UPDATE: One of the comments from a reader below reveals another interesting gem from the last WMG proxy statement. It seems as though the board lowered the threshold for the vesting of shares for Jr. and his trigger man Lyor Cohen. If he can get the price of the stock up to $7 for 60 consecutive trading days, Jr. will get 825,000 shares of WMG stock worth $5.775 million. The NY Times picked up on that as well. WMG shares closed up over 27% at $6.01 today. Hmmm. What’s that fishy smell?
Today the media world is abuzz over a report in yesterday’s NY Times citing WMG’s hiring of Goldman Sachs to find a buyer for the company. Or buy EMI. You pick. Seems that both options are on the table at WMG and KKR is circling both EMI and WMG.
But today we also learned that Junior Bronfman, the man who wanted to beat Napster out of existence and ferociously sued his customers for downloading songs from the likes of James Blunt, is indeed himself a felon, thief and a fraud. Seems like the apple really doesn’t fall far from the tree in that Jr.’s granddad made the Seagram fortune from illegal bootlegging. So Jr. proudly continues the family legacy.
Jr., along with fellow felon Jean-Marie Messier, were convicted of insider trading while running Vivendi from 2000 to 2003. He gained $12.8 million from exercising stock options based on non-public information about a planned share sale. But here’s the good part: not only did he draw a 15 month suspended sentence, but he was only fined 5 Million euro, thus leaving him a profit of roughly $6 million!
Not only that, but Glenn Peoples of Billboard ran a story yesterday that Jr. received $5 million in total compensation last year, topping his paltry 2009 paycheck of $3.1 million. In the latest proxy statement, the company explained that the board of director’s compensation committee bases its decisions on a number of goals. “These goals include, among other things, the successful implementation of strategic initiatives, realizing superior operating and financial performance, and other factors that we believe are important, such as the promotion of an ethical work environment and teamwork within the Company.”
Peoples goes on to report that “Warner Music Group’s revenue dropped 7% to $2.98 billion in its fiscal year ended September 30, 2010. U.S. revenue dropped 11% and international revenue was down 3%. Operating income before depreciation and amortization (OIBDA) fell 12% to $348 million. Net loss increased 39% to $145 million.”
I know it makes no sense whatsoever that Jr. is rewarded for being a failed CEO and a convicted thief, but the WMG board says that they use those big paychecks to attract and retain top talent. They claim that Warner competes for executives with other recorded music and music publishing companies, law firms, investment banks and other companies that offer high pay. Interesting concept since they fired a large number of executives over the last couple of years for exactly that–getting paid too much!
In this new post-Arizona shooting environment of civility, it’s comforting to know that hypocrisy still lives and thrives in the Warner Music Group boardroom. This same board has presided over falling revenues and stock prices while at the same time enriching themselves at the expense of the company’s shareholders. Jr. is a perennial nominees for the Fredo Award for being the biggest moron of the month. But this month he hands down wins the new honor of being Douchebag of The Month. Perhaps this will start him down the long road to rehabilitation.
PS. By the way, just in case you’re interested, here’s the names of the WMG board members:
Edgar Bronfman, Jr., Chairman of the Board
Shelby W. Bonnie, Director
Richard Bressler, Director
John P. Connaughton, Director
Phyllis E. Grann, Director
Michele J. Hooper, Director
Scott L. Jaeckel, Director
Seth W. Lawry, Director
Thomas H. Lee, Director
Ian Loring, Director
Mark Nunnelly, Director
Scott M. Sperling, Director
© 2011, Wayne Rosso. All rights reserved.
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Have you seen the supplement to the proxy statement, filed just two days ago?
“In connection with that determination, the Compensation Committee considered, among other things, that the Company’s current stock price is significantly below the performance vesting stock price hurdles applicable to Mr. Bronfman’s and Mr. Cohen’s fiscal 2008 restricted stock awards. Therefore, in order to better motivate, retain and reward Mr. Bronfman and Mr. Cohen, the Compensation Committee, in accordance with the terms of the Warner Music Group Corp. Amended and Restated 2005 Omnibus Award Plan, approved, among the other changes discussed below, modifications to their fiscal 2008 restricted stock awards revising the performance vesting criteria to lower the per-share price hurdles and to adjust the percentage of shares subject to each price hurdle. In addition, with respect to Mr. Cohen, the Compensation Committee determined to remove the performance vesting criteria for a portion of his restricted stock awards.”
http://www.sec.gov/Archives/edgar/data/1319161/000119312511010211/ddefa14a.htm
excellent article. they all no they are on a sinking ship. the one time (gatekeepers) are on there last leg, trading jobs with each other like it really means something. whats doug morris going to do for Sony, but receive a check for doing ABSOLUTELY NOTHING!! all these guys are snake oil salesmen, hustlers, three card monty crooks. new fresh faces and executives from digital music media and the technology industries are setting up to do something really special, work with new artist and discover great music. OUT with the old tired monopoly (gatekeepers), IN with the new artist driven digital age.