It’s been quite a 24-hour period for the C-Suite at America’s No. 1 owner of AM and FM radio stations, iHeartMedia.
The Houston-based U.S. Bankruptcy Court for the Southern District of Texas approved and authorized a 2018 incentive plan for company “insiders.” Meanwhile, in the south of France, iHeart’s leadership partnered with Michael Kassan’s strategic advisory and business development firm for an intimate VIP dinner during the Cannes Lions International Festival of Creativity.
The party, which brings together “the senior most influential decision makers and thought leaders in the media ecosystem,” included a private concert by Jon Bon Jovi.
With lots of legal and financial jargon, U.S. Bankruptcy Court Judge Marvin Isgur granted a motion that allows iHeart’s insiders to benefit from an incentive plan that he approved in its entirety.
The “IPI” was adopted May 1, 2018 as a “key employee” incentive plan, “designed to align the interests” of iHeart with “certain key individuals” of the company.
The motion did not go into detail on who at iHeart is entitled to what — at least for public consumption. Several pages were “intentionally omitted.”
Isgur’s decision is a blow to the U.S. Trustee who last week objected to a June 7 motion by iHeart to have Isgur approve its IPI.
As a company, iHeart is tight-lipped about its executive compensation. Its 2017 10-K annual report submitted to the SEC does not disclose what Chairman/CEO Bob Pittman, President/COO and CFO Rich Bressler and other C-Suiters earn as a base salary, nor does it discuss bonus payments.
U.S. Trustee Henry Hobbs Jr. helped out in illustrating just how big the bonus payments are to both Pittman and Bressler. Hobbs, the acting trustee for Region 7, protested on the grounds that iHeart is attempting to disguise the IPI as an “incentive” plan when the bonuses “are primarily retentive in nature.” He also argues that iHeart has failed to show the plan’s performance goals are a challenge or how iHeart execs would help reach them.
What sort of payments are Pittman and Bressler set to receive? According to Hobbs it looks like this:
The first line represents Pittman, while the second line represents Bressler.
The third line is the bonus payment to be accepted by Robert H. Walls Jr.
Who are the “other senior executives”? Tim Castelli, President of National Sales and Marketing Partnerships; and Wendy Goldberg, EVP/Chief Information Officer are included in the IPI.
In the year prior to bankruptcy, iHeart paid the insiders aggregate bonuses of $5,530,575.00 for Q1 2018 under the IPI; $8,824,683.27 under the Annual Incentive
Plan; $7,980,000.00 under the Supplemental Incentive Plan; and $10 million under the
2017 Key Employee Incentive Plan.
The IPI pays bonuses based upon the following performance metrics:
- eight of the insiders will have their performance measured based upon Consolidated OIBDAN, which consists of OIBDAN for all segments of iHM
- three of the insiders will have their performance measured solely on Segment OIBDAN, which is OIBDAN of the iHM Segment.
Hobbs disapproved of the IPI because, in his view, it violates Section 503(c) of the U.S. Bankruptcy Code. This was added in 2005, he notes, to respond to “glaring
abuses of the bankruptcy system by the executives of giant companies like Enron Corp., and WorldCom Inc. and Polaroid Corporation, who lined their own pockets but left thousands of employees and retirees out in the cold.”
Where were Poleman, Bressler and Castelli at the time Isgur’s decision was made? In Antibes, France, at the Hotel du Cap-Eden-Roc (pictured, at left), a five-star luxury resort on the Mediterranean where room rates in mid-September start at $1,159 per night.
That was the site of a VIP dinner iHeart hosted alongside New York-based strategic advisory and business development firm MediaLink, headed by Michael Kassan.
Kassan, Poleman and Bressler held court with such business leaders and advertising partners as AT&T Chief Brand Officer Fiona Carter, Unilever Chief Marketing & Communications Officer Keith Weed, Facebook VP/Global Marketing Solutions Carolyn Everson, Google CMO Lorraine Twohill, Vivendi Chairman/CEO Yannick Bollore, DDB Worldwide CEO Wendy Clark, Hulu CEO Randy Freer, and Conde Nast Chief Revenue & Marketing Officer Pam Drucker Mann.
Also in attendance were Katie Couric, The New Yorker columnist Ken Auletta, and Ryan Seacrest — perhaps the most-recognizable global talent associated with iHeart as a full-time employee.
On hand to provide the entertainment at the glitzy affair — iHeart’s seventh consecutive French fete? Monsieur Bon Jovi.
The Cannes Lions are the advertising world’s biggest annual event; The Wall Street Journal‘s “CMO Today” daily feature is devoting nearly all of its coverage to Cannes, while TV industry e-newsletter Cynopsis is offering a special daily dispatch from France.
The presence of iHeart at the important ad-industry event is designed to give the company a decisive edge over its U.S. competitors, while further positioning iHeartRadio as a brand that is second to none on a global level.