Media honchos still raking it in

Compensation review lauds Disney for incentive structure

The CEOs and CFOs at the big publicly traded entertainment conglomerates remain well paid despite negative effects of the recession and sector stock declines, and their compensation isn't always based on objective and quantifiable factors.

Those are among the key conclusions reached by analyst Michael Nathanson in Sanford C. Bernstein's second annual review of compensation policies at the sector biggies based on pay information disclosed during recent months.

In a report Tuesday, he called Disney the industry giant with "the best compensation and incentive structure." He lauded the firm for paying top executives a relatively low base salary and using a bonus system "based on meaningful, quantifiable factors," including earnings-per-share targets, growth in operating income, after-tax free cash flow and return on invested capital.

"On the flip side, CBS Corp. and News Corp. have compensation systems that are less-aligned with shareholder concerns," Nathanson said. He pointed to News Corp.'s highest base salaries in the peer group -- CEO Rupert Murdoch's base pay makes up 29.4% of his total compensation, compared with an average of 13.4% -- and bonus pay based solely on earnings-per-share performance, as well as CBS' bonus structure that the analyst called "more subjective."

Overall, media-conglomerate executives are a well-compensated group, Nathanson concluded.

"Given the relatively poor one-, three- or five-year performances for most of these stocks, the rich compensation packages look even more extraordinary," he said.

On average, the CEOs earned $26.6 million for the most recent fiscal year, according to the latest proxy statements, with CBS CEO Leslie Moonves on top with nearly $32 million and Time Warner CEO Jeffrey Bewkes at the bottom with $19.9 million. CEO compensation fell 3% on average in 2008, even though stocks declined 10% or more and only Disney shares meaningfully outperformed the S&P 500 index.

Among CFOs, Viacom's Tom Dooley is the highest paid at $18.4 million, nearly twice the $9.7 million of News Corp.'s David DeVoe at No. 2.