Fox Paying Diller $3 Million, SEC Filing Shows

After more than six months of secrecy, the salary of Barry Diller, the new chairman of loss-ridden 20th Century Fox Film Corp., was publicly disclosed Thursday. The executive is getting $3 million a year for five years as basic pay, which is by far the highest known salary in the movie industry and is among the highest of any American executive.

Also, Diller will receive additional compensation based on any growth in the equity value of Fox’s parent company, TCF Holdings, which is owned by oil baron Marvin Davis.

A Securities and Exchange Commission ruling forced the Diller contract into the public domain. Fox had submitted a copy of it to the SEC on Jan. 8, but the company asked the agency to keep it confidential as a trade secret.

After a lengthy study of the request, the SEC staff limited the confidentiality only until Fox filed its latest earnings report with the agency this week.

Although the company provided copies of its quarterly earnings report to the press late Wednesday, the Diller contract and other exhibits were not available until Thursday in the SEC’s public file in Washington.

Diller and other Fox executives were not available for comment on the contract Thursday.

The contract confirmed, as reported last month by The Times, that Davis had agreed to pay Diller cash equal to 25% of any growth in the equity value of TCF Holdings during his five-year contract--in addition to Diller’s salary.

A copy of the contract shows that Diller also receives a further cash payment amounting to another 17.5% of any equity growth in the three years following the end of his five-year employment period.

The contract says the increase in equity will be measured according to the value of entertainment-related assets, such as movies and TV programs, but not Fox’s real estate partnerships and other non-studio-use real property.

The hit television series “MASH,” now re-running in syndication, also is not included in valuing the equity of TCF Holdings, the contract stipulates.

Davis, who recently announced an agreement to sell 50% of Fox’s parent to press tycoon Rupert Murdoch of Australia, hired Diller away from Paramount Pictures last October. Although his salary at Gulf & Western Industries’ movie subsidiary was not publicly reported, industry estimates have ranged from about $1 million per year to as much as $2 million with bonuses.

During his Paramount tenure, he was widely believed to be the highest-paid movie industry executive.

After hiring Diller to take the reins from former Chairman Alan J. Hirschfield last fall, Fox took large but undetailed write-offs on movies as a major part of an $85-million operating loss for the fiscal year ended Aug. 25, 1984.

Unusual Degree of Control

When his purchase was announced, Murdoch issued a statement praising Diller, and the Australian’s arrival at the studio is not expected to affect Diller’s position.

Indeed, the wording of his contract with TCF Holdings shows he won an unusual degree of control and independence over the affairs of Fox.

By comparison with Diller’s flat $3-million annual salary, his second-in-command, Lawrence Gordon, has a base salary of $750,000 a year for three years, plus bonus. Jonathan Dolgen, senior executive vice president, is paid a $400,000 base salary. The same salary is received by Harris Katleman, Fox’s television chief.

Diller’s predecessor, Hirschfield, last year collected $936,000 from Fox, of which $500,000 was base salary. Norman Levy received a raise to $750,000 from $500,000 a year shortly before he was ousted as Fox vice chairman last fall. Bonus money raised the figure to $1,001,200. All of the figures are according to company filings. All contracts except Diller’s are between Fox and the executives.

Ranks in Top 15

Diller’s $3 million in annual base pay puts him among the highest-paid executives in any industry. According to a survey published by Business Week magazine based on 1983 data, Diller’s salary would rank him in the top 15.

But most executives are paid much less in base salary, instead earning bonuses and long-term deferred compensation such as stock options.

Because Fox is no longer a publicly traded company, Diller cannot be rewarded with company stock or its equivalent that can be bought and sold easily. He owns no equity interest in TCF Holdings.