Report Offers Rare Glimpse Into Media Exec Compensation: Carat's Verklin Earns $1.5 Million

The release of Aegis Group's 2005 annual report provides a rare public look at how the ad industry values a top media manager. Although top media executives rarely make it to the board director's level of publicly traded agency holding companies, Carat chief David Verklin is a director of parent Ageis Group, which each year discloses his salary, bonuses, benefits, and stock grants to Aegis' shareholders, and the world at large.

According to the Aegis report, released late last week, Verklin earned the current U.S. dollar equivalent of $1,489,360 from a combination of base salary ($728,472), bonuses ($705,214), and benefits ($55,486)--an increase of 16 percent from his total remuneration in 2004.

That makes Verklin the second-highest-compensated executive at Aegis Group after CEO Robert Lerwill, who earned $1,925,760 in 2005.

While most of Aegis' directors received base wage increases of only 3 percent to 5 percent, Verklin merited an 8 percent raise in his base salary due to the increased responsibilities he assumed during 2005, including management of Aegis's media groups in the Asia-Pacific region. In addition to managing Carat Americas and Aegis Media Asia Pacific, Verklin also oversees Aegis' MMA operations in North America.

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On top of his handsome salary, Verklin received a grant of 371,000 shares of Aegis stock in 2005, with a strike price equal to a current U.S. dollar equivalent of about $1.82. Aegis shares are currently trading at about $2.44 per share.

As of Dec. 31, 2005, Verklin held options for 5,408,552 shares of Aegis stock at various strike prices, exercise, and expiration dates.

On March 24, Aegis said it granted 357,243 new shares to Verklin--bringing his total holdings up to 5,765,795 shares of Aegis stock, but on April 7, Verklin exercised an option selling 600,000 ordinary shares of Aegis Group stock at a price of $2.39 per share, or approximately $2.388 million--bringing his share options to 5,165,795 ordinary shares.

In March, Verklin was also granted 357,243 new conditional shares, bringing his holdings of such shares to 1,598,243. Those shares, which are contingent on achieving certain performance goals, vest on March 20, 2009, and would be worth about $4 million based on Aegis current stock value.

Experts familiar with media agency compensation arrangements say that Verklin's deal is neither excessive nor below par for a top executive running a multinational media buying organization.

"I don't think it's the highest out there, but it's also not the lowest," says Kurt O'Hare, president of New York-based executive recruiting firm O'Hare & Associates.

While Verklin is the only top media agency executive whose earnings are publicly reported, Irwin Gotlieb, CEO of WPP Group's Group M unit, is rumored to have joined WPP from president-CEO of MediaVest in September 1999 for an annual salary of $1.25 million, a then unheard-of sum.

But the highest-paid media agency CEO, quips one observer, is "probably Bill Koenigsberg at Horizon Media." Horizon, of course, is the industry's largest privately held media agency, and it is primarily owned by Koenigsberg.

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