The remuneration of the boss of Universal Music disputed by shareholders

Excellence has a price, of course, but some shareholders of Universal Music Group (UMG) are beginning to find this logic a bit costly. According to the “Financial Times”, two of the record label’s 25 biggest titleholders are considering the new compensation package proposed for its CEO Lucian Grainge “too generous”.

Two proxy advisory firms, Institutional Shareholder Services (ISS) and Gl*** Lewis, have also reportedly recommended that shareholders vote against the resolution regarding the boss’s new compensation plan at UMG’s next general meeting on May 11.

A method of calculating his remuneration was proposed at the end of March by the board of directors of the major of the disc, during the announcement of the renewal for 5 years of Lucian Grainge in his functions. In the suggested scheme, the CEO from UMG, who would see his fixed salary reduced by two-thirds, to $5 million per year, would also be eligible for an annual bonus subject to performance criteria, up to $10 million.

“Transition Reward”

He would also benefit from shares up to $20 million per year: 50% performance share units and 50% restricted share units. Without forgetting a “transition reward” of 100 million dollars payable in shares, half in the form of blocked shares, and half in the form of stock options, the allocation of which is released in stages according to the stock market price at the end of the mandate, in 2028.

“UMG is the most successful music company in the world and incredible opportunities await the company with the right leadership and vision,” said Sherry Lansing, Chairman of the Board of UMG, in a statement. administration of the major. She emphasizes that “Lucian is simply the right person” to seize these opportunities and maximize long-term shareholder value.

The emoluments of Lucian Grainge had already caused controversy in the past. In 2021, with successful IPO of the group in September of the same year, the CEO had received remuneration of 274.3 million euros, a record for a company listed in the Netherlands.

Growth prospects

A respected industry figure, Sir Lucian Grainge, knighted by Queen Elizabeth II in 2016, has been running UMG since 2011. Under his leadership, the major experienced a period of impressive growth, which is still continuing. In 2022, UMG saw its revenues grow by 21.6%, with an adjusted Ebitda also up (+19.4%).

UMG announced on Wednesday an 11.5% increase in its turnover in the first quarter of 2023, compared to the previous year (+9.3% at constant euros) and an adjusted EBITDA up 14.7% on the same period.

Driven by the boom in streaming, whose subscription prices should gradually increase, UMG can look to the future with confidence, according to one of its main investors, Bill Ackman. “We believe that the long-term outlook for UMG is excellent, and that the company will continue to outperform in the medium term”, indicates the 2022 annual report of its fund, Pershing Square Holdings, published at the end of March.