Just as U.S. pay TV companies have grown in recent years through acquisitions, CEO compensation packages at these companies have also gotten larger.
Looking at the top 10 publicly traded U.S. pay TV operators by market capitalization, an analysis of data from S&P Global Market Intelligence shows that the most highly compensated CEOs for 2018 all came from companies engaging in significant M&A activity in recent years, including Comcast Corp., AT&T Inc. and CenturyLink Inc.
Among the CEOs at the top 10 operators, the chief executive with the largest compensation package in 2018 was CenturyLink's Jeffrey Storey. Including his salary, bonus, stock awards and other items, Storey's total compensation had a total value of $35.7 million in 2018, coming in just above the $35.0 million that Comcast CEO Brian Roberts received. Because Storey was not serving as CEO for the full year, certain compensation items were annualized in the calculation of his total pay package.
After having previously been head of Level 3 Communications, Storey joined CenturyLink as president and COO in late 2017 after CenturyLink closed its $34.00 billion acquisition of the fiber operator in November 2017. Storey became the CEO of the combined entity following the May 2018 retirement of former CEO Glen Post III.
The bulk of Storey's compensation package is comprised of stock awards that resulted from a combination of a one-time promotion award and an annual long-term incentive award of $12.6 million.
"Although, historically, CenturyLink has been very conservative with respect to pay levels, we had to modify our approach in this instance in order to secure Mr. Storey as our new CEO and respond to shareholder feedback," the company said in a proxy filing, noting that shareholders said Storey had "superior leadership skills."
Nevertheless, CenturyLink shares have struggled recently following the company's February decision to slash its annual dividend by more than half to $1.00 from $2.16.
"This is not something we did lightly, but it is something we firmly believe is in the best long-term interest of our shareholders," Storey said during a February conference call with analysts. As of May 20, the company's total return is down more than 33% from the start of 2018. A stock's total return includes both price appreciation as well as the reinvestment of dividends.
Turning to the CEO with the smallest compensation package among the top 10 public U.S. pay TV operators, Cable One Inc.'s Julia Laulis — one of the two women in the list — earned total compensation of $2.7 million in 2018.
Cable One is known for its 2012 decision to prioritize its residential high-speed data and business services over its pay TV video product. As a result, the company has shed video subscribers but grown its margins as it focuses on residential broadband and commercial services.
While some analysts and larger operators initially expressed skepticism about this strategy, emphasizing the importance of video to the bundle, most inside and outside the industry have now accepted that connectivity services are the "growth engine" of the cable business, as Comcast's Roberts said earlier this year.
"We've admittedly changed our view of Cable One rather dramatically over the past few years," MoffettNathanson pay TV analyst Craig Moffett said in a May research report, noting that his "initial misgivings" about Cable One and its broadband-first approach to pricing and service "were misplaced."
Among the top 10 publicly traded U.S. pay TV operators, Cable One had the largest total return in 2018 and has since continued its run. As of the close of May 20, Cable One's total return was up more than 60%.