How To Protect Director's Compensation in Entertainment Contracts

Director's role in conceptualizing, structuring, animating and executing a successful motion picture production is, to a great extent, incontrovertible. Nonetheless, such prominent role could perpetuate frictions among various players and leave the director even bereft of "proper" compensation. Let us explore to some extent how directors should navigate the maze of compensation universe and protect their rights, to the extent possible.
SOME BACKGROUND
Director's compensation could be negotiated like authors. Nonetheless, director's compensation is negotiated based on the following prescriptive standards:

• DURATION OF SERVICES: According to the duration of services rendered by Director.
• COMMERCIAL SUCCESS: According to the production's commercial success, namely additional contingent compensation.
• MEDIA USE OR REUSE: According to the use or reuse of media encompassing residuals fees.
• EXPENSES: According to the director's expenses for directing the motion picture.
• DGA MANDATED PAYMENTS: According to DGA (Directors Guild of America) mandated pension, health and welfare payments.

DIRECTOR'S COMPENSATION
1. FIXED FEE COMPENSATION
It is customary for directors to receive compensation for their services according to the duration of such services. This means the director receives a flat sum of money for a set period of time. When the director has to work beyond the set time, for instance, for periods of production or post-production, the set fee could be increased by a prorated weekly salary.
NOTE
This set fee, generally, is separate from other compensation director should or could receive. The set fee is generally sacrosanct against other parts of a director's compensation package.
2. CONTINGENT COMPENSATION
In addition to fixed fee, it is essential for director to request and receive some compensation based on the production's commercial success. Such contingent compensation could be based on a portion of "net profits" or gross participation. The most successful contingent compensation could be tied to a share of gross profits as collected by the distributor.
NOTE
This is important for the director to be mindful if the producer is an independent producer. In such circumstances, it would be prudent to determine if the director's contingent compensation is defined as to level of the net proceeds or gross profits received by the producer, distributor or not. As enunciated earlier, it is usually the best to negotiate for a sizable portion of the gross profits as collected by the distributor. Nonetheless, sometimes, directors and their agents should be pragmatic and accept other reasonable offers give the totality of the circumstances.
3. REUSE OR RESIDUALS FEES COMPENSATIONA director may ask for more compensation, in addition to fixed fee and contingent compensation, in the form of residuals fees. Such fees often refer to use of the motion picture the director directed for use in different mediums or repeated use of the motion picture. For instance, a director may negotiate and receive a share of books, video games, theatrical releases based on the motion picture.
NOTE
For productions subject to DGA jurisdiction, usually, a mandatory residual schedule is used for additional uses in domestic or foreign territory.
SALIENT NOTE
This article represents only SOME of the issues and concerns related to directors' compensation in entertainment contracts. You may contact Doron Eghbali, Esq. with any questions.
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DORON EGHBALI is a Partner at the Beverly Hills Offices of Law Advocate Group, LLP. DORON Primarily Practices Business, Real Estate and Entertainment Law. DORON can be Reached at: 310-651-3065. For More Information, Please, Visit: HERE.