Last month, it came to light that Universal Music Group (UMG) had retreaded the contract of chairman and CEO Lucian Grainge through May of 2028 with a two-thirds salary reduction and enhanced stock incentives. Now, shareholders are reportedly questioning whether the $100 million or so compensation package makes sense in the current economic climate.
Investors’ qualms with Grainge’s massive employment agreement just recently emerged in a report from the Financial Times. For background, UMG listed on the public market in September of 2021, and thanks in large part to related one-time bonuses, Grainge was reportedly paid at least $200 million that same year.
Notwithstanding this once-off windfall and the London native’s decidedly healthy annual salary, though, the uncertain state of the economy (which has of course prompted all manner of companies to cut spending) is causing stakeholders to take aim at the “excessive” deal.
Per the mentioned FT piece, two of the major label’s top-25 stakeholders characterized the proposed contract as “too generous,” with shareholder advisory services Glass Lewis and Institutional Shareholder Services reportedly urging investors to reject the salary framework at UMG’s annual meeting on May 11th.
“The company has failed to implement a remuneration strategy that adequately aligns executive pay with performance,” Glass Lewis is said to have relayed in a report this month. 20-year-old Glass Lewis further drew attention to its estimate that Grainge is poised to benefit from a “transition award” under which a $50 million payday “depends on him staying at the company,” per the FT.
Another $50 million would reportedly be tied to share performance, on top of $5 million in annual base compensation and different bonuses yet for Lucian Grainge, who’s now the oldest of the Big Three labels’ respective heads.
When the market closed, Universal Music Group stock (UMG on the Euronext Amsterdam) was worth €21.02 ($23.21 at the present exchange rate) per share. The price represents a small increase from Tuesday but an approximately €2-per-share dip from 2023’s beginning as well as a roughly €5-per-share falloff from the aforesaid 2021 IPO.
The leading label also posted its Q1 2023 financials today, disclosing €2.45 billion/$2.71 billion in revenue (up about 11.5 percent year over year), including €1.92 billion/$2.12 billion from recorded music (up 11.7 percent YoY).
As usual, streaming (and in particular subscriptions) accounted for the lion’s share of the recorded sum, at €1.33 billion ($1.47 billion), for a 9.9 percent YoY boost. Physical revenue (including CDs and vinyl) likewise improved from the same period in 2022, jumping this time by 32.1 percent YoY to hit €313 million ($345.56 million), according to the analysis.
On the publishing side, Universal Music identified a 13.3 percent YoY revenue hike and €425 million ($469.10 million) in income, including 20.9 percent YoY growth for digital (€231 million/$255.03 million).