Lions Gate Amends Proxy After Underreporting CEO’s Pay

Jon Feltheimer, the chief executive officer of Lions Gate Entertainment Corp., the studio that distributed the “Hunger Games” movie franchise, received $2.7 million more in compensation last year than his company reported in its proxy statement released three days ago.

A grant of 94,971 restricted stock units awarded in January was undervalued by 91 percent, a Bloomberg News review of the U.S. Securities and Exchange Commission filing shows.

“We inadvertently applied Black Scholes rather than fair value,” Peter Wilkes, a Lions Gate spokesman, said in a phone interview yesterday, referring to the options-pricing method the company used to value the restricted shares. The company filed an amendment to its proxy today that shows Feltheimer was paid $66.3 million in fiscal year 2014.

That brings him within $1 million of CBS Corp. CEO Leslie Moonves, who received $66.9 million. CBS has a market capitalization that’s about seven-times larger than Lions Gate, the fifth-largest production studio last year with $1.07 billion in gross box office sales, according to Box Office Mojo.

“There are only two differences between CBS and Lions Gate,” pay expert Bud Crystal said in a phone interview. “CBS is many times bigger and it is a fantastically good performer. Lions Gate underperformed the S&P last year and they’re a shrimpy company.”

Membership Dues

Feltheimer, 62, received $1.47 million in salary, $14.4 million in stock awards, $41.5 million in options and an $8.75 million bonus for the year ended in March, according to the proxy amendment. He received almost $200,000 in other pay, including almost $24,000 for club membership dues. The equity awards vest in equal installments over four years.

The $2.7 million in underreported RSUs were awarded for increases in Santa Monica, California-based Lions Gate’s stock price. The company has more than quadrupled since July 2011.

“The big media executives are among the highest-paid executives anywhere,” Paul Sweeney, an analyst at Bloomberg Intelligence, said in a phone interview. “It puts Wall Street to shame.”

In March, Lions Gate said it failed to properly disclose share transfers to a director that prevented activist investor Carl Icahn’s takeover attempt of the company in 2010. The company sold 16 million shares to director Mark Rachesky, a managing member at MHR Advisors LLC.

Icahn Defeated

Icahn’s director nominee was defeated by “the same number of shares” Rachesky obtained from Lions Gate, according to a decision written by Jill M. Peterson, assistant secretary at the SEC. The company agreed to pay a $7.5 million civil fine. MHR owns 37.4 percent of Lions Gate and Rachesky serves as chairman and sits on the company’s compensation committee. He didn’t respond to phone calls seeking comment.

Lions Gate is scheduled to release “The Expendables 3,” starring Sylvester Stallone, Jet Li and Terry Crews on Aug. 15. It acquired Summit Entertainment LLC, the studio that produced the “Twilight” series, for $412.5 million in January 2012.

Summary compensation tables are mandated by the SEC and show some compensation awards in the year they’re granted rather than for the year they’re earned. Some awards are restricted, vesting and paying out over a set time frame, and the receipt of others may depend on future performance goals. The summary compensation table also counts changes in pension and the value of perks.

(An earlier version of this story corrected the pay period in the third paragraph.)

(Updates with Summit Entertainment transaction in the 11th paragraph.)
Before it's here, it's on the Bloomberg Terminal.