PR Versus the Experts

By any measure, Barry Diller makes a lot of money.

The chairman and chief executive officer of InterActiveCorp. (“IAC”), Diller hauled in $295 million in compensation in 2005, according to The Corporate Library, a corporate governance research firm. The figure put Diller at the top of the list of highest-paid CEOs, which brought plenty of attention from the media – none of it positive. The figure is also misleading.

Virtually all of Diller’s compensation in 2005 — some 98% — came when he exercised stock options. The value of options minus the price of options was used to calculate Diller’s haul. Left unsaid in some media reports was the stock options were granted in 1995, and they were set to expire just before Diller exercised them. In other words, if he didn’t exercise the options, he would have forfeited them, and the opportunity to pick up a lot of shares of IAC on the cheap.

As it stands, Diller kept all of the stock from option exercises, selling only enough shares to cover the tax liabilities from the transactions. His cash compensation, meanwhile, puts him below the average in his peer group — both that of CEOs, and that of CEOs of Internet or media companies. (IAC owns, Citysearch, TicketMaster and Home Shopping Network, among other businesses.)

Confused yet?

Issues such as executive compensation, stock options, the implied value of stock options and corporate governance can be confusing. The latter concept – corporate governance – is an idea that’s only been discussed for about fifteen years, and only seriously discussed for the past five years or so. The other issues are relatively new in terms of public discussion, but they now come up often. For example, the issue of executive compensation reared its head recently with regards to the New York Public Library.

One of the problems with complicated, yet newsworthy, issues is that there are experts out there who issue reports about them and talk to the media about them. I am one of those experts, speaking to the media almost daily about insider stock transactions, stock options, executive compensation, corporate governance, hedge funds, etc. Believe me, I know how difficult it is to talk about these issues in a manner that everyone — including my co-workers — can understand.

Diller’s bad ink is partly related to the fact the issue being discussed is complicated. It’s also related to the fact that the press “bought” an easy story. Diller suggested the latter when he lashed out at corporate governance experts and the media, The New York Times in particular, during a speech this week at the Reuters Media Summit in New York.

Diller complained about two New York Times articles to be exact, one a column and one an article. The column is only available for subscribers to the TimesSelect service, and I’m not very concerned about an editorialist’s opinion on Diller’s compensation. The article, however, did catch my eye.

The story relies on two research reports, one from The Corporate Library and one from research firm Glass Lewis. I’ve seen neither report, as both are expensive documents. Regardless, the Times story quotes figures from the reports liberally, and quotes representatives from both research firms. They paint a picture of Diller being severely overpaid.

Diller gets ample opportunity to respond, but it’s not until the nineteenth paragraph of the article that he gets to make a debatable point. In other words, Diller’s explanation is buried by the time most readers have moved on.

The lashing out at the media by Diller was probably an unwise move, but when you’re worth a couple of billion dollars, you probably don’t care. More to the point, Diller squandered an opportunity to explain corporate governance and executive compensation issues in a rational manner, using his podium instead to complain and whine. Well, at least the media is only reporting his complaining and whining.

Where Diller, and IAC’s spokesperson, erred was in issuing a statement that put ideas (e.g., “Diller has created a lot of wealth for investors, so he deserves what he’s paid”) first instead of facts, the most important being the date of the options issue and that the options were set to expire. This issue alone mitigates the gaudy “compensation” figures thrown out by the research firms, and that opinion comes from an “expert” on the issue — me.

The truth is, Diller is overpaid. Well, actually, he was overpaid when the company doled out the stock options ten years ago, and last year, when he received another large option grant. Nonetheless, the media overplayed (no pun intended) the story, obscuring some of the facts because they either did not understand the issue, or relied solely on the research of a third party.

Defending against such abuses is sometimes difficult, mostly because the media trusts third-party experts and research firms more than the companies or organizations these people study. The facts matter most, and that’s the only way to deal with the scrutiny. Providing accurate data and explaining the issue to the media can be helpful, but it must be done so in a certain manner.

Attacking the third party or expert can be problematic because it’s going to sound like sour grapes. Instead, attack the findings, and provide your own information to back up your argument that the findings are wrong. More important, take the time to explain the issue to the media. We can’t expect the media to understand every issue, especially an obscure one, and if you walk them through the matter, you may be able to change the tone of the story.

Experts are great sources for stories, and PR people can be great experts. When the information is misleading, however, no one wins. When confronted with experts or third-party research about your company or organization, take the offensive and set the record straight with the right information in the proper context.

This article, written by Ben Silverman, originally appeared in PR Fuel (, a free weekly newsletter from eReleases (, the online leader in affordable press release distribution. To subscribe to PR Fuel, visit:

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