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A sour note…

One of 2005’s more disappointing IPOs, Warner Music Group (NYSE: WMG), struck a number of sour notes when it filed its first proxy statement as a public company after the bell on Tuesday.

The first note of discord is reserved for Warner’s CEO, Edgar Bronfman, Jr. , who received a $1 million salary and an eye-popping bonus of $6.25 million, largely in relation to taking the company public. The amount is even more stunning when compared to the pay received by some of Warner’s self-selected peers. Marvel Entertainment (NYSE: MVL), for example, paid its CEO $550,000 in salary and $343,750 in bonuses during fiscal 2004 . Lions Gate (NYSE: LGF), another Warner peer, paid its CEO $850,000 in salary and $1,600,000 in bonuses during fiscal 2005.

Bronfman, you may remember, is a former Vivendi (NYSE: V) executive who left the company on less than cordial terms. Warner’s proxy even notes that “APPAC, a minority shareholder group of Vivendi Universal, initiated an inquiry…into various issues relating to Vivendi, including Vivendi’s financial disclosures and the appropriateness of compensation received by the former CEO, Jean-Marie Messier. The inquiry has also been extended to cover compensation received by Mr. Bronfman. The president of APPAC has publicly announced that he is seeking to have Mr. Bronfman repay to Vivendi compensation he received while affiliated with Vivendi. The outcome of such inquiry or of any subsequent proceeding with respect to Mr. Bronfman is uncertain at this time. Mr. Bronfman believes that all compensation paid to him by Vivendi was properly received and that the claims raised by APPAC are without merit.”

Other rotten notes included the $600,000 salary and $350,000 bonus paid to Bronfman’s brother-in-law, Alex Zubillaga, the Executive Vice President of Digital Strategy and Business Development. Still, Zubillaga didn’t make out as well as another EVP, Michael Fleisher, who is also the Company’s CFO. During 2005, Fleisher pocketed $800,000 in salary, $1,250,000 in bonus payments, a jaw-dropping $8.8 million in restricted stock awards, and a gross-up payment of $4.9 million to cover the tax liabilities created by the award.

Shareholders aren’t complaining — Warner’s stock closed yesterday at $20.53, some 20% above the IPO price of $17/share. Nevertheless, I’d be watching WMG pretty closely — it took the Company five pages in the proxy to describe “Certain Relationships and Related Party Transactions” and late last Friday afternoon disclosed that it faced delisting from the NYSE because the company currently lacks two independent directors as well as a majority of independent directors on its audit committee.