Common Music CEO Lucian Grainge’s Wage Final Yr

Now Grainge’s laborious work is absolutely beginning to repay. His 2020 earnings included a 15.5 million euros ($18.2 million) bonus for serving to shepherd a 3 billion euros ($3.5 billion) funding from a Tencent-led consortium for a ten% stake in UMG. Govt vp, CFO and president of operations Boyd Muir additionally obtained a bonus for his function in that deal value 3.3 million euros ($3.9 million).

In 2021, Grainge will earn a 17.5 million euros ($20.5 million) bonus from the Tencent consortium’s buy of a further 10% stake accomplished in January, in addition to an unspecified quantity for Pershing Sq. Holdings’ 10% stake bought in August for 3.37 million euros ($3.95 million).

Grainge’s going-forward annual compensation quantities to round 36 million euros ($42.1 million), in keeping with a Billboard calculation primarily based on data within the prospectus. Breaking that down, he receives a 12.7 million euros ($14.9 million) annual wage and an 8.6 million euros ($9.4 million) “contingent” money bonus primarily based on UMG assembly unspecified “monetary and non-financial targets.” Grainge can also be entitled to retirement advantages of 20% of his annual base wage, with a most of 262,000 euros ($307,000), in addition to an annual 418,200 euros ($490,000) annual housing allowance. As well as, Grainge will get using a automobile with a driver “for enterprise and cheap non-public use,” and using a chartered or non-public plane for enterprise functions as much as 410,000 euros ($481,000) per yr, though he can exceed that quantity with approval. The only largest element of Grainge’s compensation is 1% of UMG’s earnings earlier than curiosity, taxes and amortization — that was equal to 13.3 million euros ($15.6 million) in 2020.

Grainge’s wage is substantial however not unusually so contemplating UMG’s measurement and success. Warner Music Group CEO Stephen Cooper, who has led the corporate since 2011, earned a mean of $13.7 million in 2017, 2019 and 2020. (He made $34.4 million in 2018, which is probably going associated to the $925-million dividend WMG paid to mum or dad firm Entry Industries that yr.) Cooper, whose base wage of $1 million is lower than a tenth of a typical performance-related bonus, is paid a comparable quantity to Grainge when adjusting for the businesses’ sizes. At an affordable vary, UMG’s market capitalization — $45 billion to $52 billion — is 2.2 to 2.5 instances WMG’s present market capitalization of $20.8 billion, whereas Grainge’s wage is 3.1 instances bigger than Cooper’s three-year common. If UMG’s worth reaches analysts’ prime estimates, round $60 billion, its market cap will probably be about 2.9 instances that of WMG, placing Grainge and Cooper on almost equal footing after adjusting for the sizes of the 2 corporations.

UMG and live performance promoter Reside Nation additionally pay their CEOs roughly the identical when the businesses’ relative sizes are thought of. Reside Nation CEO Michael Rapino made $11.6 million and $14.6 million in 2018 and 2019, respectively. (Due to COVID-19’s impression on Reside Nation, Rapino’s 2020 compensation fell to $4.7 million.) Grainge’s 2020 compensation was 3.6 and a pair of.9 instances bigger than Rapino’s compensation in every year. Utilizing the identical vary for UMG’s market capitalization, UMG is 2.4 to 2.7 instances bigger than Reside Nation.

Grainge, Cooper and Rapino differ of their stock-related compensation, nonetheless. UMG doesn’t but have a long-term incentive program to incentivize its executives, though the brand new board could set up one, in keeping with the prospectus. As an alternative, Grainge will obtain a considerable bonus after UMG’s admission to the alternate. (The cost will equal 60% of the sum of $150 million and 1% of each greenback of UMG’s valuation as soon as admission exceeds $30 billion. So, a $40 billion valuation would lead to a $150 million bonus. A $50 billion valuation would give Grainge a $210 million bonus.) Cooper obtained roughly 190,000 restricted inventory items in fiscal 2021 that vest over 4 years and are value $7.8 million on the present $41 share worth. Rapino realized $28.7 million from choice awards and inventory awards in 2020.

As soon as UMG is a standalone firm, its board of administrators’ compensation committee will create wage and incentive plans primarily based on a “peer group” of like publicly traded corporations. That might possible embrace Warner Music and Reside Nation, in addition to presumably Spotify, Netflix and Endeavor, amongst others. Amongst these corporations’ CEOs, Spotify’s Daniel Ek doesn’t take a wage or different annual compensation — however he owns 16.8% of Spotify’s widespread shares, valuing his fairness at $7.8 billion. Netflix CEO Reed Hastings made $43.2 million in 2020, with $650,000 from a wage and over $42 million in inventory choice awards. (Netflix’s market capitalization is at the moment $258 billion.) And Endeavor’s Ariel Emmanuel was paid $14.4 million in 2020 for wage, bonus, fairness award and different, in keeping with the corporate’s 2020 prospectus earlier than it went public on April 29. Grainge’s 2020 compensation was almost 3 times larger than Emmanuel’s, whereas UMG’s estimated market capitalization is 7.6 instances larger than Endeavor’s $4.4 billion.

As for UMG’s different main executives, Muir earned 9.7 million euros ($11.4 million) in 2020 — most of that from a bonus associated to the Tencent consortium’s funding. For his annual compensation, Boyd receives a 1.7 million euros ($2 million) annual wage and is eligible for a bonus of as much as 3.3 million euros ($3.8 million). Muir’s admission bonus — to be paid in shares — will equal 12.3 million euros ($14.4 million, vested over three years) with a further 6.1 million euros ($7.2 million) if UMG’s valuation at admission is 30 billion euros ($35.2 billion) and one other 1.5 million euros ($1.8 million) if the valuation reaches 40 billion euros ($46.9 billion).

UMG deputy CEO Vincent Vallejo, who joined the corporate in April from Vivendi, the place he has labored with UMG since 2008, has an annual wage of 960,000 euros ($1.1 million). He’s eligible for a goal bonus of fifty% of annual base wage with a most payout of two instances the goal bonus quantity, relying on unspecified efficiency metrics. Vallejo is entitled to obtain retirement advantages of 20,000 euros ($23,500) yearly. If he’s nonetheless employed by the corporate on Feb. 1, 2023, Vallejo will obtain a retention bonus of 800,000 euros ($938,000).

UMG will go public on Sept. 21 when it lists on the Euronext Amsterdam inventory alternate. Father or mother firm Vivendi will distribute 60% of UMG’s fairness to its shareholders and retain 10% for itself. A Tencent-led consortium owns 20% of UMG’s excellent shares and Pershing Sq. Holdings owns the remaining 10%.

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