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 will only receive compensation based on that structure until the end of this month (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 is the world´s most successful music company and there are incredible opportunities ahead for a company with the right leadership and vision,” said Sherry Lansing, UMG´s Chairman of the Board.
“The UMG Board is resolutely committed to converting those opportunities and maximizing shareholder value for the long term. Only the right kind of chief executive can help achieve that goal and Lucian is just the one to do it. Through his clear vision and strong execution in building UMG into the industry leader, Lucian has also essentially created a new category of music company. This agreement is designed to drive both the sustainable success of UMG and long-term shareholder value.”
UMG said in an update to investors: “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.”
At UMG’s Annual General Meeting in May, UMG’s board will table a proposal to reappoint Grainge as its Executive Director (a position he holds in addition to being the company’s Chairman and CEO) for a term ending on May 1, 2028. The board will also seek approval to adjust a policy for Executive Directors with respect to Grainge´s new remuneration.
At that General Meeting, shareholders will also consider the proposed appointment of Haim Saban as UMG’s new Independent Non-Executive Director for a two-year term, as well as the proposed re-appointment of Sherry Lansing, Anna Jones and Luc van Os as Non-Executive Directors for a two-year termMusic Business Worldwide