Proxy published: 4/10/2015
Annual meeting: 5/21/2015
The country’s largest cable provider is also a top provider of large pay packages for its CEO. Brian Roberts who received total disclosed pay of $32,961,056 in 2014. There is one category in particular where Comcast consistently ranks high, that of “all other compensation.” This catch-all category in the summary compensation table is for pay beyond salary, bonus, stock awards and options, and is typically six figures or less, representing perquisites. Comcast this year provided all other pay of over $4 million. This places it 2nd highest of all other S&P 500 companies for the year. Over the past eight years Comcast has always been in the top 10 of all companies in this category, and been in the top 5 for five of these years.
Why? In the case of Comcast the amount is due to unusually generous contributions to executive deferred compensation plans. Deferred compensation is a tax-advantaged savings mechanism, allowing executives to avoid caps on 401k contributions. It is designed to allow executives to put some compensation aside to receive after retirement when they presumably will be in a lower tax bracket. Originally designed as a retirement savings vehicles, for executives such as Roberts these packages have instead reach the point of becoming wealth accumulation vehicles. The total amount in Robert’s deferred compensation account at the end of the fiscal year was $96,641,079.
These plans themselves are not particularly unusual. Comcast describes its deferred compensation plan as “our primary retirement vehicle generally to all employees with base salaries of at least $250,000.”
What sets Comcast apart are the extravagant contributions it makes to the plans, most of which appear to be guaranteed under employment agreements. In 2014, the company made contributions of $3.6 million to Roberts deferred compensation plan. Roberts is guaranteed a contribution of $3.8 million in 2015.
The company reports $9.5 million in aggregate earnings in Roberts’ plan this year. This highlights another key feature that distinguishes the retirement savings of ordinary workers, (and even most ordinary executives) from those at Comcast: they receive a guaranteed rate of return. Of this $9.5 million, approximately $6.5 million are “the dollar value of interest earned on compensation deferred under our deferred compensation plans in excess of 120% of the long-term applicable federal rate. The interest crediting rates on deferred compensation were 9% or 12%.” Elsewhere the company notes that the guaranteed returns of 12% were lowered to 9% in 2014. However, even a 9% guaranteed rate is beyond the hopes of most employees.
Beginning with compensation earned after January 1, 2014 the company set some limits on how much executives could defer. Also, beginning for compensation earned on or after January 1, 2014, the interest crediting rate was reduced from 12% to 9%, but it remained at 12% on (i) compensation that was originally earned before January 1, 2014 (including any subsequent redeferrals) and (ii) certain other compensation earned on or after January 1, 2014. In other words, most of the current savings will continue to receive the 12% guaranteed rate.
This is not true simply for Roberts, but for the other named executive officers. In fact, the agreement with Stephen Burke, President and CEO of NBCUniversal, whose total compensation this year exceeds $33 million, provides for specifics amounts of deferred compensation each year through 2018, when the amount will also exceed $4 million.
These large pay package and the contributions come at a time when Comcast is trying to convince regulators to approve its proposed purchase of Time Warner Cable. Comcast is also on a mission to improve its reputation. A recent AP article notes that “Comcast is adding more social media representatives as it tries to work on its reputation for inefficient, unresponsive or just plain rude customer service.” The money used to increase Robert’s deferred compensation account could be used to hire more social media representatives, or perhaps even technicians to perform the actual service that service providers are supposed to provide.