Music’s Top Money Makers: The Highest-Paid Executives at Publicly Traded Companies

For the second time in three years, Universal Music Group (UMG) chairman/CEO Lucian Grainge tops Billboard’s annual list of the highest compensated music executives.

In the first year of a five-year employment contract, the London-born, Los Angeles-based Grainge earned $150.3 million, nearly six times the $25.6 million paid to second-place finisher James Dolan, executive chairman/CEO of both Sphere Entertainment Co. and Madison Square Garden Entertainment. (The fiscal years of the latter two companies ended June 30, 2023.) Live Nation president/CEO Michael Rapino, last year’s No. 1, was third at $23.4 million.

Most other executives appeared on the prior two compensation rankings. Warner Music Group CEO Robert Kyncl and WMG’s outgoing CEO of recorded music, Max Lousada, were fifth and sixth, respectively (for the fiscal year ended Sept. 30, 2023). Spotify co-president/chief product and technology officer Gustav Söderström and co-president/chief business officer Alex Norström were seventh and 10th, respectively. IHeartMedia chairman/CEO Bob Pittman and president/COO/CFO Rich Bressler were eighth and ninth, respectively.

The top 10 list has one new name in 2023: John Hopmans, executive vp in charge of mergers and acquisitions and strategic finance at Live Nation, at No. 4. The only vice president on the list, Hopmans had a relatively low salary of $982,000 but earned $23.4 million, mostly from restricted stock units and performance stock valued at $21.4 million.

The second-longest-serving CEO on the list behind Rapino, Grainge dramatically boosted his 2023 earnings with stock options, performance stock units and restricted stock units valued at $120 million. These grants included a $100 million “one-time transition award,” according to the company’s 2023 annual report, to move Grainge from all-cash compensation in his previous contract to “a combination of cash and equity” under the stock incentive plan UMG adopted in 2022.

Due to the size of the transition award, Grainge’s $7.5 million base salary accounted for just 5% of his 2023 compensation, a relatively small figure but not the lowest of the group. Söderström’s $300,000 base salary amounted to just 2% of his $14.7 million compensation. (The remainder was a stock option award.) Lousada’s $5 million base salary made up 29% of his total compensation and was the highest percentage on the list.

On average, the 10 executives received 10% of their compensation from base salaries, which is on the low side of averages in the corporate world. “By and large,” says Aalap Shah, managing director at Pearl Meyer, a compensation consultancy, “base salary constitutes about 10% to 20%” of average executive compensation.

Instead of receiving a large, guaranteed salary, top executives at public companies are increasingly paid based on their performances on metrics such as revenue growth, adjusted EBITDA growth and share price gains. “Shareholders typically prefer that at least half of a CEO’s equity awards be based upon performance criteria,” says Stephanie Hollinger, vp at ISS-Corporate, a Rockville, Md.-based provider of data and analytics to corporations. That percentage is expected to increase over time, Hollinger adds, as “pay is becoming more equity-based, and those equity awards are increasingly tied to performance-based conditions.”

In 2023, performance-based pay accounted for 53% of the average compensation for CEOs of companies in the Russel 3000, an index of the 3,000 largest public companies in the United States, according to ISS-Corporate. For CEOs of media and entertainment companies in the Russel 3000, performance-based pay was 42% of average compensation in 2023, “likely due to a higher relative proportion of other compensation elements, such as time-based equity compensation,” says Hollinger.

For most executives, performance-based pay comes in the form of company stock. Grainge’s five-year employment contract, which took effect April 1, 2023, reduced his base salary by 72% and added stock-based compensation that accounts for 57% of his target pay package. By putting Grainge’s earnings and shareholders’ interests in better alignment, UMG followed the practices of other public companies. “The view is that there should be more accountability and more performance orientation to executive compensation,” says Shah.

Receiving stock as compensation can pay off handsomely but also carries risk. The value of Grainge’s options, which vest in equal installments over four years, will depend on UMG’s share price at the conclusion of his employment contract on May 1, 2028. One-third of the options are exercisable if UMG’s share price exceeds 26.50 euros. Another third is exercisable at 30.00 euros. The final third requires a share price of 38.00 euros. The value of the grants took a short-term hit on July 25 when UMG’s share price dropped 24% to 21.70 euros following UMG’s second-quarter earnings report. But with nearly four years left on Grainge’s employment contract, there’s ample time for the share price to hit the thresholds.

With so much executive pay coming from stock, Billboard created a new separate list for top cash earners. Here, the value of noncash earnings such as stock options and unvested stock grants are excluded in favor of money that went into executives’ bank accounts in 2023.

Three executives who made the top cash earners list do not appear on the overall compensation ranking: At No. 5 is SiriusXM CEO Jennifer Witz, with $7 million; No. 6 is Live Nation president/CFO Joe Berchtold, with $6.4 million; and No. 7 is German concert promoter CTS Eventim CEO Klaus Peter-Schulenberg, with $5.7 million.

Billboard’s list of top-paid music executives is made from publicly available information culled from annual reports and proxy filings for calendar year 2023 or, in some cases, the most recent fiscal year. Public companies reveal compensation for a small number of named executive officers. So, in the case of multi-sector companies like UMG and UMG, the earnings of label heads are not made public. Because publicly traded conglomerates do not share details of subsidiaries’ executive compensation, the list does not include executives such companies as Sony Music Entertainment and BMG. Executives at privately held companies are excluded due to a lack of publicly available information.