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Avid executives score even as revenue falls

Rivals cut into 2014 profits but top salaries march higher

Avid Technology Inc., the Burlington audio and video software maker, gave big pay increases to top executives last year, even as the company struggled to overcome sluggish growth and a delisting of its stock on the Nasdaq Stock Market.

The president and chief executive, Louis Hernandez Jr., received $6.5 million in total compensation in 2014, up from $5.2 million in 2013.

Hernandez’s salary, as well as his bonus and various stock and option awards, all increased for the period.

Chief financial officer John Frederick’s compensation increased to $4.2 million, from $3.2 million in 2013.

Avid has struggled over the past several years as competitors have cut into its business of producing sophisticated digital systems for making movies and music.

In 2014, revenue fell around 6 percent, to $530 million, and Avid’s net income was down 30 percent, to $14.7 million, from $21.1 million in 2013.

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In 2013, then-chief executive Gary Greenfield resigned and was replaced by Hernandez. Weeks later, the company announced it would postpone release of its financial results because of accounting irregularities.

A year later, with the accounting problems still unresolved, Avid was delisted by the Nasdaq, but then regained its place on the exchange in December.

Avid spokeswoman Michelle Barry said the company’s performance should not be judged solely by revenue or earnings.

She pointed out that top executives’ salaries are tied to other measures, such as free cash flow, sales bookings, and the number of clients using Avid’s subscription-based software products.

Barry said that:

■  Bookings stabilized in 2014 after falling the two previous years.

■  Last year’s free cash flow of $12.7 million was more than double that of 2013.

■  The company had signed up more than 20,000 users of its MediaCentral software by the end of 2014.

And an analyst who follows the company said that Hernandez’s team appears to have improved Avid’s financial outlook.

“They’re in an industry that’s not grown very much, but they’ve been able to maintain and grow their customer base,” said Steven Frankel, from the investment firm Dougherty & Co.

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He cited the company’s “Avid Everywhere” strategy, which offers integrated products to let media companies create, edit, and distribute their products from a single software platform

Avid pioneered the concept of using computers to digitize and edit film, radically streamlining the process. Movie and television production companies worldwide came to rely on the company’s hardware and software systems, which often cost hundreds of thousands of dollars.

Avid also became a leading provider of audio-editing software for the music industry.

But in recent years, companies like Apple Inc. and Adobe Systems Inc. have offered lower-priced alternatives to Avid’s systems.

In 2004 and 2005, Avid spent about $635 million to buy businesses that offered low-cost video and audio software for consumers, but the venture failed and Avid ended up abandoning its consumer operation in 2012.

The company’s shares closed Monday at $14.66, down 0.48 percent for the day but up 3 percent for the year to date.


Hiawatha Bray can be reached at hiawatha.bray@globe.com. Follow him on Twitter @GlobeTechLab.