At Universal Music Group‘s Annual General Meeting on Thursday (May 11), UMG’s Board tabled a proposal to reappoint Sir Lucian Grainge as its Executive Director (a position he holds in addition to being the company’s Chairman and CEO) for a five-year term (ending on May 1, 2028).
The board also sought approval to adjust a policy for Executive Directors with respect to a new remuneration package for Grainge.
Both resolutions were adopted on Thursday.
This means that Sir Lucian Grainge has officially been re-appointed as UMG’s Executive Director for five more years, and it also means that his new remuneration package has been approved by shareholders, too.
Elsewhere at Thursday’s AGM, shareholders also re-appointed Sherry Lansing and Luc van Os as Non-Executive Directors.
Meanwhile, media mogul Haim Saban was appointed as UMG’s new Independent Non-Executive Director for a two-year term.
At the end of March, we reported that Universal Music Group’s Board of Directors had extended the contract of Sir Lucian Grange to remain the company’s Chairman and Chief Executive Officer until May 1, 2028.
Grainge’s new five-year deal mixes together components of cash and equity-based compensation (his previous deal was a cash-only package).
Grainge´s annual salary under the new agreement will be reduced by more than two-thirds from his current salary, to USD $5 million.
Subject to the achievement of performance criteria, he will also be eligible for an annual bonus with a target of $10 million.
The profit (EBITA)-related bonus structure from his prior employment agreement has been eliminated (Grainge only received compensation based on that structure until the end of March).
The equity component of Grainge’s new contract will include annual grants of $20 million, comprised of as much as 50% Performance Share Units (PSUs)— with annual PSU goals set by the UMG Board of Directors — and the remainder comprised of Restricted Share Units (RSUs).
As part of his Long-Term Incentive Plan, Grainge will receive a one-time transition equity award of $100 million, of which 50% will be in the form of RSUs and 50% in the form of Performance Stock Options (PSOs).
The PSOs will only be paid out if Universal surpasses stock price hurdles (1/3rd at €26.50, another 1/3rd at €30.00 and 1/3rd at €38.00) within the term of the agreement ending May 1, 2028.
UMG said in an update to investors in March: “To assure the compensation program is aligned with shareholders´ interest, the majority of [Grainge’s new] compensation package´s economic value will be paid in UMG equity and UMG performance-based stock options.”
UMG told shareholders in its 2023 AGM agenda: “The Board considers it in the interests of the Company and its stakeholders to retain and secure Sir Lucian Grainge as the Company’s Chairman and CEO.
“Sir Lucian Grainge has a unique position in the music industry and has a longstanding relationship with and knowledge of UMG and its business.
“The Board considers Sir Lucian Grainge to be best equipped to lead UMG for the coming years as the Board is committed to converting UMG’s business opportunities and maximizing UMG’s long-term sustainable success and shareholder value.
“Only the right kind of CEO can help achieve that goal and Sir Lucian Grainge is the person to do that. Through his clear vision and strong execution, Sir Lucian Grainge has not only built UMG as an industry leader, but he has essentially created a new category of music company.”
It added: “Sir Lucian Grainge, 63, has spent his entire career in the music industry and has signed and worked with many worldwide stars. Over the span of four decades, he has not only pioneered new approaches to the signing and development of the world’s most successful recording artists and songwriters but he has consistently championed the development of innovative business models and partnerships with a wide range of technology and media partners around the world.
“He has transformed UMG into the most successful company in the history of the music industry, both competitively and financially, and his vision and leadership is widely recognized.”Music Business Worldwide