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Dauman, Dooley Strike It Rich at Viacom

1/31/2011 12:01 AM Eastern

Viacom CEO Philippe
Dauman and chief operating
officer Tom Dooley struck pay
dirt in 2010, more than doubling
their compensation in the
first nine months of the year,
on the heels of a ratings resurgence
at the cable networks and
a big bump in the company’s
stock price.

Dauman reaped the biggest increase — his
total compensation rose 148.5% for the year, to
$84.5 million from $34 million in 2009. The bulk
of that increase was in the form of stock options
and awards that will vest over time, part of a new
employment pact that Dauman signed in April.
According to Viacom’s proxy statement, filed on
Jan. 21, Dauman is entitled to about $54 million
in one-time stock options and awards that he
did not receive in 2010, but that will vest over
the next five years.

Dauman received a 5% increase in base salary
in the first nine months of the
year, according to the proxy statement,
to $2.625 million, and his
nonequity incentives decreased to
$5.6 million in 2010 from $6.3 million
in 2009.

In some cases, annual salary
and bonus increases were lower
in 2010 because Viacom shifted its
fiscal calendar to end on Sept. 30,
2010, making it a nine-month fiscal
year.

Dooley also had a big year on the compensation
front, earning a total of $64.7 million for
the year (a 139.6% increase over the $27 million
he earned in 2009), including about $41 million
in one-time stock and option awards. Without
those one-time awards, Dooley’s total compensation
would have been about $23.8 million.

Those awards were also part of a new employment
deal Dooley signed in April, making
the former chief financial officer the company’s
COO. At the other end of the spectrum, Viacom
chairman Sumner Redstone reported total
compensation of $15.6 million for 2010, below
the $16.9 million he earned in 2009.

While the size of the increases are bound to
raise eyebrows, Viacom stressed that executive
salaries are closely tied to the company’s performance.
And Viacom performed well in the first
nine months of 2010 (its fourth-quarter results
will be released on Feb. 3) — net earnings were
up 23%, to $1.2 billion in the period. Ratingswise,
MTV Networks had its best third quarter
in three years, led by hits like Jersey Shore. That
growth was reflected in Viacom’s stock price, up
45% ($14.36 per share) in 2010, closing at $45.86
per share on Dec. 31. Based on its 601.45 million
shares outstanding, Viacom added about $8.6
billion in market capitalization during 2010, all
under Dauman’s watch.

Brent Longnecker, chairman and CEO of
Longnecker & Associates, a Houston compensation
consultant, said that in looking at pay packages,
stock awards can be misleading in that the
executive may not realize their value until several
years in the future.

“Just because there is an accounting charge
doesn’t mean there is any value to the executive,”
Longnecker said.

September