At its annual meeting last year MDC Partners shareholders barely passed an advisory resolution approving the executive compensation package the company provided to its top executives—approximately 50.1% of the votes cast were in favor of the program.
In its proxy statement issued late last week, the company noted that “these results were below what we deem satisfactory,” and as a result the firm held discussions with shareholders and made what it termed were a number of “important” changes in the executive compensation program.
Still company CEO Miles Nadal did exceedingly well in the pay department last year, with total compensation of $20.7 million, more than double the almost $9.3 million he was paid in 2012. By comparison, Interpublic Group CEO Michael Roth received $11.8 million in total pay last year, up 22% from 2012, and Omnicom CEO John Wren earned $18.1 million, also up 22%.
The largest single piece of Nadal’s pay package was a $14.2 million bonus. And much of that award ($9.6 million) was based on the company’s Class A shares attaining an average $30 (Canadian) price for 20 consecutive days last fall. The company characterized that part of the award as a one-time “special bonus provision.”
Nadal also received an increase in his base salary last year, to $1.750 million, from $1.5 million in 2012.
Changes made in the compensation program include the elimination of time-based parameters for both the long-term and equity-based incentive programs. Those time-based parameters have been replaced with financial performance benchmarks. The firm also imposed a “claw-back” requirement so that a portion of incentive payment awards received by named executive officers in 2013 will have to be returned if they depart the company prior to December 31, 2016.
MDC has also instituted a policy barring executive officers from borrowing money from the company. In the past Nadal had taken loans from the firm. Those loans were repaid in full last year, per the company.
And the firm also broadened its peer group for comparative purposes. “Although the Company believes that its primary competitors remain Interpublic, Omnicom and WPP, the Compensation Committee utilized a much broader list of peer companies in its comparator group in determining 2013 incentive compensation awards in order to better assess relative financial performance and shareholder returns,” the company said. The expanded peer list includes Arbitron, Central European Media, Dreamworks Animation, John Wiley & Sons, Lee Enterprises, Morningstar, Scholastic, EW Scripps, New York Times, and a number of others.
The company said that it had “dramatically and substantially exceeded the financial targets established by the Compensation Committee,” in 2013, including achieving $159.4 million in earnings before interest, taxes, depreciation and amortization. The baseline target was $118.4 million and the “stretch” target was $127.9 million.
According to the company document, Chief Accounting Officer Michael Sabatino, was the second-highest paid executive at the company last year, with total compensation of a little more than $1.1 million, up from $826,000 in 2012. Company CFO David Doft was a close third, earning just over $1.01 million, up from about $714,000 in 2012. General Counsel Mitchell Gendel earned a total of about $995,000 last year, up from $810,000 in 2012. Vice Chairman Stephen Pustil earned over $878,000 versus a little more than $810,000 in 2012.
The company will hold its annual meeting on June 5 in New York.