A major backlash against huge bonuses at companies like AIG, ultimately paid by taxpayers, is now spreading to private concerns.
Warner Music Group is not receiving federal bailout funds, yet a massive bonus payoff to label chief executive Edgar Bronfman, Jr., is now drawing another spurt of scrutiny. In 2008, Bronfman grabbed a handsome bonus payout of $3 million, despite losses of $56 million and a massive drop in stock valuation. The payout was highlighted by the Wall Street Journal on Wednesday, and subsequently picked up by numerous other outlets.
The Bronfman bonus is just one example of a top-heavy compensation structure at Warner, detailed repeatedly within financial filings. Perhaps a more glaring example involves Lyor Cohen, who cashed out $6.8 million in options in August of last year. Others at the top are also drawing heavy millions.
That has already caused consternation among analysts, most notably Richard Greenfield of Pali Research. “We believe the lack of independence on the compensation committee is a clear negative for public shareholders,” Greenfield stated last year. Meanwhile, Wall Street has been moribund on Warner Music Group (WMG), part of a broader market downturn. Most recently, Warner landed at $2.18 in Wednesday trading, less than half of its year-ago valuation of $5.21.
Story by analyst Alexandra Osorio.