Obscene Warner Music Executive Payouts

------------------------------ In these times of major label mergers, downsizing, the slashing of label rosters, and thousands of record company jobs being lost over the last three years--not to mention the enormous sea change and seismic shifts that technology has wrought--comes one of the most disturbing reports we have come across. It further reveals just how profoundly out-of-touch certain companies TRULY are when addressing the problems within their own record divisions. The Financial Times reported Warner Music paid its top five executives more than $21m in salary and bonuses following last year s $2.6bn acquisition of the US music group by a private equity consortium. The article points out that Edgar Bronfman Jr, the Chairman who led last year s buy-out, received a $1M salary and $5.25M bonus. Lyor Cohen, head of the US recorded music business, received $1M and $5.24M in salary and bonus, respectively. Paul Rene Albertini, head of Warner s international operations, was paid $1.25M in salary and a $3.15M bonus. Departing Warner/Chappell CEO, Les Bider, received a $2.44M total payment. These payouts include further guaranteed bonuses or change of control payments. According to documents filed with the U.S. Securities and Exchange Commission, last year s total executive remuneration was more than three times higher than Warner Music s $7M operating income for the 10 months to September 30th. The management payments reflect Warner s success in cutting costs following last year s sale of the Music Group by Time Warner. The company expects to deliver $250M of annualized savings by May this year, achieved mainly through 1,600 job losses. What is so truly disturbing here is that it speaks volumes about the value system of an owner of a company that would pay its top-five Record Executives more than three times the amount of operating income for a ten-month period while dismissing 1,600 employees. What the article failed to mention was that in addition to the employee layoffs, Warner Music Group also dropped 93 of the 193 artists signed to Warner Labels in the US, approximately 47% of the artist roster during this same period. If the financial health of a company is truly so dire that it calls for these kind of dramatic and severe cuts for the financial well being of the company, how does one justify the kind of staggering bonus payouts to the top five executives in the company? Don t get us wrong, we have no problem with executive compensation when it s tied to actually rewarding performance, but in this case, one is truly hard pressed to grasp or to understand what is actually being rewarded. The claim that the Warner Music Group will save $250M of annualized savings mainly through the decimation of 1,600 jobs is not something that we think should be financially rewarded. On Feb 11th at the Grammy Foundation Entertainment Law Initiative luncheon in Los Angeles, WMG Chairman Edgar Bronfman spoke to the 460 attendees of the luncheon, We must employ our creative imagination - and we must resist the temptation to conduct business as we always have - by experimenting with new approaches, new structures and new relationships, so that we can move more quickly and appropriately respond to the ever-changing marketplace. He went on to request that music attorneys bring a new level of creativity to the deals they forge. Your willingness to join with us is critical to the success of our industry. If only he had resisted the temptation to conduct business like we always have and not given so much to so few while so many went without. In business, as in life, you lead through example. Mr. Bronfman, with all due respect, you need to have to have your own house in order before you have the credibility to make a request like that to the creative and legal communities. In an open letter to Warner Music Chairman Edgar Bronfman, Carlos Anaia, a five-year Warner Music Group employee in London who was leaving the company wrote, We understand that you took on a huge task to turn around the ailing, forgotten division of AOL Time Warner, but informing the already morale-drained staff (via a third party - The Financial Times) that the salary and bonuses that the top five executives took individually equal more than 20 times my total lifetime salaried income (assuming I started at 18 and retired at 60), is somewhat more than insensitive. If you want to make us feel like maggots, you succeeded. Paul-Rene Albertini gets paid $4 MILLION in total? Hello!!? The only deals we are all aware of have all LOST money. Walt Disney Records? It s still more than $15 million unrecouped. Milan Records? A French turkey. Need I go on? What deals has this guy done that actually MADE money? ------------------------------ The balance of the article, can be read here: http://web.archive.org/web/20051223130455/http://www.eweb-music.com/article/Music/Obscene-Warner-Music-Executive-Payouts/