The three highest paid executives in entertainment last year worked for… (Chip Somodevilla, Getty…)
Even in the most rarefied echelons of executive compensation, media mogul Sumner Redstone and his top lieutenants are in a league of their own.
Philippe Dauman, chief executive of Viacom Inc., last year earned the distinction of drawing the largest compensation package in corporate America: $84.5 million. That was a 149% jump from the previous year, lifted by a one-time stock and options award totaling $54.4 million, which came courtesy of signing a new five-year employment agreement to run the company that boasts such prominent cable TV channels as MTV, Nickelodeon and Comedy Central and Hollywood movie studio Paramount Pictures.
Dauman's second-in-command, Thomas E. Dooley, received $64.7 million. His take, also boosted by a nearly $41 million one-time stock and options bonus tied to the signing of a new contract and added responsibilities, represented a 139% increase from his 2009 pay. The Viacom chief operating officer's compensation was even six times higher than for a typical CEO in the U.S.
Dauman's and Dooley's salaries covered only nine months of work, rather than a full year, because Viacom changed its fiscal calendar midyear to align it with the TV season.
At Redstone-controlled broadcasting giant CBS Corp., CEO Leslie Moonves reaped $57.7 million, including a $27.5-million bonus. His package, an increase of 34% over the previous year, also included $2.5 million to cover taxes he paid in New York, where CBS is based and where he maintains a home. Moonves' primary residence is in Los Angeles, and he frequently works out of CBS' West Coast complex in Studio City.
Both Viacom and CBS turned in strong performances last year. But in good years and bad, pay packages for media CEOs have eclipsed those for other captains of industry — except oil barons and Wall Street bankers. The 30 highest-paid media executives in the U.S. made an average of nearly $22 million last year, an increase of 13% over 2009, according to a survey by Redwood City, Calif., executive compensation research firm Equilar Inc. In contrast, the norm for CEOs of Standard & Poor's 500 companies last year was $10 million.
Several factors contribute to the outsize salaries of media bosses. Corporate governance experts chalk up the phenomenon to the so-called star effect. Chiefs don't want to make less than the talent they employ. CBS, for example, pays daytime syndication star "Judge Judy" Sheindlin more than $40 million a year.
In addition, many media companies started as family-owned businesses, and the founders have preferred stock with increased voting rights, which gives them even greater sway in decision-making.
The large wage earners at Viacom and CBS dramatically outpaced the chiefs at much bigger media companies. Walt Disney Co.'s Robert Iger received a $29.6-million package in 2010; Time Warner Inc.'s Jeffrey Bewkes made $26.3 million, and 80-year-old Rupert Murdoch, the lion of News Corp., earned $22.7 million.
But 88-year-old Redstone, who monitors his companies' affairs from his Mediterranean-style mansion above Beverly Hills, has them beat. Redstone has been collecting paychecks from two companies since the 2006 corporate breakup of Viacom that divided his empire into two pieces — Viacom and CBS. As executive chairman of both companies, Redstone pulled in $35.3 million last year.
That's a considerable boost from his salary before the breakup. In the five years before Viacom split, the compensation for Redstone, then the CEO, was $17 million to $24 million annually.
Viacom defended the packages.
"An overwhelming majority of the total compensation of Viacom's senior named executive officers is in long-term equity awards that align their interests with those of our stockholders," the company said in a statement. "Annual compensation for all of Viacom's executive officers reflects the achievement of double-digit growth in operating income, adjusted net earnings and total shareholder return."
Experts said checks and balances dealing with executive pay do not appear to be priorities within Redstone's sphere. Investors are largely powerless to demand reforms. Redstone, through his family investment firm National Amusements Inc., controls 79% of the voting stock of each of his two companies, which gives him wide latitude to manage Viacom and CBS as he sees fit.
"There is very little that investors can do when companies like these are so tightly controlled," said Paul Hodgson, senior research associate with GovernanceMetrics International Inc., an independent corporate governance research firm.
Last year, Viacom and CBS shares soared, along with the rest of the market. Viacom's common stock climbed 27% during the nine months covered in the company's fiscal year. Viacom posted net earnings for continuing operations of $1.18 billion, an increase of 23% for the comparable period in 2009. On Wednesday, Viacom hiked its quarterly dividend 67% to 25 cents a share, signaling the company's healthy finances.