Hollywood Strikes: A Reckoning for Excessive CEO Pay

Studio executives are at an inherent disadvantage in the War of Words that defines the WAG/SAG-AFTRA strikes. The people who make programs we love funny are on the other side of the picket line, and their way with words brings people to their side. Writers and actors are ready to risk it all to fight for better pay, for a more secure future, and against the astronomical pay of the Hollywood CEOs who have been unyielding to the demands of the strikers. As Variety put it: “Hollywood Strikes Amplify Criticism of Lavish Media CEO Pay Packages.” I’ve spent most of my career looking at excessive executive compensation, and the media industry is the poster child for excessive pay packages. These strikes are the newest, and arguably most public, reckoning for exorbitant CEO pay. They illustrate the effect such excess can have on companies, workers, shareholders, and customers. These strikes represent a loss for shareholders. Entertainment companies continue to lose market cap, and the longer the strike goes on, the less they will be able to release and publicize in the future.

For nine years, As You Sow has been publishing an annual report on The 100 Most Overpaid CEOs: Are Fund Managers Asleep at the Wheel. Every year, CEOs from entertainment companies are high on the list. In fact, Discovery and Disney are the only two companies that have been in the top 100 every year. David Zaslav even has the dubious honor of being the CEO who has been on As You Sow’s list of Overpaid CEOs every year since we began research and ranking nearly ten years ago. For most of those years, he was CEO of Discovery Communications, but when it merged with Warner Brothers in 2022, he became CEO of Warner Bros. Discovery. Earlier this year, I wrote about his current compensation in a blog titled Warner Brothers Discovery: David Zaslav’s Overpaid Sequel. One aspect that made his $39.2 million total disclosed pay for 2022 so unusual is the percentage of his total compensation that is in cash. He received an exorbitant salary of $3,000,000 (guaranteed through the end of 2027) and has a target cash bonus of $22,000,000. You need to read closely to discover that Zaslav’s 2023 bonus is guaranteed to be paid at target, no matter how he performs. This, of course, completely undermines the very idea of bonuses.

Reading proxy statements, you get the sense that executives push as hard as they can to extract wealth from the companies for their own benefit. We got a view into that in an August 11 filing made by Fox regarding the departure of Viet Dinh, Fox's top lawyer. As always, the devil is in the details: “The Company also agrees to pay the entire premium necessary for Executive and Executive’s eligible dependents to continue coverage under the Company’s group health, dental, and vision insurance plans” until June 30, 2025. We know this executive has enough to pay for his own insurance— the paragraph above the COBRA discussion notes that he will be receiving a separation payment of $23 million in cash and will consult with the company for up to $5 million. The fact that an executive who has left the company is getting insurance paid for his family for the next 22 months while individuals in the unions struggle to combine enough hours to take advantage of limited group benefits highlights a contrast between how large entertainment companies negotiate with executives versus how they negotiate with workers.

Shareholders, 90% of whom are usually supportive of CEO pay, have voted against pay in high numbers at entertainment companies. At Netflix’s June annual meeting, 71.2% of shareholders voted against the pay package. Compensation for then Co-CEO, President and Chairman Reed Hastings was $51,073,237 for 2022; Co-CEO and Chief Content Officer Ted Sarandos has disclosed compensation of $50,299,296.

There’s been lots of coverage of Netflix’s unusually heavily cash-based compensation for its CEO, unique among all S&P 500 companies. However, it isn’t simply the C-Suite that is highly paid. The median pay at Netflix was $218,400, a number many multiples higher than that of SAG members ($46,960). This makes the pay ratio between CEO and median employees (not even the actors and writers who make the shows people flock to Netflix for) approximately 234:1. This disparity is between people who work at Netflix headquarters, who presumably are primarily full-time employees with benefits, and the CEO. The disparity between the CEO and the people who write and act in the shows we love is much, much greater.

At Disney, where the median wage is $54,256, CEO Bob Iger earns 446 times that amount. The average Disney employee would need to work 446 years to receive what Iger, CEO since 2020, made in 2022 - Disney’s overpay of its executives and underpay of its staff has been a reputational risk to the company for years. As extraordinarily high as it seems, the 446:1 ratio is a sharp improvement from only a few years ago. In 2018, the median employee at Disney made $46,127. That year, Iger’s total compensation was $65,662,806. The pay ratio that year was an astonishing 1,424:1. In other words, 14 employees would each need to work a century (longer than Disney has been in existence) to equal Iger’s reported compensation that year. Shareholders – including Abigail Disney – objected heartily. Iger left the company but returned as CEO in November 2022 with lower compensation.

This change in Iger’s pay shows that, standing together, shareholders can influence executive compensation. The bad publicity of the executive compensation figures is part of the reason public opinion favors a settlement of the WGA and SAG-AFTRA strikes. Here’s hoping that one can be reached soon. Until it does, the strike at entertainment companies amplifies the way exorbitant executive pay harms everyone but the executives themselves.