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Studios Slam Pay Disclosure Plan

SEC says proposal would serve investors. CBS, Disney and others say it would hurt recruitment.

April 11, 2006|From Bloomberg News

CBS Corp., Walt Disney Co., NBC Universal and Viacom Inc. are protesting a proposal by the Securities and Exchange Commission that may force them to disclose what they pay their Hollywood studio chiefs.

The rule would require companies to list the pay of up to three nonexecutive employees whose compensation exceeds any of its named officers. That may hurt Hollywood's ability to recruit employees who don't want their pay to become public, according to lawyers from the New York-based firm Shearman & Sterling who represent the four media companies.

Hollywood studios, such as Viacom's Paramount division, are resisting the SEC proposal amid heightened competition for top talent ranging from studio heads to directors and stars. Paramount studio chief Brad Grey, for example, has made a series of major hires in the last year, including luring former Universal Pictures Chairwoman Stacey Snider to run its DreamWorks division.

"The new requirements could place the disclosing company at a competitive disadvantage," wrote Shearman lawyers Linda Rappaport and George Spera in a letter to the SEC dated Monday. The change might "result in the disclosure of sensitive and confidential information concerning compensation levels that could affect industrywide negotiations."

The proposed rule would also place "significant" compliance burdens on many companies, because it would require them to track the total compensation of many employees to make sure they correctly identify three who fit the rule, they wrote.

The lawyers said that in some cases involving film, television and other recorded performances, some payments extend over several years, making current agreements potentially subject to future disclosure even though they were written before the proposed rules were created.

John Nester, a spokesman for the SEC, said the regulatory agency doesn't comment on letters it receives.

"The purpose of such disclosure is to give shareholders a better idea of how compensation is done at the companies they own," Nester said.

New York-based CBS Corp. owns the CBS television network, and Fairfield, Conn.-based General Electric Co.'s NBC Universal owns the NBC TV network and the Universal film studio.

Disney, located in Burbank, runs the ABC television network and the Buena Vista and Miramax film studios.

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