State Champ Radio executive pay
Universal Music Group (UMG) shareholders approved CEO Lucian Grainge‘s 138.8 million euros ($128 million) compensation package from 2023 in a nonbinding advisory vote at the company’s annual general meeting in The Netherlands on Thursday (May 16).
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A majority of investors voted to approve all proposals up for a vote this year, including the reappointment of billionaire Bill Ackman, Cyrille Bollore and others as non-executive directors despite criticism from shareholder advisory groups Glass Lewis, who last month called UMG’s pay practices excessive and said the board lacked independence.
Advisory shareholder votes like these are only advisory and not enforceable, but they are closely watched as indicators of investors’ feelings on a company’s pay policies and the people who make up their boards. Anytime a significant percentage of investors expresses disapproval, which Glass Lewis defines as 20% or more, directors consult with shareholders about how to make internal changes to address their concerns.
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Investors in Live Nation and Cumulus Media used recent shareholder meetings to vote their disapproval of those companies’ CEO pay packages.
UMG did not immediately disclose the percentage of votes cast in support of the proposals at this year’s annual meeting, which was livestreamed only to registered shareholders. Last year, a slim majority of UMG investors representing roughly 59% of shares voted in approval of UMG’s remuneration policy, which details the 2023 compensation packages paid out to Grainge and deputy CEO Vincent Vallejo.
About 58% of UMG’s voting shares are collectively held by Ackman’s Pershing Square Capital Management, Tencent, Bollore and Vivendi. Last year, all four shareholders voted to approve UMG’s remuneration policy.
Grainge’s total 2023 compensation is 138,814,000 euros, or $128,264,000 based on a monthly average foreign exchange rate of 0.924. In 2022, he was the third highest-paid music executive, having made total compensation of 47.3 million euros ($49.7 million) thanks to a 28.8 million euros ($30.3 million) performance bonus in addition to a base salary of 15.4 million euros ($16.2 million).
In 2023, Grainge had a base salary of 7.5 million euros (just over $8 million) and bonus of 15.16 million euros (nearly $16.3 million), and a one-time transition equity award worth 92,406,852 euros (roughly $100 million). That award was paid out in half in restricted stock units and half in performance stock options. The performance stock options vest over the coming five years and can only be excised once UMG’s stock hits certain thresholds.
Glenn Peoples contributed reporting.
For some music companies, 2022 was the payoff for weathering the darkest days of the COVID-19 pandemic. When business returned that year — sometimes in record-setting fashion — these companies rewarded their executives handsomely, according to Billboard’s 2022 Executive Money Makers breakdown of stock ownership and compensation. But shareholders, as well as two investment advisory groups, contend the compensation for top executives at Live Nation and Universal Music Group (UMG) is excessive.
Live Nation, the world’s largest concert promotion and ticketing company, rebounded from revenue of $1.9 billion and $6.3 billion in 2020 and 2021, respectively, to a record $16.7 billion in 2022. That performance helped make its top two executives, president/CEO Michael Rapino and president/CFO Joe Berchtold, the best paid music executives of 2022. In total, Rapino received a pay package worth $139 million, while Berchtold earned $52.4 million. Rapino’s new employment contract includes an award of performance shares targeted at 1.1 million shares and roughly 334,000 shares of restricted stock that will fully pay off if the company hits aggressive growth targets and the stock price doubles in five years.
Live Nation explained in its 2023 proxy statement that its compensation program took into account management’s “strong leadership decisions” in 2020 and 2021 that put the company on a path to record revenue in 2022. Compared with 2019 — the last full year unaffected by the COVID-19 pandemic — concert attendance was up 24%, ticketing revenue grew 45%, sponsorships and advertising revenue improved 64%, and ancillary per-fan spending was up at least 20% across all major venue types. Importantly, Live Nation reached 127% of its target adjusted operating income, to which executives’ cash bonuses were tied.
The bulk of Rapino’s and Berchtold’s compensation came from stock awards — $116.7 million for Rapino and $37.1 million for Berchtold — on top of relatively modest base salaries. Both received a $6 million signing bonus for reupping their employment contracts in 2022. (Story continues after charts.)
Lucian Grainge, the top-paid music executive in 2021, came in third in 2022 with total compensation of 47.3 million euros ($49.7 million). Unlike the other executives on this year’s list, he wasn’t given large stock awards or stock options. Instead, Grainge, who has been CEO of UMG since 2010, was given a performance bonus of 28.8 million euros ($30.3 million) in addition to a salary of 15.4 million euros ($16.2 million) — by far the largest of any music executive.
This year, shareholders have shown little appetite for some entertainment executives’ pay packages — most notably Netflix — and Live Nation’s compensation raised flags at two influential shareholder advisory groups, Institutional Shareholder Services and Glass Lewis, which both recommended that Live Nation shareholders vote “no” in an advisory “say on pay” vote during the company’s annual meeting on June 9. Shareholders did just that, voting against executives’ pay packages by a 53-to-47 margin.
Failed “say on pay” votes are rare amongst United States corporations. Through Aug. 17, just 2.1% of Russell 3000 companies and 2.3% of S&P 500 companies have received less than 50% votes on executive compensation, according to executive compensation consultancy Semler Brossy. (Live Nation is in both indexes.) About 93% of companies received at least 70% shareholder approval.
ISS was concerned that the stock grants given to Rapino and Berchtold were “multiple times larger” than total CEO pay in peer group companies and were not adequately linked to achieving sustained higher stock prices. Additionally, ISS thought Live Nation did not adequately explain the rationale behind the grants.
To determine what Rapino, Berchtold and other executives should earn, Live Nation’s compensation committee referenced high-earning executives from Netflix, Universal Music Group, SiriusXM, Spotify, Endeavor Group Holdings, Fox Corporation, Warner Bros. Discovery, Inc. and Paramount Global. Netflix co-CEOs Reed Hastings and Ted Sarandos were paid $51.1 million and $50.3 million, respectively, in 2022. Warner Bros. Discovery CEO David Zaslov made $39.3 million in 2022 — including a $21.8 million cash bonus — a year after his pay totaled $246.6 million, including $202.9 million in stock option awards that will vest over his six-year employment contract. Endeavor CEO Ari Emanuel and executive chairman Patrick Whitesell received pay packages worth $308.2 million and $123.1 million, respectively, in 2021 thanks to equity awards tied to the company’s IPO that year (the received more modest pay of $19 million and $12.2 million in 2022).
Some companies in the peer group didn’t fare well in “say on pay” votes in 2023, though. Netflix, got only 29% shareholder approval in this year’s say-on-pay advisory vote after Hastings’ and Sarandos’ compensations both increased from higher stock option awards while the company’s stock price, riding high as COVID-19 lockdowns drove investors to streaming stocks, fell 51% in 2022. Warner Bros. Discovery’s 2022 compensation squeaked by with 51% shareholder approval.
Minutes from UMG’s 2023 annual general meeting in May suggest many of its shareholders also didn’t approve of Grainge’s compensation. UMG’s 2022 compensation was approved by just 59% of shareholders, and the company’s four largest shareholders own 58.1% of outstanding shares, meaning virtually no minority shareholders voted in favor.
UMG shareholders’ votes could be meaningfully different next year. Anna Jones, chairman of the music company’s remuneration committee, said during the annual meeting that in 2024, shareholders will vote on a pay package related to Grainge’s new employment agreement that takes minority shareholders’ concerns from the 2022 annual meeting into consideration. Grainge’s contract lowers his cash compensation, and more than half of his total compensation will come from stock and performance-based stock options.
Other companies in Live Nation’s peer group received near unanimous shareholder approval. SiriusXM’s 2022 executive compensation received 98.5% approval at the company’s annual meeting. Paramount Global’s executive compensation was approved by 96.4% of its shareholders. Endeavor didn’t have a “say on pay” vote in 2023, but a year ago, it’s sizable 2021 compensation packages were approved by 99% of voting shareholders.
As the radio industry came back from pandemic-era doldrums, two iHeartMedia executives — Bob Pittman, CEO, and Richard Bressler, president, CFO and COO — were among the top 10 best-paid executives in the music industry. It was new employment contracts, not iHeartMedia’s financial performance, that put them into the top 10, however. Both executives received performance stock awards — $6.5 million for Pittman and $6 million for Bressler — for signing new four-year employment contracts in 2022. Those shares will be earned over a five-year period based on the performance of the stock’s shareholder return. Neither Pittman nor Bressler received a payout from the annual incentive plan, however: iHeartMedia missed the financial targets that would have paid them millions of dollars apiece. Still, with salaries and other stock awards, Pittman and Bressler received pay packages valued at $16.3 million and $15.5 million, respectively.
Spotify co-founders Daniel Ek and Martin Lorentzon once again topped the list of largest stockholdings in public music companies. Ek’s 15.9% stake is worth nearly $4.8 billion while Lorentzon’s 11.2% stake has a market value of nearly $3.4 billion. Both Ek and Lorentzon have benefitted from Spotify’s share price more than doubling so far in 2023. In September 2022, the inaugural Money Makers list had Ek’s stake at $3.6 billion and Lorentzon’s shares at $2.3 billion.
The billionaire club also includes No. 3 HYBE chairman Bang Si-hyuk, whose 31.8% of outstanding shares are worth $2.54 billion, and No. 4 CTS Eventim CEO Klaus-Peter Schulenberg, whose 38.8% stake — held indirectly through his KPS Foundation non-profit — is worth $2.25 billion. They, too, have benefitted from higher share prices in 2023. Last year, Bang’s stake was worth $1.7 billion and Schulenberg’s shares were valued at $2.1 billion.
These top four shareholders and three others in the top 10 have one important thing in common — they are company founders. At No. 5, Park Jin-young, founder of K-pop company JYP Entertainment, owns a $559 million stake in the label and agency he launched in 1997. Another K-pop mogul, No. 8 Hyunsuk Yang, chairman of YG Entertainment, owns shares worth $199 million in the company he founded in 1996. And No. 9 Denis Ladegaillerie, CEO of 18-year-old French music company Believe, has a 12.5% stake worth $112.7 million.
Live Nation’s Rapino again landed in the top 10 for amassing a stockholding over a lengthy career, during which he has helped significantly increase his company’s value. Rapino, the only CEO Live Nation has ever known, took the helm in 2005 just months before the company was spun off from Clear Channel Entertainment with a market capitalization of $692 million. Since then, Live Nation’s market capitalization has grown at over 20% compound annual growth rate to $19.1 billion. Rapino’s 3.46 million shares represent a 1.5% stake worth $291 million.
Selling a company that one founded is another way onto the list. Scooter Braun, CEO of HYBE America, has a 0.9% stake in HYBE worth $69.8 million. That’s good for No. 10 on the list of executive stock ownership. Braun, HYBE’s second-largest individual shareholder behind chairman Bang, sold his company, Ithaca Holdings — including SB Projects and Big Machine Label Group — to HYBE in 2021 for $1.1 billion.
These rankings are based on publicly available financial statements and filings — such as proxy statements, annual reports and Form 4 filings that reveal employees’ recent stock transactions — that publicly traded companies are required by law to file for transparency to investors. So, the list includes executives from Live Nation but not its largest competitor, the privately held AEG Live.
Some major music companies are excluded because they are not standalone entities. Conglomerates that break out the financial performance of their music companies — e.g., Sony Corp. (owner of Sony Music Entertainment) and Bertelsmann (owner of BMG) — don’t disclose compensation details for heads of record labels and music publishers. Important digital platforms such as Apple Music and Amazon Music are relatively small parts of much larger corporations.
The Money Makers executive compensation table includes only the named executive officers: the CEO, the CFO and the next most highly paid executives. While securities laws vary by country, they generally require public companies to named executive officers’ salary, bonuses, stock awards and stock option grants and the value of benefits such as private airplane access and security.
And while Billboard tracked the compensation of every named executive for publicly traded music companies, the top 10 reflects two facts: The largest companies tend to have the largest pay packages and companies within the United States tend to pay better than companies in other countries.
The list of stock ownership is also taken from public disclosures. The amounts include common stock owned directly or indirectly by the executive. The list does not include former executives — such as former Warner Music Group CEO Stephen Cooper — who are no longer employed at the company and no longer required to disclose stock transactions.
In a rare investor reproach for Live Nation, at the company’s annual meeting held earlier in June, a majority of its shareholders voted against ratifying chief executive Michael Rapino‘s $139-million pay package for 2022.
In an advisory say-on-pay referendum on June 9, more than 53% of votes cast rejected the 2022 compensation packages for promoter Live Nation’s named executives — Rapino, president and CFO Joe Berchtold, chief accounting officer Brian Capo, executive vp John Hopmans and general counsel Michael Rowles, according to a filing released on June 15. In contrast, 94% of the votes cast at its 2020 shareholder meeting were in favor of the say-on-pay proposal, according to Live Nation.
As the shareholder vote was advisory and non-binding, Live Nation’s board will have the ultimate say on any future actions around executive compensation.
Shareholder rebukes like this are rare, and it comes as the Ticketmaster owner is already under fire from fans and regulators over its role in the Taylor Swift Eras Tour ticket debacle. As of May 31, only 1.5% of companies in the Russell 3000 index have failed Say on Pay votes so far this year, according to a report by Harvard Law School’s Forum on Corporate Governance.
In Live Nation’s proxy statement, the company said it believes its “compensation program is reasonable, competitive and strongly focused on pay for performance principles.” A company spokesperson did not respond to requests for comment.
“We believe that the fiscal year 2022 compensation paid to our named executive officers was appropriate and aligned with Live Nation’s fiscal year 2022 results,” the company stated in its proxy, citing the company’s 44% growth in revenue to $16.7 billion in 2022.
Influential shareholder advisory groups Institutional Shareholder Services (ISS) and Glass Lewis recommended shareholders vote against Live Nation’s executive officers’ compensation, citing a “misalignment” between pay and performance in the structure of certain stock equity grants.
ISS actually estimates Rapino’s 2022 compensation higher than what Live Nation published in its proxy — at $156 million for the year. The group raised specific concerns over a “mega grant” Rapino received in July 2022 that it said was worth $120.5 million and a similar award CFO Berchtold received worth $52.6 million. ISS contends the grants were not adequately linked to achieving sustained higher stock prices. Total Live Nation shareholder returns were negative over a one-year period and underperformed the S&P 500 Index, ISS says.
“The current structure could reward these executives for short-term or merely temporary increases in stock price,” ISS researchers wrote, adding that the large one-time equity grants paid were “multiple times larger than the total CEO pay for the company’s peer group…lack clear disclosure regarding the rationale for the size of the awards and other details necessary to assess them.”
Glass Lewis also raised concerns over cash signing bonuses of about $6 million received by Rapino and Berchtold.
“The (bonuses) are not subject to any performance or recoupment provisions,” Glass Lewis researchers wrote. “Such pay levels on a one-time basis outpace total compensation levels afforded executives at some of the largest companies in the U.S. despite being subject to considerably weaker vesting and performance conditions.”
Additional reporting by Glenn Peoples.
Universal Music Group shareholders approved on Thursday (May 11) the 2022 compensation packages for CEO Lucian Grainge and his deputy, Vincent Vallejo, plus a special $100 million stock option awarded to Grainge to stay on the job for five more years.
The company did not immediately disclose the percentage of votes cast in support of the advisory vote on the pay packages or other voting items at its annual general meeting held in the Amsterdam, and the meeting was live-streamed only to registered shareholders.
Since the global financial crisis, these kinds of annual meetings become a stage for shareholders to express their gripes about a company’s policies or performance. The vote of support for the world’s largest music company’s pay practices comes despite criticism raised by influential shareholder advisory groups, Institutional Shareholder Services and Glass Lewis, who had advised investors to reject Grainge’s pay packages.
Shareholders approved Grainge’s 2022 pay, which totaled more than 47 million euros (roughly $50 million), and re-appointed him as executive director, along with Sherry Lansing and Luc van Os as non-executive directors. Entertainment mogul Haim Saban was also appointed as non-executive director.
Shareholders declined to reappoint Anna Jones as a non-executive director, and her current term will run until the company’s next annual meeting in 2024.
Shareholders also approved a final 2022 dividend payout of 0.27 euros per share, which investors will receive in June. The vote brings UMG’s full year 2022 dividend to 0.51 euros per share.
In an April report, ISS recommended shareholders vote against UMG’s 2022 remuneration policy, saying the pay packages were out of step with industry standards in part due to “excessive” base salaries. That Grainge’s total pay was 12.4 times higher than the median of peers “raises substantial concerns,” ISS wrote.
Grainge’s 2022 pay package included a base salary of about 15.4 million euros and short-term incentives totaling 28.77 million euros, including a portion equivalent to 1% of UMG’s consolidated earnings before interest, taxes and amortization (EBITA) that was part of an agreement reached prior to UMG going public.
In its annual report, the company says that full-time UMG employees receive an average of 142,039 euros annually,up from 131,961 euros in 2021.
The board explained its reasoning for the remuneration for its executive directors saying that Grainge was a one-of-a-kind executive, and that certain incentive payments were due to legacy arrangements agreed to before the company went public.
In the proposed future pay agreement, which was part of an extension of Grainge’s contract through May 2028, the board said it did away with the incentive that paid Grainge 1% of UMG’s consolidated EBITA. In addition, the new agreement transitions Grainge from an all-cash compensation package to a combination cash and equity package “with a broad set of performance-based objectives aligned with shareholders’ interest and corresponding to the company’s long-term growth strategy.”
UMG ended the European trading day up 0.43% at 18.79 euros ($20.52).
Live Nation CEO Michael Rapino’s total compensation package rose to $139 million in 2022, up from $13.8 million the previous year.
Rapino’s compensation included a base salary of $3 million, up from $2.6 million in 2021 (which came as Rapino agreed to take a pay reduction during the pandemic). Live Nation entered into a new employment agreement with Rapino in July 2022, ending Dec. 31, 2027, which meant he also earned a $6 million signing bonus.
The executive also earned a $12 million annual cash performance bonus for 2022 and stock awards of $116 million, some of which vest in early 2024, while others vest in four installments through 2027 if the company reaches certain stock price targets.
CFO Joe Berchtold also saw his overall compensation jump to $52.4 million in 2022, up from $5 million the prior year. His base salary increased slightly to $1.3 million from $1.1 million, and he also earned a signing bonus of $6 million and an annual cash performance bonus of $2.5 million. Berchtold received $42.4 million in stock awards.
These pay bumps come after a rocky year for the company.
The Ticketmaster, which falls under Live Nation Entertainment, has faced backlash since its site experienced errors and site slowdowns during its Taylor Swift presale for verified fans in fall 2022. Since then, the company has faced pushback from lawmakers over its merger of Ticketmaster and Live Nation and is said to be undergoing an investigation by the Department of Justice. At the same time, concert attendance has been on the rise, as has the company’s revenue.
This article was originally published by The Hollywood Reporter.
The board of directors at Universal Music Group (UMG) has extended the contract of chairman and CEO Sir Lucian Grainge until May 1, 2028, the company announced Thursday (March 30).
The updated agreement transitions Grainge from an all-cash compensation package to one that combines cash and equity; the latter of these includes performance-based objectives that align with the interest of shareholders and correlate with the company’s long-term growth strategy. The majority of the compensation package’s value will be paid in UMG equity and performance-based stock options. As a result, Grainge’s annual salary will be reduced by more than two-thirds from his current salary, down to $5 million. He will be eligible for an annual bonus with a target of $10 million. The EBITA bonus from his previous contract has been eliminated, and he will only be entitled to the contingent bonus under his prior agreement on a pro rata basis until Friday (March 31).
The equity components of the compensation program include annual grants of $20 million, comprised of as much as 50% performance share units (PSUs), with annual PSU goals set by the board of directors; the remainder will be comprised of restricted share units (RSUs). Grainge will also receive a one-time transition equity award of $100 million, comprised of 50% RSUs and 50% performance stock options (PSOs). The PSOs will be paid out only if the company surpasses stock price hurdles — 1/3rd at 26.50 euros ($28.90), another 1/3rd at 30.00 euros ($32.71) and 1/3rd at 38.00 euros ($41.44) — within the term of the agreement.
UMG went public in September 2021 with a listing on the Euronext Amsterdam Stock Exchange.
“UMG is the world´s most successful music company and there are incredible opportunities ahead for a company with the right leadership and vision,” said UMG chairman of the board Sherry Lansing in a statement. “The UMG Board is resolutely committed to converting those opportunities and maximizing shareholder value for the long term. Only the right kind of chief executive can help achieve that goal and Lucian is just the one to do it. Through his clear vision and strong execution in building UMG into the industry leader, Lucian has also essentially created a new category of music company. This agreement is designed to drive both the sustainable success of UMG and long-term shareholder value.”
To align Grainge’s term as executive director and chairman/CEO with the term of the extended contract, the board will put forth a proposal to reappoint him as executive director for a term ending on May 1, 2028, at UMG’s 2023 general meeting on May 11; it will also seek approval for a supplement to UMG’s existing executive directors remuneration policy with respect to his new compensation.
Grainge got his start in the music publishing business in 1979 at age 18. He joined Universal Music in 1986 when he launched PolyGram Music Publishing in the U.K. and steadily climbed the ladder from there, rising to chairman/CEO of UMG’s international division in 2005 and chairman/CEO of UMG in 2011, succeeding Doug Morris. He placed atop this year’s Billboard‘s Power 100, marking his seventh appearance at No. 1 on the list; in 2020, he was named Billboard‘s executive of the decade.
In 2022, UMG’s overall revenues increased 21.6% to 10.34 billion euros ($10.96 billion), boosted by solid returns from recorded music subscriptions and streaming. It remains far and away the largest recorded music company by market share.
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