CBS' $67 Million Man: Does Leslie Moonves' Moolah Make Sense?

Les Moonves

A 69 percent stock hike tops media rivals in 2013 as Stephen Colbert's "Late Show" deal hints at bigger profits and Philippe Dauman's Viacom pay lags.

A version of this story first appeared in the May 2 issue of The Hollywood Reporter magazine.

All the numbers have yet to be crunched, but one thing is certain: CBS Corp. president and CEO Leslie Moonves' $66.9 million compensation in 2013 will make him the best-paid CEO in American media and put him among the world's highest-paid executives in any industry. By comparison, Goldman Sachs CEO Lloyd Blankfein made $20 million in 2013, and Coca-Cola CEO Muhtar Kent made $18.2 million despite a market cap of $111 billion that dwarfs CBS' $35 billion.

Whether Moonves, 64, has earned his pay is a difficult question. CBS stock soared 69 percent in 2013, more than each of the other six major media conglomerates and more than double the S&P 500's 30 percent jump, making Moonves' 7.7 percent salary boost seem small. But CBS' sister company Viacom saw its shares rise 58 percent in fiscal 2013, and CEO Philippe Dauman, 60, made $37.2 million, a mere 56 percent of what Moonves scored, despite the fact that Dauman runs a larger company.

PHOTOS: Stephen Colbert's Career in Pictures

The bulk of Moonves' pay package comes courtesy of $26.5 million in stock awards and $28.5 million in bonus money, which reflects a $20 million bonus for running the company and $8.5 million "for his leadership in connection with the creation of premium content across the company's portfolio businesses." He also got security and a car and driver plus "personal use of the company aircraft," according to a regulatory filing.

"Tens of millions is too much to pay anyone in my worldview, but Les has proved to be of fantastic value to CBS shareholders," says Steven Birenberg of Northlake Capital Management. Adds Brian Wieser of Pivotal Research Group, "If a company is better off than it would otherwise be without the individual in question, investors will generally not be particularly focused on executive compensation."

On the flip side, among those irritated by soaring exec pay is the AFL-CIO, whose website compares the $19.77-an-hour wage for the average U.S. worker with the hourly salaries of such CEOs as Robert Iger of Walt Disney ($19,348 an hour) and Jeff Bewkes of Time Warner ($12,447 an hour, though his 2013 pay has not been reported). But they're pikers compared with Moonves, who made more than $32,000 an hour.

Still, CBS and Viacom executive chairman Sumner Redstone, who himself pocketed $57.2 million from CBS (and $36.2 million from Viacom) in 2013, told THR in January that Moonves is a "miracle worker" and hasn't flinched at paying his CEO nearly $200 million during the past three years alone. Beyond record earnings, CBS' April 11 regulatory filing revealed that it closed the 2012-2013 TV season first in all key Nielsen categories, with Under the Dome helping it become the only network to score summer-over-summer ratings growth. CBS delivered the most-watched Super Bowl to date, and its Floyd Mayweather- Canelo Alvarez fight in September became the highest-grossing pay-per-view event ever. Its Showtime division also reported subscriber gains.

STORY: 'Late Show' Successor Stephen Colbert to Visit Letterman

That momentum has continued in 2014. CBS won Thursday night NFL games in a $300 million deal, and on April 10, Moonves scored more points by revealing that Stephen Colbert, 49, will replace David Letterman, 67, as host of Late Show in 2015. The move could boost the show's profitability significantly for years to come.

That's because sources say Colbert's deal pales in comparison with Letterman's, which is fair considering Letterman's history as well as the risk CBS is taking because Colbert will host as himself and not the faux conservative character he's known for on Comedy Central. Colbert likely will earn less than his competitors, too, with one industry veteran estimating that his pay will start between $10 million and $12 million a year, while Jimmy Fallon gets $12 million to $14 million for hosting NBC's The Tonight Show.

Plus, Colbert will not own his show, as Letterman's Worldwide Pants does. A source says Letterman has been paid as much as $35 million a year, though he has taken pay cuts in recent years. Worldwide Pants also produces the 12:30-hour The Late Late Show With Craig Ferguson, a benefit Colbert will not enjoy. Another source says additional revenue streams are not available to Colbert, including international distribution and product placement (Letterman gets a cut of both). There also are less obvious income streams. For example, says a TV veteran, "You can buy equipment and rent it back to yourself."

STORY: Upfronts 2014-- Complete Network Scorecard

Owning Colbert's show will open CBS to potential pacts with Hulu and other streaming services, or even off-network syndication deals like NBC's with Esquire Network for Fallon's Tonight Show. This is where CBS really stands to boost profits, which have dipped below $20 million annually for Letterman's Late Show.

So despite the eye-popping salary, Moonves remains a worthwhile investment for Redstone and the CBS board. "This is the fifth consecutive year the company's performance significantly exceeded the S&P 500," CBS said in an April 11 statement, "including a period during which CBS stock appreciated by more than 20 times."

"Over the past five years, CBS returned significant value to their shareholders. During that period, holding shares of CBS would have been a better investment than holding shares of the S&P 500 index. Moreover, over the last year, CBS was the top performer in terms of shareholder returns among its diversified media peers," said Eliezer Fich, ‎associate professor of finance at Drexel University's LeBow College of Business‎.‎ "Hence, investors should have little reason to quibble about Mr. Moonves’ overall compensation considering that Moonves took over as CBS’ CEO in 2006."

Added the expert: "At first glance, Mr. Moonves’ pay appears significantly higher than that of the CEOs of larger rivals, such as Disney. However, even though Disney valued Robert Iger's compensation at $34.3 million, he netted over $100 million over the year, since after receiving another $72.4 million from vested shares and exercising previously awarded stock options. Given this, Moonves’ total compensation appears well-deserved since under his leadership CBS significantly outperformed not only Disney but all of its other competitors."

Kim Masters and Michael O'Connell contributed to this report.