Famed financier Carl Icahn, the largest individual holder of Blockbuster shares, blasted management at the nation's leading video rental chain for its botched attempt at a hostile takeover of Hollywoo
Famed financier Carl Icahn, the largest individual holder of Blockbuster shares, blasted management at the nation's leading video rental chain for its botched attempt at a hostile takeover of Hollywood Entertainment, and he vowed to take control of Blockbuster's board if certain changes aren't made.
In a regulatory filing April 7, Icahn railed against the "unconscionable" pay package worth more than $50 million in stock and cash that Blockbuster CEO and board chairman John Antioco received last year.
He said Blockbuster made a "grave error" in giving up its attempt to purchase Hollywood Entertainment, an acquisition that would have had immediate financial benefits to Icahn because he owns a significant number those shares as well. When Blockbuster abandoned its purchase of Hollywood Entertainment for $14.50 a share, it paved the way for Movie Gallery to acquire it for just $13.25 per share.
"Mr. Icahn was heavily invested in our acquisition of Hollywood Entertainment, and that didn't happen for reasons outside of our control," Blockbuster spokesman Randy Hargrove said. "He's looking for a short-term payback. Our goal is to build long-term shareholder value."
Icahn also accuses Blockbuster management of going on a "spending spree" that he demands be stopped. "If we cannot bring about these changes to our satisfaction, we plan to attempt to take control of the board of directors in the 2006 annual meeting."
Blockbuster has made no secret of its plans to spend millions in order to market its online subscription service that is doing battle with Netflix.
Icahn, who owns 9.7% of Blockbuster's Class A shares and 7.7% of its Class B shares, also suggested, so far to no avail, that Blockbuster pay shareholders a one-time special dividend.
Icahn also claims that the company moved its shareholders meeting from July to May so he wouldn't have time to field board candidates and force other changes, and he said a suggestion to postpone the meeting was rebuffed by Antioco.
"The postponement might have given us a small window to discuss our differences," Icahn wrote in a letter to Antioco, according to the filing. "However, on reflection, it appears that our differences are probably too large to be bridged in any event."
But, countered Hargrove, Blockbuster's shareholder meetings have historically been in May, while last year it was moved to July because of Blockbuster's split from former parent Viacom.