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Really Big Packages 

Forget what EW says, it’s the moguls’ perks that are out of control, not the stars’

Thursday, Apr 21 2005
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What unmitigated gall. Entertainment Weekly suspended its usual pabulum spewing to piss on celebrity perk packages in its recent, laughably titled article “New Age of Greed.” In the piece, unnamed executives at movie studios, TV networks and record labels whine about unnamed stars who dare to demand $40,000 private-jet flights to carry their luggage and $35,000 basketball courts to entertain them on location. The article even gripes that celebrity perks add about 5 percent to the bottom line of a film’s cost. “Given that the average studio film now costs $98 million to produce and market, that can be $5 million in perks,” EW gasps. “Say a studio releases a dozen movies a year, that’s $60 million — enough to make a Sideways roughly every three months.” Forget, for a moment, the stupidity of an entertainment publication that is shocked to find that stars are wasting Hollywood’s money. The same outrage was heard throughout the 1980s and 1990s over Demi Moore demanding vintage dolls for her collection or Tom Cruise a co-op in Manhattan. Forget the cowardice of magazine editors who won’t finger-point for fear those celebs will refuse to do EW covers. (Even though documents filed in the ongoing lawsuit over the collapse of the Basic Instinct sequel made public Sharon Stone’s five pages of demands including Pilates equipment, a $3,500 per diem for armed bodyguards, a chauffeured car with a nonsmoking driver, three nannies, two assistants, a presidential suite, deluxe motor home, and on ad nauseam.) Instead, remember this: Hypocrisy, thy name is EW’s parent company, Time Warner. Chairman and CEO Dick Parsons gave himself a perk that’s a monument to ego: a 5,000-square-foot, 21st-floor, marble-and-rare-wood dream suite (a supposed $25 mil to build out) inside the swankiest and priciest NYC office space, the new Time Warner Center. Parsons and the other heads of the Mammoth Media conglomerates feeding America its infotainment — Disney, Sony, Viacom, General Electric and News Corp. — may gag on celebrity greed, but they never stop indulging their own corporate gluttony. Wanna hurl? Look at the latest shareholders-be-damned headlines this week about Viacom — owner of Paramount, CBS, MTV, VH1, and Infinity radio — disclosing that it gave its top three moguls a 58 percent pay increase even though the company’s stock price fell 18 percent in 2004. A Viacom spokesman noted that the bonuses for all executives were tied to operating income, not share price. It’s not just the arrogance of rich, old Viacom chairman Sumner Redstone claiming he cuts costs at every corner while at the same time lining his own pockets at the expense of investors that’s so nauseating. It’s also the profligacy of a public company shameless enough to reimburse Les Moonves, who lives in Los Angeles but also has a New York apartment, $105,000 for the period he stayed in New York at his apartment instead of at a hotel, or Tom Freston, who is based in New York but also has a residence in Los Angeles, $43,100 for the time he spent staying at his L.A. home instead of a hotel. Talk about chutzpah: This is paying these guys to live in their own homes. For that matter, departing Walt Disney CEO Michael Eisner received $735,000 for security services, personal protection and equipment. That’s on top of the $8.3 million in salary, bonus and other compensation in the same year he was the target of a shareholder revolt. The examples are legion. Besides the disputed $20 million golden parachute, French-based Vivendi Universal paid for all sorts of extravagant perks to chief executive Jean-Marie Messier before his ouster. Reportedly, Viv U picked up the tab for a $140,000-a-year butler, a $75,000-a-year chauffeur for Messier’s wife, plus the heating bills in the $17.5 Park Avenue duplex the company bought for him — all while shareholders were kept in the dark about the extent of the conglom’s financial problems. Given such wretched excess, those toys for Hollywood A-listers seem like chump change.

Celebrities can make all the demands they want, but someone has to underwrite every perk. Whereas, when it comes to corporate gluttony, the execs are writing the checks to themselves. That’s because, increasingly, the CEOs consider themselves celebs. That’s certainly how Vanity Fair’s New Establishment unctuously began describing them a decade ago. And when it comes to Hollywood, who doesn’t believe their own publicity? In his book, Why Smart Executives Fail, business professor Sidney Finkelstein says CEOs who have a long or impressive track record may come to feel that they've made so much money for the company that the expenditures they make on themselves, even if extravagant, are trivial by comparison.

In turn, The S.E.C. does not require companies to describe many big portions of an executive's compensation in any company filing, while others must be explained in only a vague way. And for those execs who turn down a seat on the board, their paychecks escape public scrutiny through a loophole in SEC reporting requirements. That’s why Warner Bros. fat cats Bob Daly and Terry Semel skated for so long making more even than their Time Warner boss Gerald Levin (the pair reputedly took home more than $30 mil each). Of course, they learned bad habits from their old boss.

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