Tuesday, July 29th15.2°C
21450

5 reasons why media company executives top CEO pay lists

LOS ANGELES, Calif. - Once again, media company CEOs are among the highest paid executives in the nation, occupying six of the top 10 earning spots according to an Associated Press/Equilar study.

Compensation experts say a variety of factors are at play, including the gain in media stocks, the intangible value of talent in a hit-or-miss business, the control of shareholder power in very few hands, and the decline of the financial sector.

STOCK OUTPERFORMERS

Outsized stock growth boosts the value of stock and option grants. Media companies' shares have rebounded strongly since the 2008 recession, mainly because advertising spending grows in tandem with a growing economy. That means higher-priced ads and higher-priced execs.

Stocks of the six media companies on the list all outperformed the Standard & Poor's 500 index, which grew 128 per cent in the five years through December 2013, according to FactSet.

CBS Corp. shares grew a whopping 699 per cent in that period; Discovery Communications Inc. went up 539 per cent; Viacom Inc. rose 377 per cent; The Walt Disney Co. rose 250 per cent; Time Warner Inc. climbed 259 per cent and Comcast Corp. grew 223 per cent.

"If shareholders are happy they don't care how much a person makes," said Paul Dorf, managing director of consulting firm Compensation Resources Inc. "When they complain most is when the market doesn't do well and their stock is going down the tubes."

TALENT QUOTIENT

Making it big in media means generating hits. And while top executives may not be hands-on with every decision, they are where the buck stops.

Take Disney's animated blockbuster "Frozen," which grossed $1.2 billion at box offices worldwide. While Disney CEO Bob Iger didn't make the movie, he did orchestrate Disney's $7.4 billion acquisition of Pixar in 2006, which brought in talented executives to help reform Disney's faltering animation studio.

"With movie studios and the media, it's more of a talent business. You have highly paid people at all levels," said Alan Johnson, managing director of Johnson Associates, a compensation consultant in New York. "The view is the right CEO can make a big difference."

VOTING POWER

Control of voting power by a single shareholder can dilute the impact of "say on pay" advisory votes, experts say. A major shareholder can override other shareholders' concerns.

For instance, Sumner Redstone controls 79.7 per cent of the vote at CBS and 79.3 per cent of the vote at Viacom, possibly contributing to the higher pay of CEOs Les Moonves and Philippe Dauman, who were ranked No. 2 and No. 5.

CEO Brian Roberts, ranked No. 10, controls 33.3 per cent of the voting power at Comcast. And Discovery CEO David Zaslav, ranked No. 8, answers to one big boss: cable magnate John Malone, who controls 28.9 per cent of the vote.

"When you have the vote in your back pocket, you do not need to negotiate in the same way," said Nora McCord, managing director at Steven Hall & Partners, an executive compensation consulting firm in New York.

OTHER INDUSTRIES' DECLINE

Lists in previous decades might have had more financial and banking executives. Since the Great Recession punished those companies with government bailouts, bank collapses, accounting revisions and writedowns, they have dropped in the pay rankings.

"If you were to go back in time, a lot of these lists would have had financial executives," Johnson said. "They're not part of it anymore."

ALL BOATS RISE

When one company boosts pay, others compensate to remain competitive. That's why executive pay within industries tends to "move in lock step," McCord said.

The Canadian Press


Read more Business News

21411


Recent Trending




Today's Market
S&P TSX15445.22-9.82
S&P CDNX1019.852.41
DJIA16982.5922.02
Nasdaq4444.909-4.655
S&P 5001978.91+0.57
CDN Dollar0.9240-0.0021
Gold1310.00+6.70
Oil101.09-0.58
Lumber321.20-1.80
Natural Gas3.764+0.017

 
Okanagan Companies
Pacific Safety0.195+0.01
Knighthawk0.01-0.005
QHR Technologies Inc1.150.00
Cantex0.065-0.005
Anavex Life Sciences0.265-0.01
Metalex Ventures0.08+0.01
Russel Metals35.15-0.21
Copper Mountain Mining2.97+0.15
Colorado Resources0.225+0.015
ReliaBrand Inc0.10+0.019
Sunrise Resources Ltd0.02-0.03
Mission Ready Services0.19+0.01

 





FEATURED Property
12958061329 Ellis Street
1 bedrooms 2 baths
$349,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


Take charge of your debt

Photo: Thinkstock.comWays to reduce your Debt:Make a budget and get budget counselingA basic first step for debt reduction is to prepare a budget and plan your spending. Once you have a budget, you mu...


Geopolitical tensions rattle markets

The Big Picture Geopolitical tensions rattle markets The spectre of rising geopolitical tensions in Ukraine and Gaza cast a shadow over an otherwise positive week in the markets. News that a passenger...


Learn to delegate effectively

Photo: ContributedI have the pleasure of witnessing people delegate tasks quite often. Sometimes with tremendous success and sometimes with disastrous consequences. I have chaired a lot of committees...

_








Member of BC Press Council


22707