Megabonuses for Dreamworks’ Megaminds…

November 8, 2010

News that Megamind was the #1 movie this past weekend with ticket sales of $47.7 million may ameliorate shareholders’ reaction to the disclosure that DreamWorks Animation SKG, Inc. (DWA) just handed out bonuses worth $17.55 million.

Of course, in this case, we’re not talking about Megamind and Metro Man, but characters better known as Jeffrey Katzenberg, Lewis Coleman, William Damaschke, John Batter and Anne Globe.

An 8-K filed Nov. 4 disclosed that Katzenberg, Dreamworks’ CEO (and, according to this website, the “most fervent evangelist” for the use of 3D technology in movies) got the biggest bonus – $8 million. He got $4 million in stock appreciation rights (SARs), $2.4 million in performance-vested restricted stock units (RSUs), and $1.6 million in performance-vested cash incentive awards.

In fairness, we want to add that Katzenberg pulls in $1 a year as a base salary. According to the proxy that Dreamworks filed April 1, his compensation package was structured with the goals of conserving cash by giving more equity awards, emphasizing the company’s long-term success, and rewarding Katzenberg “if and when other stockholders receive appropriate returns.” The proxy added that Katzenberg’s comp package was designed to put his total compensation “…at approximately the fiftieth percentile for comparable positions at other entertainment studios.” Nevertheless, he got more than $23.44 million in FY 2009.

For president/CFO Lewis Coleman, his $3.25 million bonus included approximately $1.08 million in SARS, 18,413 in time-vested restricted shares of stock (vesting over 4 years), about $650,000 in performance-vested RSUs, and $433,333 as a cash incentive award (which also vests over 4 years). Interestingly, the 8-K notes that:

“…Performance-vested awards granted to Mr. Coleman continue to be subject to the achievement of performance goals, as described in the preceding sentence, through the end of the three-year performance period, but Mr. Coleman need only remain continuously employed until December 31, 2011 in order for such awards to vest.”

For the remaining executives, Damaschke (Co-President of Production and President of Live Theatrical), Batter (Co-President of Production), and Globe (Head of Worldwide Marketing and Consumer Products), the awards were $2.5 million, $1.8 million, and $2 million, respectively. Each of those executives got his or her award allocated as 33.3% SARs, 20% time-vested RSUs, 20% performance-vested RSUs, 13.3% time-vested cash incentive awards, and 13.3% performance-vested cash incentive awards.

We’re not opposed to rewarding executives for success – especially when it’s truly tied to performance – but the megamillion-dollar bonuses won’t make us happy if and when we shell out $50 for the family to see the new film.

Image source: DreamWorks Animation SKG, Inc.

————

See more of what’s in the filings: Check out FootnotedPro, where we highlight unusual opportunities and potential problems well in advance of the market. For more information or to inquire about a trial subscription, email us at [email protected].

Leave a Reply