Ouch! Virgin Media cuts top bonuses
UK cable is famous for the rewards it hands out to its hard working executives. One UK headline described this year's bonuses as being "slashed". We are not so sure.
Virgin Media, despite missing some key targets during 2007, still managed to award its top six staffers with just over $20m in terms of bonus and share benefits. In fairness this is well down on the $50m shelled out in 2006 (amongst 7 execs), but still sounds like a decent reward for a 9am-5pm job, and a business that still has some major challenges.
For example, and key to the drop in bonus payment, Virgin Media's operating cash flow last year fell from £342m to £321m.
Steve Burch, now yet another name in a hugely long list in CEO's at either NTL or Telewest (now united as Virgin Media) who left unexpectedly in August last year saw his pay and benefits fall from $11.4m to $3.4m, mostly made up of his two-times final salary compensation payment of $1.5m. The current CEO is Neil Berkett, and he must really be suffering the loss in bonus which brings his total package down from $5.1m (when he was only COO) to a miserable $4.3m when he was acting CEO. He has just been promoted to full CEO so can confidently look forward to either a handsome bonus at the end of this year, or an equally generous compensation package when he also unexpectedly leaves, whichever happens sooner.
Virgin Media's executive chairman Jim Mooney's package fell from $7.29m to $5.19m. Virgin Media failed to make its operational cashflow targets last year. Virgin Media's share price has reflected the high opinion the market has for Virgin, tumbling, deteriorating, falling, collapsing and generally not doing very well, from $29.39 a share last July to just $14 now. Oh to be a UK cable boss! It's the closest thing to a licence to print money.
On April 9 Virgin Media went to the markets again with an offer for $1bn of convertible senior notes, due 2016, in order to pay down a portion of its senior debt.