NEW YORK: In a surprise move, the board of underperforming US media conglomerate Viacom cut the salary of Sumner M Redstone, its octogenarian chairman, founder and controlling shareholder.
But this was no palace revolution, rather an exercise in stock market cosmetics instigated by Redstone himself. Concerned at the company's lacklustre share price, the canny boss is to link the greater part of his remuneration to "superior shareholder returns".
Under a new agreement, from 2007 Redstone's annual salary will be reduced to $1 million from its current $1.75m. Deferred compensation, presently $1.3m annually, will be eliminated, while his target cash bonus under Viacom's short-term incentive plan will be reduced to $3.5m pa from $6.1m.
To redress this cruel inequity, Viacom's chairman will receive an annual award of stock options with a grant-date value of $3 million. Plus an annual award of performance-share units with a grant-date target value of $3 million.
Data sourced from Wall Street Journal Online; additional content by WARC staff