 "For the highest-paid chief executives, the party goes on")
It pays to work for John C Malone. The billionaire who built a cable and communications empire is 74, and no longer a chief executive himself. But Malone still exerts sway from various boardrooms, and the CEOs at the companies he oversees are routinely among the best compensated managers on the planet. Last year, the largesse was particularly notable.
Take Discovery Communications, the cable group behind Shark Week and shows like Cake Boss. Malone spun Discovery out of his media group and still sits on the board. His choice for chief executive, David M Zaslav, received total compensation worth $156 million last year, making him the highest-paid chief of an American public company, according to the Equilar 200 Highest-Paid CEO Rankings, conducted for The New York Times.
Just behind Zaslav on the list of the highest-paid chief executives is Michael T Fries of Liberty Global, an international cable and wireless group that Malone presides over as chairman. And while Fries made considerably less than Zaslav - $44 million less - he still got a package worth $112 million.
Gregory B Maffei, one of Malone's closest lieutenants, was paid twice in 2014. As chief of Liberty Media, which owns the Atlanta Braves baseball team and a big stake in the satellite radio provider SiriusXM, Maffei received compensation of $41.3 million. As chief of Liberty Interactive, a related company that owns stakes in home shopping networks, he received $32.4 million. Malone, the chairman of both companies, awarded his friend a total of $74 million last year, placing him sixth on the list.
Thomas M Rutledge, another Malone confidant who oversees the regional cable operator Charter Communications, where Malone and Maffei are board members, was given a $16-million package last year, an increase of 259 per cent over 2013. Though Malone is not on the compensation committee that sets executive pay, Maffei is. Taken together, the four CEOs were awarded more than $350 million last year, occupying three of the top six spots of the study conducted by Equilar, an executive compensation data firm.
Today's bursting-at-the-seams paydays arrive despite sustained efforts to restrict excessive executive compensation. Since the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, which made certain pay practices more onerous, compensation committees have mostly abandoned several controversial pay mechanisms. Employers are no longer footing the tax bills for departing CEOs who enjoy golden parachutes. Supplemental pension plans, which heaped benefits on executives regardless of how well the company did, are largely a thing of the past. Stock awards are mostly tied to performance, not simply awarded at regular intervals. "Fifteen years ago, there were some programmes that were egregious," Gerard Leider of Meridian Compensation Partners said. "Today there is more sensitivity than there ever has been."
Underpinning these efforts was a belief that more transparency would lead to some much needed belt-tightening. If only companies were forced to reveal just how sweet their packages were, perhaps they would reform. "The increased pressure for more disclosure was motivated by public shaming," said Regina Olshan, head of the executive compensation practice at Skadden, Arps, Slate, Meagher & Flom. "The idea was somehow that the companies would be ashamed and change their ways." It hasn't worked. If companies have to report CEO pay that is 1,000 times that of the average worker or justify growing pay in spite of weak results, perhaps shame will kick in. In the meantime, like an all-you-can-eat buffet for America's captains of industry, it seems there is no end to how much money executives can devour. For the first time, all 10 of the top-paid CEOs on Equilar's list received at least $50 million last year.
And while much of the overall compensation came in the form of stock - some of which vests over several years - some chief executives received generous cash bonuses, a form of compensation that does little to incentivise long-term performance.
Big pay has its defenders. "What does 'excessive' mean?" said Leider, the compensation consultant who advises companies on pay packages. "What somebody who works on the line considers excessive is different than what someone who has worked in management for 10 years considers excessive." The defence of these supersize salaries comes down to the idea that the executives, like celebrities, ought to be rewarded for their indispensable contributions. "Movie stars and sports stars get paid a lot for a very unique skill set," Leider said. "Some of these CEOs have very unique skill sets."
What's more, the companies say that many pay packages are largely tied to performance, aligning the interests of the chief executive with those of shareholders, and that some headline figures are skewed by the fact that many stock awards vest over time.
For example, Satya Nadella, who was named chief of Microsoft in February of last year, was awarded compensation worth $84.3 million in 2014. But most of that is a one-time equity grant that will be distributed over seven years.
For a more accurate picture, "the value of equity awards should be annualised over their vesting periods," a Microsoft spokesman said. By that measure, Nadella would have earned nearly $22.8 million last year, $29 million from 2015 to 2018, and $26.5 million in 2019 and 2020. Still a handsome payday.
Take Discovery Communications, the cable group behind Shark Week and shows like Cake Boss. Malone spun Discovery out of his media group and still sits on the board. His choice for chief executive, David M Zaslav, received total compensation worth $156 million last year, making him the highest-paid chief of an American public company, according to the Equilar 200 Highest-Paid CEO Rankings, conducted for The New York Times.
Just behind Zaslav on the list of the highest-paid chief executives is Michael T Fries of Liberty Global, an international cable and wireless group that Malone presides over as chairman. And while Fries made considerably less than Zaslav - $44 million less - he still got a package worth $112 million.
Gregory B Maffei, one of Malone's closest lieutenants, was paid twice in 2014. As chief of Liberty Media, which owns the Atlanta Braves baseball team and a big stake in the satellite radio provider SiriusXM, Maffei received compensation of $41.3 million. As chief of Liberty Interactive, a related company that owns stakes in home shopping networks, he received $32.4 million. Malone, the chairman of both companies, awarded his friend a total of $74 million last year, placing him sixth on the list.
Thomas M Rutledge, another Malone confidant who oversees the regional cable operator Charter Communications, where Malone and Maffei are board members, was given a $16-million package last year, an increase of 259 per cent over 2013. Though Malone is not on the compensation committee that sets executive pay, Maffei is. Taken together, the four CEOs were awarded more than $350 million last year, occupying three of the top six spots of the study conducted by Equilar, an executive compensation data firm.
Today's bursting-at-the-seams paydays arrive despite sustained efforts to restrict excessive executive compensation. Since the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, which made certain pay practices more onerous, compensation committees have mostly abandoned several controversial pay mechanisms. Employers are no longer footing the tax bills for departing CEOs who enjoy golden parachutes. Supplemental pension plans, which heaped benefits on executives regardless of how well the company did, are largely a thing of the past. Stock awards are mostly tied to performance, not simply awarded at regular intervals. "Fifteen years ago, there were some programmes that were egregious," Gerard Leider of Meridian Compensation Partners said. "Today there is more sensitivity than there ever has been."
Underpinning these efforts was a belief that more transparency would lead to some much needed belt-tightening. If only companies were forced to reveal just how sweet their packages were, perhaps they would reform. "The increased pressure for more disclosure was motivated by public shaming," said Regina Olshan, head of the executive compensation practice at Skadden, Arps, Slate, Meagher & Flom. "The idea was somehow that the companies would be ashamed and change their ways." It hasn't worked. If companies have to report CEO pay that is 1,000 times that of the average worker or justify growing pay in spite of weak results, perhaps shame will kick in. In the meantime, like an all-you-can-eat buffet for America's captains of industry, it seems there is no end to how much money executives can devour. For the first time, all 10 of the top-paid CEOs on Equilar's list received at least $50 million last year.
And while much of the overall compensation came in the form of stock - some of which vests over several years - some chief executives received generous cash bonuses, a form of compensation that does little to incentivise long-term performance.
Big pay has its defenders. "What does 'excessive' mean?" said Leider, the compensation consultant who advises companies on pay packages. "What somebody who works on the line considers excessive is different than what someone who has worked in management for 10 years considers excessive." The defence of these supersize salaries comes down to the idea that the executives, like celebrities, ought to be rewarded for their indispensable contributions. "Movie stars and sports stars get paid a lot for a very unique skill set," Leider said. "Some of these CEOs have very unique skill sets."
What's more, the companies say that many pay packages are largely tied to performance, aligning the interests of the chief executive with those of shareholders, and that some headline figures are skewed by the fact that many stock awards vest over time.
For example, Satya Nadella, who was named chief of Microsoft in February of last year, was awarded compensation worth $84.3 million in 2014. But most of that is a one-time equity grant that will be distributed over seven years.
For a more accurate picture, "the value of equity awards should be annualised over their vesting periods," a Microsoft spokesman said. By that measure, Nadella would have earned nearly $22.8 million last year, $29 million from 2015 to 2018, and $26.5 million in 2019 and 2020. Still a handsome payday.
©2015 The New York Times News Service