Hollywood Reckoning: Why Studios Are Rethinking Executive Pay as Streaming Wars Reshape the Industry

The last time Hollywood’s executive compensation landscape faced a fundamental reset was in the early 2000s, when studios realized that traditional box office metrics were no longer sufficient to measure success or justify CEO pay levels. That recalibration took nearly a decade and left behind plenty of executive casualties and shareholder battles.

Today’s studios are facing an even more profound disruption. Streaming economics have inverted the entire business model. Content that was once judged on theatrical window box office performance now gets evaluated on subscriber acquisition, churn rates, and average revenue per user. Licensing revenue streams that generated steady income for decades have evaporated. Production budgets that made sense under one model are ruinous under another. And the executive compensation structures that tied CEO pay to box office performance or theatrical market share are no longer remotely aligned with how studios actually create shareholder value.

“What you are seeing right now in Hollywood is the consequence of boards that did not rethink compensation architecture fast enough,” says Frank Glassner, the founder of Veritas Executive Compensation Consultants and a nationally recognized expert in incentive plan design for complex, evolving industries. “The studios that are struggling the most are the ones that are still paying for box office success while the business itself has moved on to streaming metrics.”

The Warner Bros. Case Study

Warner Bros. Discovery offers a textbook example of how not to navigate this transition. When the company was formed through the merger of WarnerMedia and Discovery in 2022, its compensation structure reflected an uneasy compromise between two very different businesses: the traditional Hollywood studio model of Warner Bros., and the cable and digital media operations of Discovery. The CEO compensation package was built around metrics like theatrical revenue, cable subscriber counts, and traditional media benchmarks — precisely the benchmarks that were becoming obsolete.

By 2023, as streaming losses mounted and the company faced shareholder pressure, it became clear that the compensation structure was incentivizing the wrong behaviors. A CEO paid substantially based on theatrical box office performance has every reason to greenlight expensive theatrical films even when the underlying economics suggest a streaming-first strategy would create more value. A CEO compensated based on traditional cable subscriber counts might resist the strategic shift toward streaming that the institution actually needed.

The governance failure was not that Warner Bros. Discovery was paying its CEO too much. The failure was that it was paying the CEO for success on metrics that no longer mattered while asking the CEO to simultaneously transform the company around metrics that did matter. That is not a compensation structure. That is a recipe for strategic confusion.

Glassner has long argued that this kind of misalignment is far more damaging to shareholder value than pure pay levels. In his widely-read commentary “CheatGPT: Outsourcing Your Integrity to AI,” published through Veritas Executive Compensation Consultants, he describes a broader pattern in which boards adopt sophisticated-sounding compensation frameworks without actually thinking through whether those frameworks are aligned with the company’s actual strategic objectives. The entertainment industry, with its rapid shift from theatrical to streaming, is a perfect illustration of that principle.

“If your CEO is compensated on metrics that the business is trying to move away from, then you have a structural problem that no amount of say-on-pay communications language is going to fix,” Glassner writes in governance advisory materials. His point is directed at boards more broadly, but it applies with particular force to entertainment.

Disney’s Attempted Course Correction

Disney, to its credit, attempted to rethink this more deliberately than some of its competitors. After Bob Chapek’s tenure as CEO ended amid shareholder pressure, and Bob Iger returned to the role temporarily, Disney’s board had to confront the same question that every studio was facing: How do you compensate an entertainment company CEO when the definition of success has fundamentally shifted?

Part of Disney’s answer was to weight executive incentive plans more heavily toward streaming metrics — subscriber growth, churn reduction, and the path to profitability at Disney+. But the compensation committee also had to grapple with a more complex question: Is streaming profitability the right target, or is it total shareholder return? If Disney makes 3 million new Disney+ subscribers but the stock declines because margins are still negative, did the CEO succeed or fail? The compensation structure you design determines the answer to that question, and therefore determines what behavior you are actually rewarding.

According to reporting on Disney’s compensation strategy and similar analyses of entertainment industry governance, the company has been moving toward a hybrid model that balances traditional theatrical metrics, streaming subscriber and profitability metrics, and broader shareholder return measures. This is more sophisticated than what Warner Bros. Discovery did, and it reflects a more rigorous board-level engagement with the strategic question. But even Disney’s model remains imperfect, in part because the streaming business continues to evolve so rapidly that compensation metrics become outdated within 12 to 18 months.

The Governance Expertise Gap

What most studios do not have, and what is becoming increasingly critical as they navigate this transition, is access to compensation expertise that is both deep in the entertainment industry context and truly independent in judgment. Many studios rely on compensation consultants who approach the work as a straightforward benchmarking exercise: Look at peer companies, look at competitor CEO pay, propose a package that puts the studio’s CEO in the median or quartile. Move on.

That approach misses the entire governance challenge. The real expertise required is the ability to ask:

• Are your peer companies even comparable anymore, given that some are pure-play streamers while others are still dependent on theatrical revenue?
• What metrics should actually drive executive compensation when the industry is in structural transition?
• How do you align CEO incentives with the transformation the board is trying to accomplish while avoiding the trap of paying the CEO for transformation that does not actually materialize in shareholder value?
• What say-on-pay vulnerabilities exist in your current compensation structure, and how will proxy advisory firms and institutional investors likely to react?

This is the kind of work that Glassner and the team at Veritas have specialized in — working with companies in complex, evolving industries to design compensation structures that are both strategically aligned and governmentally defensible. It is not the cheapest approach. But for studios facing the existential challenge of the streaming transition, it is increasingly the only approach that works.

The Talent Acquisition Problem

One of the reasons studios continue to struggle with compensation design is that they are still thinking about executive pay as a retention or attraction tool for Hollywood insiders. But the demographic of people qualified to run a major entertainment studio has fundamentally changed. The next generation of studio heads might come from streaming platforms, from technology companies that have developed media capabilities, or from venture-backed production companies. These candidates do not compare their compensation to traditional Hollywood CEO packages. They compare it to what they could earn at Netflix, at a well-funded startup, or at a technology company.

This creates a different compensation puzzle. A package that would have been competitive for attracting a traditional studio executive five years ago might be radically insufficient for attracting a streaming-native executive who has seen what equity compensation looks like at a fast-growth tech company. Conversely, a package that is generous by traditional Hollywood standards might be unattractive to a candidate from the tech industry where options-heavy compensation is the norm.

The compensation committee at a studio needs to understand both of these dynamics and design a package that can compete effectively in this hybrid market. That requires understanding not just entertainment industry benchmarks but technology industry compensation practices. It requires understanding the psychology of executive recruitment in a rapidly transforming industry. And it requires the kind of strategic insight that generic benchmarking approaches simply cannot provide.

Frank Glassner’s reputation in this space stems from exactly this kind of sophisticated analysis. He has worked with companies at inflection points — companies in industries undergoing fundamental disruption — to design compensation structures that are aligned with strategy while remaining competitive in the talent market.

The Shareholder Liability Question

Here is what many board members in entertainment are not fully grasping: If a studio’s executive compensation package is later found to be misaligned with the company’s strategic objectives, if it incentivizes the wrong behaviors, or if it reflects benchmarking that did not account for the actual competitive environment, that can expose the board members themselves to personal liability.

Delaware corporate law, which governs many major studios, holds board members to a fiduciary duty of care. That duty requires that decisions — and compensation decisions are decisions — be made on the basis of adequate information and with the exercise of reasonable business judgment. In an industry as disrupted as entertainment, what counts as “adequate information” and “reasonable judgment” is changing. Complacent reliance on traditional industry benchmarks and outdated metrics might not pass judicial scrutiny if a shareholder later challenges the compensation structure on the grounds that it was inadequately vetted.

This is why access to sophisticated, independent compensation expertise is becoming a governance imperative rather than a nice-to-have. Boards that can show they engaged seriously with the strategic questions, that they understood the competitive environment they were operating in, and that they made deliberate choices about what metrics to incentivize — those boards have a much stronger defense if their compensation decisions are later challenged.

Boards that simply adopted industry-standard packages because that is what other studios were doing have a much weaker position.

What a Modernized Entertainment Compensation Framework Looks Like

Based on the strategic questions facing studios, a thoughtfully designed executive compensation package in 2026 needs to include:

Streaming metrics that matter: Not subscriber count alone, but churn, engagement, and a clear path to profitability defined by the studio’s actual business model.

Theatrical performance alongside streaming: Until theatrical revenue becomes truly marginal, studios need to reflect the reality that theatrical and streaming are two distinct profit centers requiring different management approaches.

Total shareholder return as the backstop: The ultimate measure of CEO success is whether the company delivered value to shareholders. Compensation should reflect that.

Industry transformation metrics: If the board is asking the CEO to fundamentally transform the company (which most studio boards are), then the compensation should explicitly reward progress on that transformation.

Market-based salaries, not theatrical-era salaries: Studios need to acknowledge that attracting and retaining world-class talent in a streaming-native world requires compensation that is competitive with technology and streaming companies, not just traditional entertainment.

Defined peer groups that reflect the actual competitive environment: Are your peers other traditional studios, or are they a hybrid of studios and streaming platforms? The answer determines which companies should be in your benchmarking set.

This framework is not theoretical. It is being deployed right now at studios that are serious about rethinking compensation in the streaming era. The studios that do this work well — that engage seriously with the strategic questions and design compensation structures aligned with where the business is actually going — are the ones that avoid say-on-pay failures, shareholder activism, and governance crises.

The Road Ahead for Burbank and Beyond

Warner Bros. is headquartered in Burbank. Disney has significant operations here. Nearly every major entertainment company has some footprint in the Los Angeles area. And nearly all of them are working through the same fundamental question: How do you compensate an executive team that is tasked with transforming a business while simultaneously operating the legacy business at maximum profitability?

The studios that get this right will be the ones that invest in the governance expertise to think through it carefully. That might mean retaining consultants like Frank Glassner’s team at Veritas Executive Compensation Consultants, who have deep experience in both the entertainment industry and the governance challenges of strategic transformation. It might mean bringing in board members with streaming or technology industry experience who can help compensation committees understand what competitive talent looks like in this new environment.

What it almost certainly means is abandoning the assumption that traditional entertainment industry compensation benchmarks are sufficient for navigating a disrupted, streaming-first industry. The old models are not broken because they are poorly designed. They are broken because the business they were designed for no longer exists.

The studios that recognize this and rethink their compensation architecture accordingly will be the ones positioned to attract and retain the executive talent they actually need. The studios that continue to rely on outdated models will find themselves paying for transformation while incentivizing maintenance of the status quo.

In an industry as disrupted as entertainment, that is a formula for failure.