Did the media CEOs earn their big pay packets this year?
Is Mike Sneesby, the chief executive officer at Nine Entertainment, worth the $3.4 million he got paid last financial year? What about Seven West Media boss James Warburton. Is he worth $2.8 million? And how about SCA’s former CEO Grant Blackley? Take out exit benefits and he earned $1.6 million. Was he worth that much money?
A bit of context first up. Media CEOs get well paid.
The average annual wage in Australia is a bit over $95,000 according to the Australian Bureau of Statistics. (Males still earn, on average, at least ten per cent more than females, and in the private sector it’s closer to 20 per cent.)
At the other end of the spectrum, the boss of Macquarie Group, over many years, has been at, or near, the top of the league tables when it comes to CEO remuneration. Current head, Shemara Wikramanayake, gets paid well over $20 million a year for running the $64 billion company.
Healthcare bosses earn a motza – CSL and ResMed are examples of big payers. The boss of industrial property group Goodman, Greg Goodman, is also regularly at the top end of CEO pay.
Boards set CEO remuneration, and mostly they think about it in terms of fixed salaries, short term incentives – maybe a cash bonus of up to 100 per cent of the fixed salary if targets are met – and long-term bonuses, often options and shares that vest after three to five years. The notion is that CEO pay aligns with shareholder value.
Is that happening at the media companies?
Sneesby runs a $3.2 billion company, and earned $3.4 million. Nine’s share price rose nearly eight per cent last financial year. The overall share market jumped by ten per cent during the year, so Nine underperformed the market.
Comparing a media company with the rest of the market is a touch unfair. Plenty of external factors outside the control of CEOs can help or hinder a company – think COVID or commodity prices or interest rates. So it’s better to look at peers within the sector.
Warburton, who runs a $450 million company, made $2.8 million and Seven West Media’s share price fell by three per cent – way worse than the market and Nine. (Ten is not listed – its executive remuneration is a matter for its parent company at Paramount.)
Broadening out within the media sector, Grant Blackley at SCA was paid $2.4 million, including exit benefits worth $865,000, and its share price went backwards by 18 per cent. Given SCA is worth $172 million, Blackley’s pay was 1.4 per cent of the company’s value – which is huge.
oOh!Media boss Cathy O’Connor took home $2.1 million and the company’s share price fell 24 per cent. The financial year at oOh!Media is the calendar year, and the figures reflect 2022. Overall the S&P/ASX200 finished down five per cent in calendar 2022.
Ciaran Davis at ARN Media, another calendar year company, took home $2 million notwithstanding the group’s share price fell more than 60 per cent.
With the possible exception of Sneesby at Nine, it’s hard to argue any of the media executives deserve what they got paid, if the goal truly is to align remuneration with shareholder value.
Mike Sneesby
Executive remuneration is a fraught discussion around boardroom tables but directors do a shocking job at informing shareholders about what’s going on.
When Seven shareholders questioned Warburton’s salary at the company AGM last year, the board provided a typically anodyne response: “Market capitalisation is one factor to apply, with competitor alignment, business complexity and regulatory environment being other factors to consider.”
A totally unsatisfactory response.
It’s cold comfort but media companies aren’t alone struggling with the challenger. Corporate Australia has some good and woeful examples of boards failing to adequately set CEO remuneration.
There are some crazy outliers. The CEO of retailer Lovisa, Victor Herrero, has earned about $40 million in just two years at the retailer. This company has a market capitalisation (i.e. it is worth) about $2 billion.
There are board decisions about CEOs which are difficult to understand. Late last year, the boss of Australia’s biggest gold miner, Newcrest, left the business after complaints about his leadership. Sandeep Biswas took home $6.5 million.
Sometimes boards do the right thing. The directors of ASX Ltd stripped former chief executive Dominic Stevens of $2.6 million worth of long-term share rights after his failure to introduce a new system for trading.
And of course you can’t have a CEO remuneration story today with mentioning Qantas. Former CEO Alan Joyce could be paid nearly $24 million for his last 12 months at the carrier, though about $10 million in short term and long term incentives may not be paid. (Bet the board wants to pay the bonuses, but the political climate will ensure they claw something back.)
So the answer to the question posed originally: are media executives worth what they get paid?
Sneesby might be but the rest aren’t.
Rest of the week
In the latest Mumbrellacast, we spoke about sport supremacy on free-to-air TV, Spotify’s audiobooks updates and research that showed the ‘Yes’ campaign for the Voice to Parliament referendum is gaining momentum – but will it be enough?
And this week marked the sixth Radio 360 survey of 2023, and Mumbrella covered all the major markets – Sydney, Melbourne, Brisbane, Adelaide and Perth.
Plus, Mumbrella’s Nathan Jolly spoke to Osher Günsberg on the lessons he has learned over 10 years and 500 podcast interviews.
Have a great weekend.
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