Studios Are Furious That SEC Is Curious About Hollywood Pay

The Wall Street Journal ^ | April 10, 2006 | MATTHEW KARNITSCHNIG, MERISSA MARR and KARA SCANNELL

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Media companies, worried that some of their most closely guarded Hollywood secrets could be exposed, are rallying to fight a proposed change to corporate-disclosure rules.

The proposed regulation, under consideration by the Securities and Exchange Commission, would require a corporation to publish the salary details of as many as three nonexecutive employees whose total compensation exceeds that of any of its top five officers. Companies currently have to disclose only the pay of the chief executive officer and the next four highest-paid officers.

The new rule, which the SEC is expected to decide on later this year, would apply to all listed companies but would likely have the most impact in industries such as media, financial services, technology and pharmaceuticals, in which star performers can earn more than CEOs.

Nowhere are stars with huge paychecks more plentiful than in entertainment. But despite the industry's reputation for flaunting wealth, detailed information on the compensation of a big-name entertainment figure is rare. In addition to a salary, top earners often receive bonuses, stock and perquisites -- extras that are usually protected by extensive confidentiality clauses in contracts.

The SEC says the proposed change was motivated by a desire to give shareholders more information about how corporate funds are being spent. The agency says it isn't requiring more detailed information about the employees, such as their names, because the workers in question don't have a "policy-making function." The SEC's deadline for public comment on the measure is today.

Viacom Inc., which owns the Paramount film studio, sees things differently; it plans to file a letter with the SEC arguing that the compensation information should be treated as a trade secret. The proposed rule "would likely impose significant additional costs and administrative burdens in order to achieve disclosure..."

[L98Fiero]

"IMHO, EVERYONES salary should be known."

You ever been in management? I've seen some pretty bad crap happen becuause certain people found out co-workers made more than them, for whatever reason. The lower paid person almost always thinks they deserve as much as the higher paid person. To try to convince them any different is futile.

Every job I've ever had, talking pay with co-workers got you fired. There IS a reason.