NEW YORK (AP) — Viacom Inc.’s nonagenarian founder Sumner
Redstone saw his pay jump 77 percent to $36.2 million last year,
reflecting a surge in the value of a preferential investment called
stock option equivalents.
That’s according to an Associated Press review of securities documents filed Friday.
The
executive chairman’s special investments rose in value by $26 million.
They gained $12.9 million in the prior year. Stock option equivalents,
like stock options, rise in value when the stock price rises. When they
are preferential earnings — as Redstone’s are — a company must account
for the rise in value as an expense.
Viacom’s widely traded Class B
shares rose 56 percent over its fiscal year to close at $83.58 at the
end of September. A slight uptick in pay TV revenue from networks such
as MTV and Comedy Central offset a decline at its movie studio, while
the company spent $5.4 billion returning money to shareholders through
share buybacks.
Redstone, 90, bought the options in September 2006
using cash from salary he had deferred, the filing said. Executives
typically defer salary to put off paying taxes until later years.
According to the company, other Viacom executives and employees aren’t
allowed to invest their deferred salary in stock option equivalents.
Redstone controls 79 percent of the voting stock.
Redstone’s salary stayed put at $1.8 million, while his cash bonus rose to $8.5 million from $5.8 million
a year ago.
CEO
Philippe Dauman’s pay package rose 11 percent to $37.2 million, as a
higher bonus offset a decrease in the value of newly granted stock and
stock options.
Dauman is getting a raise for the current fiscal
year. His annual salary rose to $4 million from $3.5 million on Jan. 1,
and his target annual bonus this year is rising to $15 million from $12
million. His target stock option award is rising to $15 million from $12
million.
The Associated Press formula calculates an executive’s
total compensation during the last fiscal year by adding salary,
bonuses, perks, above-market interest that the company pays on deferred
compensation and the estimated value of stock and stock options awarded
during the year. The AP formula does not count changes in the present
value of pension benefits. That makes the AP total slightly different in
most cases from the total reported by companies to the Securities and
Exchange Commission.
The value that a company assigned to an
executive’s stock and option awards for 2013 was the present value of
what the company expected the awards to be worth to the executive over
time. Companies use one of several formulas to calculate that value.
However, the number is just an estimate, and what an executive
ultimately receives will depend on the performance of the company’s
stock in the years after the awards are granted. Most stock compensation
programs require an executive to wait a specified amount of time to
receive shares or exercise options.
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