EMI Music Publishing will begin a three-year transition Feb. 1 as it grooms its next chairman/CEO.
NEW YORK -- EMI Music Publishing will begin a three-year transition Feb. 1 as it grooms its next chairman/CEO.
London-based Roger Faxon, EMI Group's CFO, will return to the publishing unit in New York -- where he spent three years as CFO -- to become its worldwide president/COO and eventual successor to Martin Bandier.
Bandier will remain the company's chairman/CEO until April 1, 2006, when the two will share the CEO title. Faxon will become sole CEO April 1, 2007, while Bandier will remain as full-time chairman until March 31, 2008.
After exiting the company, Bandier will remain under a consulting contract for an additional three years.
During his more than 30 years in music publishing, Bandier has earned the respect of the industry as a creative contributor to the art of music.
Although Faxon's title implies he's a "numbers guy," Bandier tells ELW, "He's more than that and has proven that in the past. He's managed creative businesses and dealt with creative people and [loves music]. He has a sensitivity to the creative process and to the creators."
Bandier says the two will share ideas and responsibilities, reflecting his long-standing business philosophy within the company. "Roger and I have always talked about major decisions, what the strategy for the future is and what the planning is. I can't imagine that changing."
Given the challenges that digital music, new technology and copyright licensing and protection present the industry during the next few years, Faxon says they will be looking for new ways to optimize the business to "perform for our writers."
Bandier notes that as music publishers -- who are not reliant upon manufacturing or distribution plants to sell music -- they can be flexible in changing the direction of their business based on where opportunities lie.
"Roger and I agree that the opportunities lie everywhere," Bandier says. "At the end of the day, music is an integral part of everything that the world does, whether it's digital or it's hard copies. Our strategies will be the same: to exploit and grow our business, utilize our music as best as possible and maximize the money for our shareholders and our songwriters."
While the overall company strategy will remain the same, Faxon adds, the tactics -- the specific ways one makes things happen, which are based on what is going on in the marketplace at any given moment -- will be adjusted as necessary.
"Marty has always had an eye for the long-term future growth of the business," Faxon says. "You can see the proof of his ability to do that in the results in the company, which have been spectacular."
An EMI spokeswoman says that the latest figures from 2004 indicate that the publishing unit had a 25.6% operating profit, the highest of any music publisher.
EMI Group chairman Eric Nicoli says the "smooth" succession plan "comes at the right time and is the right thing to do."
"Most companies deal with succession plans later in the day," he adds. "My belief is that you have to do it from a position of strength instead of weakness, and EMI Music Publishing is in great shape."
Nicoli dismissed as "nonsense" reports that the succession plan was announced because Bandier, 63, was planning to acquire EMI Music Publishing and was rebuffed.
While he remains at EMI, Bandier says he would not be permitted to make a personal acquisition of outside publishing catalogs. However, he will be free to do so once he is no longer an EMI employee.
The announcement surprised many in financial circles. "It is not something we anticipated," London-based UBS analyst Helen Snell says. "But it looks like a good arrangement. It will keep Marty Bandier in the group for some time while Roger Faxon will gradually play an increasing role."
Nicoli says the decision to begin the process was facilitated by the fact that Bandier and Faxon worked together already and have mutual respect. "Their relationship is a proven one," he adds.
Martin Stewart, CFO of British Sky Broadcasting Group, replaces Faxon as EMI Group CFO.
Bob Flax will remain in his post as the publishing unit's U.S. president, and no other personnel changes are expected, a spokeswoman says.
Bandier has EMI Group's most lucrative financial package. According to the company's 2004 annual report, he was paid a total of £3,318 million ($6.24 million) last year. The base salary of £1.819 million ($3.42 million) was augmented by benefits and incentives worth £1.455 million ($2.74 million).
Faxon's full remuneration as CFO reached £885,000 ($1.66 million). The publishing unit annually contributes about 35% to the overall group's profit, an EMI spokeswoman says.
Nicoli declined to reveal the financial terms of Bandier's contract renewal. He says they are "appropriate terms that I am comfortable with, and so is the board."
Bandier and Faxon say they are looking forward to working together again. "We had fun the last time we did it; it will be great fun now," Faxon says.