LOS ANGELES -- Once again, media company CEOs are among the highest paid executives in the nation, occupying six of the top 10 earning spots, according to an Associated Press/Equilar study.
Compensation experts say a variety of factors are at play, including the gain in media stocks, the intangible value of talent in a hit-or-miss business, the control of shareholder power in very few hands, and the decline of the financial sector.
Outsized stock growth boosts the value of stock and option grants. Media companies' shares have rebounded strongly since the 2008 recession, mainly because advertising spending grows in tandem with a growing economy. That means higher-priced ads and higher-priced execs.
Stocks of the six media companies on the list all outperformed the Standard & Poor's 500 index (^GPSC), which grew 128 percent in the five years through December 2013, according to FactSet.
CBS (CBS) shares grew a whopping 699 percent in that period; Discovery Communications (DISCA) went up 539 percent; Viacom (VIA) rose 377 percent; Walt Disney (DIS) rose 250 percent; Time Warner (TWX) climbed 259 percent and Comcast (CMCSA) grew 223 percent.
"If shareholders are happy they don't care how much a person makes," said Paul Dorf, managing director of consulting firm Compensation Resources. "When they complain most is when the market doesn't do well and their stock is going down the tubes."
Making it big in media means generating hits. And while top executives may not be hands-on with every decision, they are where the buck stops.
Take Disney's animated blockbuster "Frozen," which grossed $1.2 billion at box offices worldwide. While Disney CEO Bob Iger didn't make the movie, he did orchestrate Disney's $7.4 billion acquisition of Pixar in 2006, which brought in talented executives to help reform Disney's faltering animation studio.
"With movie studios and the media, it's more of a talent business. You have highly paid people at all levels," said Alan Johnson, managing director of Johnson Associates, a compensation consultant in New York. "The view is the right CEO can make a big difference."
Control of voting power by a single shareholder can dilute the impact of "say on pay" advisory votes, experts say. A major shareholder can override other shareholders' concerns.
CEO Brian Roberts, ranked No. 10, controls 33.3 percent of the voting power at Comcast. And Discovery CEO David Zaslav, ranked No. 8, answers to one big boss: cable magnate John Malone, who controls 28.9 percent of the vote.
"When you have the vote in your back pocket, you do not need to negotiate in the same way," said Nora McCord, managing director at Steven Hall & Partners, an executive compensation consulting firm in New York.
Other Industries' Decline
Lists in previous decades might have had more financial and banking executives. Since the Great Recession punished those companies with government bailouts, bank collapses, accounting revisions and writedowns, they have dropped in the pay rankings.
"If you were to go back in time, a lot of these lists would have had financial executives," Johnson said. "They're not part of it anymore."
All Boats Rise
When one company boosts pay, others compensate to remain competitive. That's why executive pay within industries tends to "move in lock step," McCord said.