Warner Music Group's top two executives took home more money in 2010 than they did the year before, according to details in a recent SEC filing. Judging from the amounts of their bonuses, Warner's leadership exceeded their 2010 goals.
Chairman and CEO Edgar Bronfman, Jr. had total compensation of $5 million. On top of $1 million in salary, Bronfman earned a $4 million bonus. His 2009 compensation was $3.1 million -- a $1 million salary and a $2.1 million bonus. Bronfman gets a target bonus of 300% of his base salary. The bonus maxes out at 600% of base salary. In 2010, Bronfman's bonus of $4 million exceeded his 2010 target bonus by $1 million.
Lyor Cohen, vice chairman, Warner Music Group and Chairman and CEO, Recorded Music - Americas and the U.K, took home $6.5 million last year. He earned a $3.5 million bonus on top of a $3 million salary. His 2009 compensation was $5 million -- a $3 million salary and a $2 million bonus. Cohen gets a target bonus of $2.5 million with a minimum bonus of $1.5 million and a maximum bonus of $5 million. In 2010, Cohen's bonus of $3 million exceeded his target bonus by $500,000.
Executive compensation is determined by the board of director's compensation committee and is based on a number of goals. According to Warner's latest proxy statement:"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."
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.
While it may seem odd to some people that executives are rewarded when their company's revenue and profits fall, executive compensation is meant to attract and retain top talent. As the company notes in its proxy statement, Warner competes for executives with other recorded music and music publishing companies, law firms, investment banks and other companies that offer high pay.
Other music companies do not make public the compensation of their executives. Of the four majors, Warner is the only publicly traded, pure-play music company. Sony Music, owned by Sony Corp. and Universal Music Group, owned by Vivendi, do not report financial information in such detail because they are part of much larger organizations. EMI is privately owned.
Some other top Warner executives also made less money last year. David Johnson, chairman and CEO of Warner/Chappell Music, earned $1.3 million last year, down slightly from $1.4 million he earned in 2009. The 2010 compensation of Michael Fleisher, vice chairman, strategy and operations, dropped to $1.9 million from $3.1 million in 2009. However, Steven Macri, executive vice chairman and chief financial officer, increased his total compensation to $1.4 million in 2010 from $1.1 million in 2009.
Both Bronfman and Cohen earned far more in 2008 due mainly to stock and option awards. That year, Bronfman had total compensation of $17.7 million and Cohen took home a total of $13.9 million.