Summertime means festival time, and Live Nation’s AGM features a full bill of governance, compensation and regulatory issues of potential concern for shareholders.
With thousands of companies holding AGMs during proxy season, it’s hard to know where to start. Glass Lewis’ Controversy Alert service can help, identifying the most crucial meetings globally and allowing investors to make better informed voting decisions with the latest information in hand.
In this post, we provide a roundup of the AGMs taking place this week that were previously highlighted by Controversy Alerts, and look deeper at the situation at Live Nation Entertainment. To get alerted ahead of time, get in touch and sign up for Glass Lewis’ Controversy Alert service.
Controversy Alerts June 5 — June 9, 2023
6/7 Luminar; Controversy Alert issued 5/24
6/8 Titan International, Inc.; issued 5/30
6/8 Xiaomi Corporation; issued 5/24
6/9 Live Nation; issued 5/24
6/9 PT Waskita Beton Precast Tbk; issued 5/26
6/9 Servotronics, Inc.; issued 5/30
6/9 Shift4 Payments, Inc.; issued 5/26
Deep Dive: Live Nation Entertainment, Inc.
Live music promotion has been synonymous with competition concerns since Pearl Jam were considered “alternative”. Following a merger with Ticketmaster in 2010, Live Nation Entertainment, Inc. has been the largest player in the United States, and its 2023 AGM caps a tumultuous year that saw the company face renewed calls for antitrust enforcement after the demand for presale tickets to Taylor Swift’s Eras Tour produced long waits, numerous technical glitches and outright site crashes.
Taylor Swift and the Antitrust Concerns may be the headliner, but Live Nation’s upcoming shareholder meeting features a festival-length bill of supporting issues vying for the spotlight. Amongst governance hipsters, the real headline issue might be the company’s adoption of a new exclusive forum provision that limits all claims under the Security Act of 1933 to U.S. federal district courts. Any restriction on choice of venue represents a potential restriction on shareholder rights – particularly when, as in this case, the provision was adopted without shareholder approval.
While exclusive forum may not have mass-market appeal there are also more mainstream concerns regarding board leadership, with no lead independent director and Gregory Maffei, the president and CEO of 30% owner Liberty Media Corporation, serving as chair. Even setting independence aside, shareholders may question whether Maffei has sufficient bandwidth for the position given all of his side projects – he also serves on eight other boards, including three as non-executive board chair, and three others as an executive.
But the hottest ticket may be the Say on Pay proposal. Like a reclusive band that rarely ventures out on tour, the company only offers an advisory vote on executive compensation once every three years, making this a somewhat rare opportunity to weigh in. And there is plenty to weigh in on. The CEO’s new employment agreement includes $126.5 million in one-time awards, on top of annual target pay of $30 million, putting relative pay at the top of the company’s peer group. Aside from the quantum of it all, the one-off awards are tied to rolling stock option hurdles that allow for retesting, and the normal incentive structure is heavily geared towards short-term, absolute measures. Even the “long-term” grants are based on one-year performance, vesting after just two; and executives are eligible for overlapping award opportunities based on the same adjusted operating income metric. Moreover, the company lacks a comprehensive clawback policy.
But back to TS…. The Eras Tour fiasco prompted a nearly three-hour Senate Committee hearing in January 2023, with president and CFO (and recent recipient of a $58 million one-off award) Joe Berchtold facing withering attacks from both sides of the aisle, and the company labeled a monopoly that hinders competition and harms consumers. In a 38-page letter dated February 12, 2023, the company responded to written questions received from Senate Judiciary Committee members.
This is not a new dance for the company, which has been subject to a court-imposed final judgment regulating its practices ever since the Ticketmaster merger closed. However, the stakes appear to be increasing — The New York Times reported that even before the Swifties were riled up, the Department of Justice (DOJ) had opened an antitrust investigation, asking music venues and others in the ticket market about Live Nation’s practices and the wider dynamics of the industry. One day after that report, the company released a statement asserting that it takes its responsibilities under the antitrust laws seriously and does not engage in behaviors that could justify antitrust litigation, let alone orders that would require it to alter fundamental business practices, and that the concert promotion business remains highly competitive.
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