Ahead of its separation into two publicly traded companies, Madison Square Garden Co. awarded CEO James Dolan a hefty and somewhat controversial compensation package.
Dolan took home total compensation valued at $54.1 million in fiscal 2019, making him the year's highest paid CEO in the media sector, according to an analysis by S&P Global Market Intelligence. The bulk of his compensation was composed of stock and option awards totaling $49.9 million.
Following the April 2020 split of Madison Square Garden Co., the existing entity took on the name Madison Square Garden Sports Corp., becoming a pure-play sports company focused on the New York Knicks and Rangers franchises. The newly formed entity, meanwhile, operates under the moniker Madison Square Garden Entertainment Corp., focused on live events across the country.
Dolan became executive chairman and CEO of MSG Entertainment and executive chairman of MSG Sports, while Andrew Lustgarten was named CEO of MSG Sports.
In discussing Dolan's salary for 2019, MSG's board said in a proxy statement that the company "is at an important inflection point in its multi-year growth strategy," both in terms of the separation and the development of its next-generation live event venue, dubbed MSG Sphere. Construction on the first MSG Sphere, located in Las Vegas, started in September 2018 but was paused earlier this year due to the coronavirus pandemic. A second MSG Sphere has been planned for London.
"The transformative nature of our current strategy requires us to take a proactive approach to ensuring leadership continuity and to retaining a talented executive team that will execute over the long-term," the company said, pointing to both the spinoff and the launch of MSG Sphere.
"Dolan is integral to the successful execution of our global growth strategy, including directing these large-scale undertakings and positioning our Company to drive long-term value," the MSG board said.
But at least one MSG Sports stockholder felt differently, resulting in a March 2019 lawsuit filed in the Delaware Court of Chancery. The suit alleged that the MSG board breached their fiduciary duties to stockholders in approving Dolan's compensation.
In June 2020, the company settled with the shareholder, and Dolan agreed to relinquish the additional one-time stock awards in MSG Sports and MSG Entertainment that he had been granted in 2020 in tandem with the separation. The company said it entered into the settlement "solely because it will eliminate the distraction, burden, delay and expense of further litigation."
The second highest paid CEO in the media industry for 2019 was Discovery Inc.'s David Zaslav, who earned a total compensation package of $45.8 million, barely edging out No. 3 on the list, Walt Disney Co.'s Bob Iger, who took home $45.6 million.
Iger stepped down as Disney CEO and assumed the role of executive chairman in February of this year. At the time, Iger said he would continue to direct Disney's creative endeavors, while "providing the full benefit of his experience, leadership and guidance" through the end of his contract in 2021. Bob Chapek — who previously was chairman of Disney Parks, Experiences and Products — became the new CEO.
Other well-known media executives to make the list of highest paid CEOs include Fox Corp.'s Lachlan Murdoch, son of media magnate Rupert Murdoch; Netflix Inc.'s Reed Hastings; and Brian Roberts of Comcast Corp., parent of NBCUniversal Media LLC.