Viacom Execs Get $100 Mil

[LiviaOlivia]

Viacom Execs Get $100 Mil-CBS parent's stock fell while duo raked in dough for on-the-job training
Village Voice
by Sydney H. Schanberg
May 3rd, 2005

Over the years, Big Business has virtually numbed the public with its annual, head-spinning salary increases for top executives. But one of our giant "media" companies, Viacom, owner of CBS, MTV, and a host of radio and TV news stations, has actually managed to wake us up this year, at least for a moment, by recently paying two admittedly green executives more than $50 million—each—for calendar year 2004. Fifty million dollars is double or triple the pay of the top executive, the CEO, at comparable corporations, and this amount of loot was now also going to the newly elevated No. 2 and No. 3 at Viacom.

Wall Street analysts, who are hard to shock, recoiled; they noted that 2004 was a year in which the Viacom stock value had fallen significantly—by 18 percent. Even more stunning, deep in one of the documents that corporations have to file annually with the SEC, Viacom admitted that the two executives—Leslie Moonves (one of whose Viacom fiefdoms is CBS, of which he's president) and Thomas Freston (who developed MTV as its CEO)—had no prior experience in the responsibilities of their new, high-level posts but expressed confidence that they would soon remedy that lack.

This admission appeared on page 33 of Viacom's 2005 proxy statement, where the board of directors listed the factors it had weighed before accepting the recommendation of board chairman and CEO Sumner Redstone to approve the Moonves/Freston promotions and the accompanying shower of money upon them. The board said it realized "that neither executive had experience in the top operating position of a large publicly held corporation, but by accepting the recommendation these executives would be in a position to gain such experience prior to Mr. Redstone's retirement as Chief Executive Officer." The board said it had also considered "the associated added cost to the Company of compensating two executives at that level."

It's quite rare to find such unintended comedy in a proxy statement. Think of it. A huge American corporation was acknowledging, without a whisper of apology to its stockholders, that it was paying Moonves and Freston $52 million each for one year's worth of on-the-job training. The two men were promoted from their lower Viacom positions in July last year to be co-presidents and co-chief operating officers of Viacom. They had been handpicked by Redstone as his successor team. Redstone, who is 81, has announced he'll step aside as CEO by December 2007.

~snip~

http://www.villagevoice.com/news/0518,schanberg,63600,6.html

[Double T]

1. I want an apprenticeship at Viacom...

and I'll only charge them $25 million per year which represents a 50% savings to the stockholders.

[Phoebe Loosinhouse]

2. Is all of Wall Street a "Conspiracy of Fools"? Aren't we the fools?

Ok - I just finished the book "Conspiracy of Fools" which is an amazingly long, detailed account about the fall of ENRON. Which entails much detail about the ludicrously compensated captains of the Ship of Fools "ENRON"

The major points I would make is that these are PUBLIC companies and their responsibility is to make profit for their SHAREHOLDERS. Often, these companies make no real profit or minimal profit or short-term profit, so their managers can suck the assets of the company dry with their compensation packages. We seem to have GM going down the tubes as we speak and IBM is laying off thousands. Employees could have a voice in this, as many are stockholders due to 401K plans and shareholders should realize that these bizarre compensations take away from R&D, aquisitions, and dividends and future profits.

As regards the story in this post, it would be unusual if it were unusual. "looting" "ponzi scheme" "fiduciary responsibility" "plundering" conflict of interest" "unethical" seem to be words that pop up when you read stories like these.