Virgin Media screws up again
cable_messThere’s nothing quite like making an SEC 8-K special filing on Good Friday. By such an action UK cable company Virgin Media had hoped to slip under the UK media radar with a raft of decisions made at a Virgin Media compensation committee meeting a week ago on April 6 about massively rewarding Virgin senior staff with bonus payments of up to 100% of salaries.
Virgin’s SEC filing states: “The percentages range from 5 - 100% of base salary (depending on employee level) for on-target performance of a number of performance targets, with a potential maximum payment of double the on-target percentage. These percentages are subject to a further multiplier of up to 1.35 times depending on the employee’s individual personal performance during the year. The specific performance targets vary based on the relevant division and function. The performance metrics for the named executive officers measure: (i) cash flow; (ii) net present value of customers; (iii) customer satisfaction; (iv) fault rates; (v) employee engagement; (vi) achievement of various operational objectives; and (vii) operating cost controls.
It will now be interesting to see how Virgin massage their results to – probably – guarantee the maximum reward to senior staffers. The SEC filing comes after Virgin Media confirmed in its February quarterly results statement that it would be losing some 2200 jobs, some 15% of its workforce, over the next year or two.
So-called ‘bonus culture’ is currently something of a dirty word in UK financial circles, but not apparently at Virgin Media. Grace Mitchell, of the powerful Communications Workers Union, told The Times newspaper: “At a time when people are losing their jobs and there is a lot of uncertainty, the executives should be taking a lead and looking to forgo these bonuses.”
Virgin has just raised its prices, including a penalty of £1.25 a month if customers wish to continue receiving a paper invoice.
Virgin, and its predecessors, are famous for rewarding failure. Virgin Media was formed as a result of a merger between Telewest and NTL in March 2006, and then along with an input from Virgin Mobile to create Virgin Media. Virgin Media has had a single CEO in New Zealander Neil Burkett since it was formed, first as ‘acting’ CEO, which was confirmed in March 2008. But the history of the pre-merged – and bankrupt company - is a long litany of failed CEOs, not least NTL’s Barclay Knapp who walked away with a reported £10m for his efforts. Telewest’s roll-call is every bit as impressive, each and every one of whom was rewarded with major compensation payments for loss of office.
Here’s the Telewest list of CEO’s each and everyone of whom promised ‘jam tomorrow’. One short-lived CEO Charles Burdick, during his tenure promised profitability within the year! Another, as early as 2005, promised dozens of impending HDTV channels (Virgin supplies just 1 high-def channel).
• Steven Burch (NTL-Telewest)
• Barry Elson
• Charles Burdick
• Adam Singer
• Tony Illsley
• Stephen Davidson
• Mark Luiz
• David Van Valkenburg
• Alan Michels
Here’s a comment from the Cable Europe newsletter, written almost exactly 10 years ago, and spoken by the UK’s then Secretary of State for Media, Chris Smith: “The inherent advantages that cable has…should enable cable to play a leading role in the take up of digital TV. But if you cannot look after your customers you can be sure that digital terrestrial and satellite will look after them for you.”
Virgin Media’s long-term debt (as at Dec 31 2008) stood at a breathtaking £6.267 billion ($9.23bn). During Q4/2008 its long-term debt increased by £107m. What a success story!