Miles Nadal, the CEO of a little-known and—in the grand scheme of things not terrifically significant—ad agency company, got a staggering pay raise in 2011, according to this SEC filing. His pay went up 278 per cent, from just over $6 million to just under $24 million.MDC owns small agencies such as Crispin Porter + Bogusky and Kirshenbaum Bond Senecal + Partners.
The stock declined over the year (from ~$17.52 to ~$12.98) even as revenues grew 37 per cent to about $1 billion. More than half that growth came from acquisitions, however.
The company isn’t even profitable. It lost $77 million.
In a statement, the company noted that a minority of his compensation was in cash and the much of the rest was stock that will only vest if MDCA performs:
“Notably, less than 10% of Mr. Nadal’s overall compensation in 2011 was in cash. As a result, over 90% of Mr. Nadal’s compensation is tied to future stock price performance and aligned directly with shareholders’ interests.”
- Read MDC’s full statement below.
Nadal is now better paid than the CEOs of Omnicom (John Wren, who got $15 million) and Interpublic (Michael Roth, who got $13 million). Both those agencies are large multinationals that dwarf MDC. He’s even richer than WPP CEO Martin Sorrell, who got the better part of £8 million in 2011.
WPP is 10 times the size of MDC, which should give you an idea of how disproportionate Nadal’s pay now is.
The raise came from nearly $22 million in stock awards. Nadal has an unusual agreement with his board. He’s not actually an employee of MDC. Rather, the proxy form states, “The personal services of our Chairman and CEO are provided to the Company through Nadal Management, Inc.”
Nice work if you can get it. Here’s the summary chart. Click to enlarge:
Here’s MDC’s statement:
In determining MDC Partners’ Chairman, CEO and President Miles Nadal’s
compensation for 2011, the Compensation Committee took into account
the Company’s strategic and operating plans and how Mr. Nadal
performed against those plans. For the three years ending 12/31/11,
MDC shares appreciated 345% or at a compound annual growth rate of
64%. Including dividends, the total return to shareholders was 532%
or a CAGR of 85%.
While the significant expansion strategy that Mr. Nadal has
spearheaded has already translated into positive financial results,
the Compensation Committee understands that additional growth will
only come over time. As such, Mr. Nadal’s compensation is primarily
paid in the form of restricted stock awards. The long-term equity
incentive awards – that will be paid, depending on performance, over a
number of years – ensure that Mr. Nadal will only benefit as the
business grows, and as the Company’s stock value appreciates.
In addition, $8.4 million of the Chairman’s compensation relates to
equity incentive awards as part of a new management performance
incentive plan (EVARs). While SEC regulations call for the potential
sum total of stock awards to be reported in the year they were
granted, unless MDC Partners’ stock appreciates to at least $20 per
share, these EVARs – along with those awarded to management overall –
will have no value.
Notably, less than 10% of Mr. Nadal’s overall compensation in 2011 was
in cash. As a result, over 90% of Mr. Nadal’s compensation is tied to
future stock price performance and aligned directly with shareholders’
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