There is a well-known Los Angeles company that has been battered by the recession. Its stock price has tumbled. Its profits aren’t what they used to be. Recently, it offered buyouts to hundreds of executives. Yet the same company just disclosed that it paid its CEO $30 million in 2008, an 11 percent increase over the previous year.
The generous employer happens to be the Walt Disney Company. The lucky CEO is Bob Iger. Most people would say Iger has done a perfectly good job since he replaced the mercurial and polarizing Michael Eisner in 2005. Iger is also shrewd enough to know that this isn’t the best time for the head of a public company to be pocketing huge sums of money. Indeed, Disney said its CEO decided to forgo an additional bonus of $2.4 million as a gesture of good will.
That is admirable. But Iger is still making extraordinary amounts of money. He’s not the only media company chief taking home eight figures at a time when restraint might be more appropriate. The future of big media companies like Disney is uncertain at best. They are being whipsawed by the recession and by the inexorable migration of customers and advertisers to the Internet.
But top executives are still being compensated as if it is 1999 when content, as they used to say, was king, and their companies’ shares were buoyed by mergers and acquisitions, many of which turned out to be disastrous for their stockholders and employees.
Bob Iger isn’t the most extreme example. In 2007, CBS CEO Leslie Moonves was awarded a compensation package worth $36.8 million. Moonves is a gifted network television programmer. But it’s been rough sledding at CBS lately. Recently, Bernstein Research predicted ad revenues at the company’s local stations would fall by 26 percent in 2008. It warned that CBS might have to slash its dividend to keep a healthy credit rating. Moonves may soon need to make a goodwill gesture himself to keep investors happy.
News Corporation CEO Rupert Murdoch and the company’s COO, Peter Chernin, are two more of the media industry’s highest paid executives. Murdoch made $27 million in 2007. His deputy made $28 million. This is nearly $4 million less than they each made in 2006. But News Corporation’s stock has been in a tailspin for the last two years. Still, there must be plenty of shareholders who would argue that Murdoch and Chernin deserved to give up a little more.
Time Warner’s top executives haven’t raked in nearly as much. They are hardly in a position to protest. Their famously dysfunctional company has yet to recover from its failed 2000 merger with AOL. Richard Parsons, Time Warner’s former chairman and CEO, received $18 million in 2007. (Earlier this year, he departed for Citigroup.) Parsons’ successor, Jeff Bewkes, made $19 million. The change in the executive suite has done nothing to revive the company’s moribund stock prices. Neither has the latest round of layoffs at Time Inc. and Warner Brothers. (Full disclosure: I worked for Time Inc.’s Fortune for almost nine years.)
Then there is Yahoo’s new CEO Carol Bartz. She walks in the door with total compensation package valued at more than $19 million. Bartz’s salary is $1 million. That’s a half of what Iger is getting and a third of Iger’s salary. The rest of Bartz’s compensation comes in stock options. Fair enough. In the last 12 months, Yahoo shares have tumbled 57 percent. Then again, she imposed a salary freeze at the company. Hopefully, her new underlings have some options, too. Otherwise, they won’t benefit financially if Yahoo recovers.
Of course, there are many people in the media business who are getting by on considerably less. Dreamworks Animation CEO Jeffrey Katzenberg’s total compensation was $11 million in 2007. Lions Gate CEO Jon Feltheimer made $6.4 million. Warner Music Group CEO Edgar Bronfman Jr.’s compensation was $3.4 million. Bronfman’s recorded music chairman Lyor Cohen actually makes over $1 million more than his boss.
Should these underpaid executives apply for a job at CBS? They really know how to pay a CEO at the Tiffany network. Maybe Disney is hiring too. Aren’t you supposed to make big bucks in the media business?
But here’s another way to think about it. Disney and Time Warner were hot companies in the nineties. Now they are being overshadowed by newer ones like Amazon and Google. Part of the reason is that those companies have a better idea where the media business is headed in the digital age.
How much are their CEOs paid? Nowhere close to the old media guys. Amazon’s Jeff Bezos made $1.3 million in 2007 His salary is a mere $81,840. The rest of his compensation, according to Amazon’s filing with the Securities and Exchange Commission, “represents the approximate incremental cost of security arrangements for Mr. Bezos in addition to security arrangements provided at business facilities and for business travel. The Company believes that all Company-incurred security costs are reasonable.
Google paid Eric Schmidt $480,561. The company says $474,662 of that amount is for personal security and approximately $4,000 paid by Google on Eric’s behalf for aggregate incremental costs related to aircraft chartered for Google business on which family and friends flew.”
Yet Schmidt and Bezos are obviously enjoying their power and influence. Could it be that money isn’t everything in business? Maybe someone should tell that to Bob Iger.