Its stock may still be struggling from effects of a $250 million accounting scandal, but the chief executive at Gemstar-TV Guide International Inc. isn’t.
Richard Battista will bring in a minimum bonus of 30 percent of his base salary this year and that bonus could go as high as 50 percent if he meets individual and company performance objectives, according to a Securities Exchange Commission filing earlier this month.
The bonus would put him in the seven-figure range given his salary, which while hardly outlandish in the media and entertainment world is notable given the company’s $1.5 billion market cap.
In February, the Gemstar board of directors approved a base salary increase of 7.3 percent for Battista to $912,050 retroactive to December, the one-year anniversary date of his employment agreement with the company. That means if Battista meets all of his objectives, his bonus would come in at more than $455,000 this year for a compensation package of nearly $1.4 million. Last year, his base salary of $850,000 was topped by a bonus of $496,496.
Bonus formula
The plan outlined in the SEC filing sets a formula for bonus calculation, with 50 percent to 60 percent of the bonus to be based on individual performance and the remaining 40 percent to 50 percent based on “achievement of economic performance objectives of the company and/or business unit.”
Gemstar declined comment, but Battista’s guaranteed minimum bonus raised questions from some corporate watchdogs, more based on principle than amount.
Paul Hodgson, a senior associate at the Corporate Library, said the bonus plan was “far from a standard arrangement,” and noted that few of the large corporations in the U.S. guarantee a minimum bonus.
“The floor is zero, typically because if there’s no performance to be rewarded, then there is no bonus,” Hodgson said. “The whole point about incentive payment is that if you are unhappy with someone’s performance, then there is no bonus. If you are obligated to give it, what is the point? That’s salary as far as I’m concerned.”
Battista, a former Fox executive, took over as chief executive in 2004, to right the Gemstar ship in the wake of the accounting scandal involving former executives Henry Yuen and Elsie Leung, who were charged with inflating Gemstar’s revenue by at least $223 million.
Since Battista took over, the company has undertaken an overhaul of its flagship TV Guide publication, sold its SkyMall in-flight catalog magazine, shuttered its short-lived celebrity magazine Inside TV and acquired the Web site jumptheshark.com.
In May, the company reported net income of $8.6 million for the three months ended March 31, compared to a $3.7 million loss for the same period last year. The publishing division continues to struggle, though, reporting a 46 percent revenue loss for the same period.
When the fraud allegations hit the news in 2003, Gemstar shares plunged to $3.40 from nearly $50 two years earlier, and the weakened stock still hovers around the $3.50 mark.
