Top-paid media chief executive officers Les Moonves, Bob Iger and David Zaslav, three of the best-compensated CEOs in the U.S., saw their jumbo pay packages cut by tens of millions of dollars in a two-day stock rout.
The respective CEOs of CBS Corp., Walt Disney Co. and Discovery Communications Inc. were among the 40 highest-paid U.S. executives last year, according to the Bloomberg Pay Index. Options and restricted shares in their packages have slumped since Disney’s disappointing earnings Tuesday led to the worst two-day drop in the S&P 500 Media Index since 2008.
Media-industry pay has outpaced other sectors in recent years, according to data compiled by Bloomberg. Buoyed by equity awards, executive compensation surged as media stocks, measured by the S&P index, rose more than fourfold since global equities bottomed in March 2009.
“If the stock market in the sector is coming down, people expect to see the pay coming down as well,” said Robin Ferracone, chief executive officer of Farient Advisors LLC, a compensation consultant. “Investors want to see executives in the boat with them.”
Moonves’s pay has fallen by $4.3 million from the $50.8 million it was worth at the end of 2014, according to data compiled by Bloomberg. Zaslav, who runs the smallest of the three companies yet had the biggest paycheck last year, is down $16.4 million.
The stocks tumbled on mounting concerns over so-called cord-cutters, people who drop traditional pay-TV packages costing about $90 a month for less-expensive online streaming services like Netflix Inc., undermining a business model that has sustained the TV industry for decades. Media companies rely on two sources of revenue: subscriber fees and advertising.
Netflix, whose billionaire CEO Reed Hastings doesn’t earn enough to rank among the top 200 in pay, jumped to a record high as the media stocks tanked. Hastings was awarded $7.6 million last year, more than half in stock options. The value of that package has tripled in value to $23.5 million.
Zaslav, who leads a company with more than $6 billion in revenue, was awarded $94.9 million last year, mostly in equity. That made him the 10th-highest-paid U.S. executive, according to the index, ahead of Apple Inc.’s Tim Cook, CEO of the most-valuable U.S. corporation, and Doug McMillon, head of Wal-Mart Stores Inc., the largest U.S. company based on sales.
Moonves ranked 36th in CEO pay last year.
One of the biggest losers over the past few days has been Viacom Inc., owner of Comedy Central and Nickelodeon, which declined 21 percent and is now down 41 percent for the year. The drop has cut the value of CEO Philippe Dauman’s pay package by $7.7 million from $36.5 million at the end of fiscal 2014. He is ranked 61st.
Even with the losses in recent days, Disney’s Iger is still up $6.1 million to $57.5 million from the estimated value of his pay at the end of the company’s fiscal year in September. Since then, Disney stock is up 22 percent. Iger is the 35th-highest-paid U.S. executive, the index shows.
Cash still makes up a large chunk of media CEO pay, sheltering the executives from market swings. Moonves received $28.5 million in salary and bonus last year, Iger and Dauman received $25.3 million and $23.9 million, respectively, and Zaslav collected $9.1 million.
Awarded pay measures what a compensation committee intended to pay an executive, not what was reported by the company in the summary compensation table. It includes salary, cash bonuses and stock awards received during the fiscal year that are valued as of that year-end’s stock price. It accounts for changes in the value of pensions, and includes perks such as club dues and personal use of corporate jets.
Still, falling equity values won’t be the only problem for the media CEOs if investors’ fears are right and the business is in decline. Bonuses tied to earnings are also likely to implode.
“If earnings fall but pay doesn’t, investors are going to cry foul,” Ferracone said.