Music executives’ pay vs. Disney, Netflix and other media peers – Billboard
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Music industry executives at publicly traded companies are well paid, but they’re not the only ones.
As Billboard reported in Money Makers’ inaugural list of highest-paid music executives and shareholders at publicly traded companies, 10 CEOs earned near or more than $9 million in 2021. Of these, most their compensation came from stock awards and stock options, not base salary or performance bonuses. For example, only 5% of SiriusXM CEOs Jennifer WitzThe total compensation of $32.6 million came from a guaranteed salary. As is common practice among publicly traded companies, SiriusXM has tied most of Witz’s compensation to long-term stock performance.
Similarly, three employees of the South Korean company HYBE appear in the top 10 – $35 million, $34 million and $25 million – because they cashed in stock options after the IPO of the company in October 2020. Because stock and option awards are uneven from year to year, Witz’s compensation in 2022 could be dramatically different, and the three HYBE executives could not be on next year’s list.
It’s not nonsense, but salaries for music executives are generally lower than those seen at other technology and content companies. In film and television, the former Disney CEO and current chairman of the board Bob Iger earned $45.9 million – as much as anyone on Billboardexcept for the CEO of Universal Music Group Lucien Grainge (see below). The co-CEOs of Netflix, Hastings Reed and Ted Sarandoseach won $34.7 million. Bob Chapeck, Disney’s new CEO, earned $32.5 million, about as much as SiriusXM’s Witz. President and CEO of Paramount Global Robert Bakich reportedly placed No. 6 on Billboard’s list with $20 million.
Some people would say that these media executives are overpaid. “Entertainment companies have some of the worst compensation practices for their executives of any industry,” Rosanna Landis Weaverhead of the CEO compensation program for shareholder advocacy group As You Sow, Told Variety earlier this year for an article on executive compensation for film and television companies. One of the reasons companies have similar compensation systems is that they use each other as benchmarks. A compensation committee of the board of directors uses a group of peers from similar companies to determine an appropriate and competitive level of executive compensation. For 2021, Spotify’s Compensation Committee used a peer group that included a mix of technology and entertainment companies such as Snap, Discovery, Activision Blizzard, Netflix, Live Nation, SiriusXM and Electronic Arts. Similarly, Live Nation’s peer group included Activision Blizzard, Spotify, Universal Music Group, Warner Music Group, Paramount Global, and Netflix. The Electronic Arts peer group includes Activision Blizzard, SiriusXM, Snap and Warner Bros. Discovery.
As long as companies use this system, CEO compensation will stay where it is today, said Charles M. Elson, professor of finance at the Alfred Lerner College of Business and Economics at the University of Delaware. Variety. “The benchmark against which they are measured is too high for substantial change to be achievable.”
However, not all music executives are in the league of Chapek, Hasting and Sarandos. Out of nine companies not represented in Billboardof the top 10, the average CEO salary was $4.6 million. That excludes Spotify CEO Daniel Ek, who doesn’t receive a salary (but tops the shareholder list with $3.6 billion). As expected, compensation varied based on revenue and market capitalization of the company. The lowest-ranked US music CEO was Robert Ellin of LiveOne with total compensation of $621,000. Outside the US, Believe CEO Denis Ladegaillerie earned $444,000 (but ranked #7 in shareholding with $106 million) and HYBE Park CEO Ji-won received $445. $000 (both amounts have been converted using the average 2021 exchange rate).
The recent bear market will take a bite out of the take home pay of many music executives. Companies tend to value stock awards and options at the time of grant. But what ends up in the pockets of leaders could be radically different. Spotify’s stock price, for example, is down 52.9% year-to-date, for example. HYBE is down 54.7% mainly because the BTS members are pursuing solo projects. Any HYBE executive with stock options — like those on the top 10 list — was advised to sell before the news broke.