Proxy published: 4/10/2015 Annual meeting: 5/21/2015
Pay for Cablevision’s CEO James Dolan increased from $15,987,539 to $23,702,403 in 2014. Pay for executive chairman Charles Dolan also increased to $15,347,097.
The compensation committee continues to include a practice that we highlighted in our report last year, a problem not just for shareholders of Cablevision but for shareholders of any company that uses Cablevision in its peer comparator group. As stated in the proxy: “The Compensation Committee set a general guideline for target total direct compensation based on a combination of internal and market considerations. . . Market considerations include referencing market pay levels and pay practices among a peer group of companies with a reference to the third quartile of the core peer group.”
There’s a phenomenon in compensation some call the Lake Wobegone effect: compensation committees seem to believe no CEOs should be paid below the average. This is one factor that has driven up CEO pay at such a disproportionate rate. In the case of Cablevision, the grading on a curve reaches a particularly alarming level. The compensation committee believes that the comparator point should be the top 25% of other highly paid CEOs.
There are other problematic features of pay at Cablevision, including stock awards guaranteed in employment agreements, and the fact that the company has a highly paid executive chairman. James Dolan is the son of the company founder Charles Dolan. According to the proxy statement, his brother Thomas C. Dolan, a director of the Company and Executive Vice President, Strategy and Development — Office of the Chairman also earned a base salary of $868,528 and a bonus of $521,100 in 2014 and was granted a $500,000 cash performance award and 30,300 shares of restricted stock. .
It should also be noted that in April 2011, Thomas C. Dolan filed a lawsuit against Cablevision and its wholly-owned subsidiary, Rainbow Media Holdings LLC, in New York Supreme Court. The proxy states that “the lawsuit raises compensation-related claims (seeking approximately $11 million) related to events in 2005. The matter is being handled under the direction of the Independent Committee of the Board of Directors of the Company.”
Cablevision is a controlled company. Under the terms of it Amended and Restated Certificate of Incorporation, the holders of the Company’s Class B common stock have the right to elect up to 75% of the members of our Board and there is no requirement that any of those directors be independent or be chosen independently. The executive officers and directors as a group control 72.9% of the voting power, it is unlikely that shareholders will see any changes to compensation practices at the company.