March 18, 2008 -- The beat goes on for Warner Music's Edgar Bronfman Jr.

The media mogul has inked an incentive-laden contract extension - potentially worth in excess of $90 million - that will keep him at the helm of the major label through 2013, the company disclosed in a regulatory filing yesterday.

But for Bronfman to collect on the high end, he would have to add more than $2 billion in equity value to the company. Warner Music's stock fell 14 cents, or 2.7 percent, to $5.15. In the past year, shares are down 68 percent.

The new deal comes as industry watchers and Wall Street remain divided over the company's performance under Bronfman.

"The first part of the party was a lot more fun than the last part," said Bishop Cheen, an analyst with Wachovia Securities.

Last year, Warner Music delivered improved operating income and the biggest market-share gain among the leading labels, fueled by hits from crooner Josh Groban and the acquisition of Roadrunner Records, home to rockers Nickelback.

But the stock is suffering from weak revenue and net income results, rapidly shrinking CD sales, uncertain merger prospects with EMI, slower-than-expected growth in digital (now 14 percent of annual revenue from zero in 2004) and criticism from some analysts over cost controls.

One key camp is still in Bronfman's corner, though: private-equity backers, a group that includes Thomas H. Lee Partners and Bain Capital.

People close to the situation said the backers remain satisfied with Bronfman and recorded music chief Lyor Cohen, who is in the middle of negotiating his own contract extension.

Under Bronfman's watch, Lee and Bain recouped their initial 2003 investment in less than two years.

Bronfman's base pay is $1 million annually, with a bonus potential of up to $6 million per year. Both figures are unchanged from his prior contract. He did not take a bonus last year.

On top of that, he gets 2.75 million stock options with an exercise price of $5.29, and another 2.75 million shares of performance-based restricted options - worth as much as $55 million - that hinge on the stock hitting targets for 60-day periods at levels of $10, $13, $17 and $20 per share.

Both sets of options vest at a rate of 20 percent annually.

"Relative to what we see CEOs ink for themselves, this looks fairly tame," said Cheen.

Copyright 2008 NYP Holdings, Inc. All rights reserved.