... Entertainment executives continue to reap some of the biggest rewards when it comes to compensation.
The biggest pay day so far went to Discovery Communications Chief Executive David Zaslav, who received a $156.1-million compensation package in 2014 even though he manages one of the smaller media companies. That's a stratospheric level even by Wall Street standards. Consider that JPMorgan Chase & Co., the nation's largest bank, reported in January that CEO Jamie Dimon raked in a pay package of $20 million. ...
Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, said that sky-high executive compensation packages for media executives is just a symptom of a larger problem. Many of the companies have two classes of stock — voting and nonvoting shares — which reduces ordinary shareholders to bystanders with no influence.
"Investors in media companies really don't have a voice like they do in other companies," Elson said Friday. "That's why you see all of these high salaries in media. The whole thing is a toxic cocktail for investors." ...
Executive compensation experts long have attributed the outsized compensation in media to the "Judge Judy" effect. The TV judge, whose syndicated daytime show is distributed by CBS, is paid about $45 million a year. Company CEOs do not want to see their compensation dip below hers. ...
Judge Judy. Jeebus.
What's always hit me as a semi-interested bystander to CEO compensation inside Entertainmentland is how the generous wages persevere through good times and bad.
A company's stock goes up, the chief exec gets rewarded with a big bonus and/or stock option payout. The company stock goes down, the chief exec gets rewarded with a larger salary and/or more generous bonus. Years ago, when Disney's stock was declining, Michael Eisner and his lieutenant Robert Iger went to the Disney board asking for sizable bonuses ... and got them. (I know this because a Disney exec complained to me about it at the time.)
The "compensation tied to performance" thingie sounds good in theory, but in practice often doesn't mean very much. As the Times points out above.
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The "compensation tied to performance" thingie sounds good in theory, but in practice often doesn't mean very much. As the Times points out above.
As William J Bernstein once put it in 2007...
That the pursuit of high compensation actually destroys ability should not surprise; the fact that the CEOs of large European corporations are paid a small fraction of what their American counterparts receive does not mean that our firms are better managed. Far from it; were pay related to performance, then Disney, Time Warner, and Blockbuster should be the best-run firms in the United States. Were high salaries a necessary ingredient for performance, the Diplomatic Corps, Jesuits, and Navy Seals would not be able to attract highly qualified personnel. -- "The Executioner of Excellence"
As this type of selfishness and greed rise... our sustainability decreases. Like to see some benevolent studios on the rise and greedy ones boycotted. Thanks for posting Steve!
Let me be Capt. Obvious here: this is the number one problem plaguing the entertainment industry. High margins for box office are necessary to sustain these bloated salaries but terrible for culture building.
No wonder why the bottom line is all anyone cares about.
PS. Steve, read your book. Loved it. Do more.
Thanks, Sean. I have another installment in mind, but my time (and energy?) are limited, so it will be a while before the thing is done.
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