'Business Insider' Takes a Hard Look at FFN CEO Compensation

BOCA RATON, Fla.—One upside, or downside, to being a publicly traded company is that a lot of information that would otherwise never see the light of day becomes public knowledge—for instance, executive compensation. On Wall Street, the issue of executive pay in the aftermath of the federal bailout of the big investment banks is an issue, and rightly so, but the subject rarely if ever comes up with respect to porn companies—until today. Business Insider has published an article on Penthouse parent FriendFinder Networks sporting the headline, "Check Out The CEO Salary Package At America's Only Publicly Traded Porn Company." The article itself is equally as snarky, perhaps because the salary increase last year for FFN CEO Marc Bell, who has announced he is stepping down as chief executive effective July 1, appears to be excessive in light of the company's recent performance. The numbers were contained in a Schedule 14A filed with the SEC today. Last year, the site reported, "[Bell's] total compensation rose from $314,000 to $818,000, paid almost entirely in cash. The raise was curious because FFN underperformed in 2011. Revenue sank to $331 million from $346 million, subscribers to FFN's adult sites also fell from about 951,000 to 828,000. Ad revenue at Penthouse was negligible. "The company was unprofitable, again," it continued. "The stock launched at $8.30 in 2011 and was trading in pennies by the end of the year." The article also notes that Bell doesn't have to work full-time for FNN, citing the annual report's estimate that "he devotes 10 percent of his time to managing ARMOUR, a residential real estate investment trust," and points cynically to the fact that FNN is also a Bell real estate client. "FFN doubtless searched diligently for a location for its Boca Raton, Fla., corporate headquarters but by amazing coincidence found that the best deal on the 8,000-square-foot space came from Bell himself, who rents the space to his own company for $150,000 a year," the article states. All of this was taken from the SEC report and thus may be factually correct, but in at least one respect the article is mistaken. Private Media Group may be located in Spain, but it is incorporated in Nevada, and even though it has been delisted from Nasdaq, it is still a publicly traded porn company; and so, arguably, is New Frontier, which makes FNN one of three such companies. That said, it remains to be seen whether FFN shareholders have a problem with the issues raised by Business Insider regarding the company's executive compensation.