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Media moguls on elevated pay scale

While most CEOs of U.S. companies saw their compensation fall in 2009, top executives of TV, movie and cable companies continued to rake it in.

May 08, 2010|By Meg James, Los Angeles Times

Doing quite well, yes, but that's in comparison to quite dismal lows. CBS stock is trading at about $16 a share, quadruple its recessionary nadir last year but well off its peak in 2007 of above $30 a share.

There also is the benefit of longevity.

"A lot of these guys have been around for years and they helped establish their companies, like Moonves, Murdoch and Barry Diller," said Boyd. "For them, it is probably easier to make the case that they should have a certain pay because they have played such an important role."

However, Corporate Library, an independent corporate governance research firm based in Portland, Maine, pointed out that company founders and other "executive chairmen" can take advantage of their influence. "Many executive chairs have no operational role within their companies but are paid like high-level executives," a recent report by the firm found. It said Sumner Redstone, who is executive chairman of both CBS and Viacom Inc., was one of the highest paid.

Last year, Redstone, who turns 87 this month, received $33.1 million as chairman of his two companies. He spends much of his time at his estate perched above Beverly Hills with his long-haired dachshunds.

But where are the watchdogs?

"It ultimately comes down to the board of directors. Should these directors 'just say no' to the CEOs?" asked Charles Elson, a professor at the University of Delaware who specializes in corporate governance. "How independent are they from the management of the company? These boards should be negotiating in the best interests of shareholders."

Standing up to a strong CEO can backfire. If a board cuts a CEO's salary, the executive could become bitter and leave. That could destabilize the company and cost it much more than what was saved by paring the salary, said James F. Reda, a New York-based executive compensation consultant.

Still, Reda predicts that in five years entertainment chiefs won't rake in such hefty rewards. He compared media moguls to the steel barons and railroad titans of the 1930s. Captains of those industries are now much further down the corporate pay scale.

"The whole move to digital doesn't bode well for entertainment companies," he said. "These big compensation packages are something of a holdover, and the profit margins do not support them. There is going to be a tipping point and then you will see this begin to trend down. But for now, there is a lot of inertia."

meg.james@latimes.com

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