Media execs fill top-paid CEO list

Of S&P 500 firms, $10.6M average

This undated photo provided by Discovery Communications shows company CEO David Zaslav. Zaslav was the highest paid CEO in 2014, according to a study carried out by executive compensation data firm Equilar and The Associated Press.
This undated photo provided by Discovery Communications shows company CEO David Zaslav. Zaslav was the highest paid CEO in 2014, according to a study carried out by executive compensation data firm Equilar and The Associated Press.

NEW YORK -- They're not Hollywood stars, they're not TV personalities and they don't play in a rock band, but their pay packages are in the same league.

Six of the 10 highest-paid chief executive officers last year worked in the media industry, according to a study by executive compensation data firm Equilar and The Associated Press.

The best-paid chief executive of a large American company was David Zaslav, head of Discovery Communications, the pay-TV channel operator that is home to Shark Week. His total compensation more than quadrupled to $156.1 million in 2014 after he extended his contract.

Les Moonves of CBS held on to second place in the rankings, despite a drop in pay from a year earlier. His pay package totaled $54.4 million.

The remaining four CEOs -- from entertainment giants Viacom, Walt Disney, Comcast and Time Warner -- have ranked among the nation's highest-paid executives for at least four years, according to the pay study.

One reason for the high level of pay in the industry is that its CEOs are dealing with well-paid individuals.

"The talent -- the actors and directors and writers -- they're being paid a lot of money," said Steven Kaplan, a professor of finance at the University of Chicago Booth School of Business. "In industries where the talent makes a lot of money, the CEO makes a lot of money as well."

Pay packages for CEOs overall grew for the fifth straight year in 2014, driven by a rising stock market that pushed up the value of executive stock awards. Median compensation for the heads of Standard & Poor's 500 companies rose to a record $10.6 million, up from $10.5 million the year before, according to the study.

Peer pressure is another factor driving up executive compensation. The board members responsible for setting CEO pay typically consider what the heads of similar companies are making. If pay for one goes up, it will likely go up for others.

For the chieftains of media, there are also other factors inflating pay.

Several work at companies where a few major shareholders control the vote.

Media magnate Sumner Redstone controls almost 80 percent of the voting stock at CBS and Viacom. Because of his large holdings, Redstone can override the concerns of other investors about the level of CEO pay. Discovery's voting stock is heavily influenced by brothers Si and Donald Newhouse, as well as John Malone, another influential investor in the media industry.

At Comcast, which owns NBC and Universal Studios, CEO and Chairman Brian Roberts controls a third of his company's voting stock. That means he has substantial influence on the pay that he is awarded.

All of the media executives have tried, with varying degrees of success, to maximize the value of their company's entertainment brands online and on mobile devices.

For example, Moonves at CBS launched the series Under the Dome -- based on the Stephen King novel -- both on the network and on the Amazon Prime streaming service. Besides reaching online customers, the move helped offset production costs. The company, whose shows also include NCIS and The Good Wife, has attracted 100,000 customers to CBS All Access, an online subscription platform that costs $6 a month. Time Warner, under CEO Jeffrey Bewkes, introduced HBO Now, which streams shows to computers, tablets and smartphones for $15 a month.

At Disney, CEO Bob Iger has bolstered revenue through acquisitions.

The purchase of Marvel in 2009 is reaping dividends with blockbuster superhero movies. Avengers: Age of Ultron pulled in almost $190 million in its opening weekend, making it the second-biggest U.S. movie opening ever. Disney's purchase of LucasFilms in 2012 means it also owns the highly lucrative Star Wars franchise, with the next installment scheduled for release in December.

Disney spokesman David Jefferson said in an email that Iger's pay award "reflected the company's outstanding financial performance" and cited its record earnings. He also said that during Iger's tenure Disney has returned more than $51 billion to stockholders through share buybacks and dividends.

Media stocks have climbed strongly the past five years. An index of media companies in the S&P 500 index has risen 193 percent compared with a gain of 95 percent for the broader S&P 500.

Because corporate earnings have grown consistently, with a near six-year expansion of the economy, executives have met or beaten their earnings targets generally.

The gap between pay for CEOs and that of the average worker narrowed slightly last year, because average wages crept up more than CEO pay did.

A chief executive made about 205 times the average worker's wage, compared with 257 times the year before, according to calculations using earnings statistics from The Labor Department. That gap was still much wider than six years before, during the recession, when executives earned 181 times the average worker's pay.

The notion that every CEO is a visionary in the mold of Steve Jobs, who led Apple, or Bill Gates, who co-founded Microsoft, is challenged by some.

"There are superstar CEOs that definitely are the driving force of the company, but while they are out there, they are rare," said Charles Elson, a corporate governance expert at the University of Delaware.

Elson said that boards should look at overall levels of pay within their own company, rather than benchmarking pay against CEOs working in the same industry. He also said companies are paying too much to retain their chief executives when there is little evidence they'll move to competitors.

For the annual CEO pay study, Equilar assessed data from 338 companies that filed proxy statements with regulators between Jan. 1 and April 30. To calculate a CEO's pay package, Equilar and the AP looked at salary, stock and option awards, perks and bonuses.

The study includes only chief executives who have been at the helm of their company for at least two years. Because of these criteria, there are some notable omissions from the list.

Business on 05/27/2015

Upcoming Events