In the film "Jerry Maguire" a few years ago, the star played by Cooper Gooding Jr. famously said when negotiating a contract with Tom Cruise's gold medal agent: "Let me see real money." ”
Today, Wall Street is putting so much pressure on Hollywood. In the recent retrograde economic environment in the United States, investors must see tangible income. From Disney to Amazon Pictures, many film and television giants have taken measures to cut costs, of which layoffs are the most common move; But on the contrary, the major companies have once again offered executives considerable "real money".
U.S. tax regulatory filings disclosed in March and April show that despite the current economic situation, CEOs of large companies are paid higher overall, in stark contrast to layoffs and the current screenwriting strike. In the latest full-year 2022 compensation report, there are no cases of several CEOs joining the 9-figure high-income club as they did last year, such as Ali Emanuel (US$308.2 million) and Warner Bros. Exploration CEO David Zaslav ($246.6 million).
Still, Hollywood has several executives with salary increases in 2022, many of which are driven by large stock incentives.
The U.S. film and television media industry has long been considered higher than other industries, meaning that CEOs and board members of media companies may face more public scrutiny.
Amit Batish, senior director of content at Equilar, a corporate leadership data firm, concluded by commenting on the overall trend across the U.S., "Overall, we're seeing CEO compensation continue to rise post-pandemic. "Iquile recently released a data analysis called "Iquiler 100," which compiles publicly disclosed pay figures for executives in large U.S. companies across a wide range of industries as of March 31 this year. According to recent media analysis, the salary of most media and film and television entertainment executives in the United States today exceeds the median salary of 22.3 million US dollars in 2022 in "Iquiler 100", an increase of 7.7% over 2021.
"Company stock awards make up the bulk of compensation packages, and these awards are usually paid out at the beginning of the year – there are not many signs of economic uncertainty at the beginning of 2022," Bhatish said. As a result, negative economic impacts, such as layoffs and cost cuts, are not necessarily reflected in the actual value of stock awards. ”
Netflix's Reed Hastings stepped down as co-CEO in January to focus on the executive chairmanship with a 25% increase in total compensation of $51.1 million in 2022. The biggest increase in pay was Paramount Universal's CEO Bob Bakish, with a 60% increase. Comcast's Michael Kavanagh was promoted from CFO to president last October and recently took over oversight of entertainment subsidiary NBCUniversal, where his compensation grew 48 percent. Earlier, the company's CEO, Jeff Schell, was fired for "improper relationships."
The compensation of former Disney CEOs Bob Chapek and Jeff Schell, who were replaced by Bob Iger at the end of the last fiscal year, has decreased from 2021, but it still attracts a lot of criticism - on May 2, US Senator Bernie Sanders tweeted on his personal account: "Last year, eight Hollywood CEOs earned nearly $800 million, but the compensation of TV writers has fallen by 23% in the past 10 years." ”
Wall Street veteran Hal Vogel concludes that "if salaries for things like CEOs and other executives rise significantly, then simultaneous mass layoffs will certainly damage the company's image." He added that given that "a lot of CEO compensation is tied to stock price performance," it's not surprising that executives are forced to accept "pay cuts." Given that the shares of many media companies have closed 2022 with sharp declines, even more than the S&P 500, which has already recorded its worst annual performance since 2008. Vogel noted, "I expect executives to continue to be paid less next year, and they should be prepared for that." ”
Bhatish agreed, "Since stock awards are usually paid at the beginning of each year, executive compensation may shrink in 2023 as many media companies end 2022 with declining growth in streaming users and a weakening advertising market." ”
Interestingly, the highest-paid executives in the pan-entertainment industry tend not to be CEOs, but creative executives, such as Charlie Collier, who left Fox last year and joined Roku as head of media at the end of October, where he paid a staggering $53.3 million in 2022.
What is the final result of the big gamble of large enterprises using sky-high salaries as chips? Only time will tell.