Blockbuster Names James Keyes as CEO
Video rental chain Blockbusternamed Monday James Keyes as its new chairman and chief executive to replace current CEO John Antioco, who agreed to leave after a dispute over his pay package.
Blockbuster's shares rose nearly percent as investors expressed confidence in the company's new chief, whose appointment took effect on Monday.
Keyes, 52, was formerly president and CEO of convenience store chain 7-Eleven.
JP Morgan analyst Barton Crockett described Keyes as "a credible retail executive" whose expertise in merchandising could help Blockbuster capitalize on new in-store traffic from its Total Access plan, which lets online customers swap DVDs in stores.
Blockbuster has been running the plan at a loss as it seeks to add new subscribers to catch up with online rival Netflix, whose customer base is now twice as large.
Blockbuster is counting on online growth to compensate for falling in-store rental revenues industry wide.
The CEO announcement comes less than two weeks after Blockbuster Chief Financial Officer Larry Zine agreed to stay through year's end to help with the transition.
Zine intends to retire at the end of his contract.
Antioco had planned to leave the company by the end of the year after a fight over compensation with Blockbuster's board. In January, the board awarded Antioco a 2006 bonus of $2.28 million on top of salary and deferred compensation of about $2.5 million, rather than the $7.65 million bonus to which he said he was entitled. The board had threatened to give Antioco no bonus if he contested its decision.
Financier Carl Icahn had described as "unconscionable" Antioco's $54 million severance package while trying to oust Antioco from the board during a 2005 proxy battle.
Icahn gained control of three board seats but abandoned his plans to force proposals to cut costs.
An Icahn Pick
A turnaround specialist who guided Blockbuster for a decade, Antioco had been under pressure from board members to cut costs rather than invest aggressively in the company's online business to compete with Netflix.
Keyes was Icahn's choice, according to a New York Post report. The billionaire financier was attracted by Keyes' experience running a retail store chain and his ideas for the company's digital business, the Post said.
Keyes' employment contract is for a three-year term, with an annual salary of not less than $750,000, according to a regulatory filing.
The contract also provides for an annual bonus of not less than $500,000 and options to buy up to 4 percent of the aggregate number of Blockbuster common shares and class B common shares outstanding on the effective date.
Keyes also will received $3 million in restricted shares as a bonus and he has agreed to buy $3 million in Blockbuster common shares within 30 days.
Blockbuster shares were up 6.5 percent, or 28 cents, to $4.59 in midday trade on the New York Stock Exchange. 7-Eleven is the world's largest convenience store operator and is owned by Japan's Seven & I Holdings.