Celebrity Endorsers Break a Sweat; Shareholders Fight "Golden Coffin" Perks; Care vs. Caviar at Hospitals
Celebrity Endorsers Have to Work HarderWith marketers trying to squeeze more out of every dollar, celebrity endorsers are being asked to do more than just pose beside a product. Just ask Grammy Award-winner Alicia Keys, who recently worked her first trade show. The Yamaha piano brand she endorses is asking more of its celebrity roster, which also includes Elton John, as times get tough. Keys, for instance, now gives the company logo screen time in her music videos and appears at such industry events as a National Association of Recording Merchandisers show, where on Jan. 18 she sang four songs from a cramped booth under fluorescent lights.
Companies now "want the world" from endorsers, says Chris Lighty, who manages rappers 50 Cent, Missy Elliott, and others. "It's 'What are you doing for us on the Web? How can we intertwine with the album release?'" Even A-listers aren't spared. Actor Sean Connery appears in three online videos for part of his deal as the face of luggage maker Louis Vuitton (LMVUY).
Up against declines in their own industries, celebrities aren't in a position to say no. "If you're not going to work harder, there are five people right behind you who will," says Ryan Schinman, who negotiates endorsements for Pepsi (PEP), Coors (TAP), and AT&T Wireless (T).
As agreements evolve toward partnerships, Keys for one says she's happy to do more for Yamaha. "They're my team," she says. Keys and Yamaha are sharing revenues from software she developed to help keyboard players emulate her signature piano sound. Elton John has collected royalties from Yamaha's sales of the Elton John Limited Edition Signature Series Red Pianos that fetched $70,000 to $150,000 apiece. And to promote its teen-oriented TAG body spray, Procter & Gamble (PG) has its spokesman, rapper Jermaine Dupri, running a new, branded music label: TAG Records. His job is to find young talent. So far, the label has cut a single for a Brooklyn-based rapper. Look for Q Da Kid in a future TAG body spray ad.Trying to Bury the 'Golden Coffin'Wall Street bonuses may grab headlines, but activist shareholders are going after what they see as another kind of overcompensation: the "golden coffin." That's the irreverent name for payouts made to families of top executives if they die in office. Roughly 17% of megacap companies offer some form of this deal. So far, footnoted.org, which tracks SEC filings, says proposals opposing the practice are in the current proxies of Walt Disney (DIS), auto supplier Johnson Controls (JCI), and Shaw Group (SGR), which offers industrial services. Companies with the perk say it helps them attract and retain top-quality executives. But investors with labor ties, who are filing a total of 15 proposals against it, are unmoved.
"This is pay for being dead," says Vineeta Anand, chief research analyst at the AFL-CIO's investment arm, which filed objections with Comcast (CMCSA) and Charles Schwab (SCH). The Disney vote has yet to take place. The proposal aimed at Johnson Controls was defeated, with 42% of the vote. But the one filed at Shaw Group passed, with 67%. The issue "will be a serious consideration for our board," says a Shaw spokesperson. Says Carol Bowie, head of risk governance at analytics group RiskMetrics: "Golden coffins are bizarre in the context of the financial crisis. These proposals resonated with shareholders this year."
Corner-Office Death Benefits
Walt DisneyIn the event of CEO Robert Iger's death, his family receives all of his $2 million base salary in the first year, 75% in the second, and 50% in the third. Disney says it does not offer the benefit to new hires, but prefers it to remain available when renewing contracts.
Shaw GroupCEO James Bernhard's estate would get about $18 million based on a noncompete agreement that pays off even in the event of his death. The estate would also receive a year's salary and bonus (a total of $1.7 million in 2008).
Johnson ControlsBeneficiaries of former CEO John Barth would have received 10 times his base salary at his death. Under revised rules, CEO Stephen Roell's beneficiaries receive twice his base salary of $1.3 million.
Data: Company proxy statements
Nurse, More CaviarWhat do consumers look for in hospitals? New research suggests that plush accommodations may be more of a draw than high-quality care. RAND economists Dana Goldman and John Romley studied the hospital choices of 8,721 Medicare pneumonia patients. They then correlated each facility's popularity among these patients with its mortality rate—a proxy for clinical quality—and the rank its "amenities" scored in a marketing survey. A high amenities score, they found, predicted keen demand much more than a low pneumonia mortality rate did. Why? Goldman says while flat-screen TVs and gourmet meals stand out, public quality-of-care data in most states is scant. Also, patients may assume that fancy facilities signal superior care. As they market themselves in the race to fill beds, hospitals may decide "it's not about attracting the best doctor," Goldman says. "It may be about treating patients a little better. Oh, and giving them wireless Internet."