra­cone said.

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