Sky chief executive receives £12m payout despite a 6% fall in profits
Jeremy Darroch sees total salary quadruple to £16m Broadcaster’s operating profits decline to £1.47bn
Sky’s chief executive, Jeremy Darroch, was paid more than £16m in the year to the end of June as the broadcaster’s UK and Ireland business reported a hefty fall in annual profits.
Darroch’s total remuneration almost quadrupled year on year, from £4.6m in 2016 to £16.3m, thanks to a payout of nearly £12m under Sky’s long-term incentive plan. Darroch’s pay was a more modest £4.7m in 2015 as the scheme vests every two years. He also received a bonus of £1.9m, 186% of a potential 200% of his £1.04m annual salary.
The payouts came as Sky’s total operating profits fell 6% to £1.47bn for the year. The UK profits, which accounted for £1.3bn of the total profits, were down 14%.
Sky called it an excellent performance given a one-off rise in the cost of its Premier League rights deal of £629m and £51m spent getting its mobile service up and running. Revenues across the group, which includes operations in Germany, Italy and Austria, rose 10% to £12.9bn.
The £12m that Darroch received from Sky’s long-term incentive plan related to the performance of the business in the three years to June 2016 and not the fall in profits in the most recent financial year.
Darroch cashed in £11.5m in shares in July, and Andrew Griffith, Sky’s finance chief, sold £6.8m in shares.
Sky also said that it had paid £16m to advisers in the year to the end of March in relation to 21st Century Fox’s bid for the 61% of the company it does not own.
The culture secretary, Karen Bradley, said on Tuesday that she was set to refer the deal to the competition regulator for a six-month investigation on media plurality and broadcasting standards grounds.
This means Sky shareholders can look forward to a £172m special dividend, which the company said it would pay out if the deal did not complete this year.
The delay means Sky investors will now also receive a further interim dividend of up to £224m, usually paid out at the end of March. Fox has promised a £200m break fee if the deal fails to be sealed.
Wilton Fry, an analyst at RBC Europe, said investors believed there was still an 85% chance that the Competition Markets Authority would clear the deal. RBC predicts Fox will get the deal through by offering to separate Sky News to address the media plurality concerns.
“The issue of broadcasting standards is harder to gauge,” said Fry. “We believe the issues raised – such as potential undue influence, corporate governance, etc – should all be able to be resolved via either behavioural and/or structural remedies.
“The real question in our mind is where is the point of pain at which point Fox would not be willing to accept the remedies? Very tough remedies could include, for example, a prohibition on James Murdoch’s executive powers, given his prior relationship with News Corp at the time of the phone hacking scandal.”
£11.5m Julia Stiles, top, appears in Sky’s recent big budget mini-series Riviera. Above, the value of shares, above, that the company’s chief executive, Jeremy Darroch, right, sold in July