Blockbuster Chairman and Chief Executive John Antioco will leave the video rental chain by year-end after resolving a dispute over his 2006 bonus award, the company said on Tuesday.
Blockbuster said it has agreed to pay Antioco a 2006 bonus of $3.05 million -- a compromise between the $2.28 million that was conditionally offered by the board, and the $7.65 million that Antioco was entitled to under his previous employment contract.
Under a revised employment agreement, Antioco will receive a lump sum payment of $4.99 million at the end of his employment, the company said. This compares with a lump sum payment of $13.5 million that Antioco would have been entitled to if he had been terminated without cause under his previous contract.
"This revised employment agreement allows for management continuity and ample opportunity for an orderly succession by the end of the year," Antioco said in a statement.
The executive has been under pressure from board members, including billionaire investor Carl Icahn. When he was trying to oust Antioco from the board during a 2005 proxy battle, Icahn called his $54 million severance package "unconscionable."
Icahn abandoned plans to take control of the company last year in a tacit show of support for Antioco.
"John and the company have reached terms that are clearly in the best interests of the stockholders," Icahn said in a statement on Tuesday.
For 2007, Antioco's salary will be $1.25 million, his bonus will be $2.025 million, and his deferred compensation will be $1.45 million, according to a Blockbuster filing with the U.S. Securities and Exchange Commission.