Viacom has suffered recently. In the last year, its stock price has fallen from about 42 to about 34. That is a loss of almost 20% for its shareholders. That loss is particularly troublesome since one of Viacom’s most visible competitors, Time Warner, saw an 8% rise in its stock price last year.
The fourth quarter of 2004 was particularly bad for Viacom. It reported a loss of more than $18 billion for the quarter as it wrote down the value of its radio and billboard assets. That loss amounts to more than $10 per share.
What happens to top executives of a public company when the earnings and stock price crater? Do they get fired for doing a bad job? Does their pay get cut? The New York Times
reports:
The top three executives at Viacom Inc. received total compensation last year valued at about $52 million to $56 million each in salary, bonus and stock options, the company disclosed yesterday.How much is $160 million for three executives?The three officers - the chief executive, Sumner M. Redstone, and the co-presidents, Tom Freston and Leslie Moonves - received a total of $160 million. Viacom filed documents disclosing the compensation with the Securities and Exchange Commission yesterday, after the market closed.
The compensation is beyond breathtaking, and it dwarfs what their competitors are earning," a longtime compensation specialist, Brian Foley, said.
It would pay the average yearly salary of $36,547 for 4,377 firefighters.
One hundred and sixty million dollars could have paid all the product liability settlements and judgments in Texas in 2002 and still have had more than $80 million left over.
It would pay four full years of tuition ($4,078 per year for in state students) for all 5190 freshmen at the University of Georgia still and leave enough left over to pay each of the Viacom executives $25 million.
It could lift 27,633 families consisting of a single mom and two children (with the mom working full time at minimum wage) out of poverty. One hour of compensation for one of the three executives is above the poverty line for a family of three.
It could provide more than a $4,000 per year raise for each of the 38,350 Viacom employees.
As the owner of Infinity Broadcasting, Viacom used to broadcast Howard Stern. The compensation of the three top Viacom executives could pay the FCC’s half a million dollar fine for Stern’s alleged indecency 320 times. For the amount paid Viacom’s three top executives, Stern could be indecent five times a week for a year with money left over.
It is not as if Viacom could not find substitutes for its three executives at a lower price. The Times:
Viacom's market capitalization is roughly 70 percent of Time Warner's, and roughly on a par with those of the Walt Disney Company and the News Corporation.I own Viacom shares through a couple of mutual funds. I wish those funds would vote against directors who approve outrageous executive compensation packages. They should also vote with their investment dollars. Companies giving bloated compensation packages to executives are wasting company money. That does not exhibit a commitment to creating shareholder value. The absence of a commitment to maximizing shareholder value should be a consideration when mutual fund managers are deciding where to invest. Posted by Dwight Meredith at April 16, 2005 05:41 PM | TrackBackThe three Viacom executives earned more than the combined compensation of the leaders of the other three top companies, Mr. Foley noted.
He calculated that Time Warner's top three executives - the chairman, Richard D. Parsons, and top lieutenants, Jeffrey L. Bewkes and Donald Logan - received total compensation of $42.9 million in 2004.
Michael D. Eisner and Robert A. Iger of Disney took home $20.2 million in fiscal 2004, and Rupert Murdoch and Peter Chernin of the News Corporation received $35 million combined.