Carl Icahn Makes Waves at Blockbuster

Blockbuster Inc (NYSE:BBI) released their Q4 and year-end results along with the financial apologies associated with them. Apparently because they are attempting to enter the on-line business they have to create some losses along the way and disappoint investors in the process.

The real focus should be on a bizarre section of their press release entitled “Other Matters” The Board of Directors and the CEO are having a disagreement over the CEO’s bonus. The press release reads

“The Company and its Chief Executive Officer are in discussions in an attempt to resolve a disagreement concerning the Board of Directors' 2006 bonus award to the Chief Executive Officer.”

In the board’s wisdom they want to award the CEO an amount which is substantially less than the agreed upon formula as set out in SEC filings. They appear to be about $4.5 million dollars apart.

In the conference call transcript made available through www.seekingalpha.com the CFO Larry Zine in response to Tony Wible of Citigroup confirmed that the disputed amount has been reserved for in Q4 and therefore earnings will not have to be re-stated. The CEO John Antioco made no comment.

When the board wants to overtly change a senior level bonus there must be a performance reason. The now public dispute will surely leave an awkwardness even if resolved amicably. If there are serious performance issues than the board has to deal with them. If the board cannot make this stick then several compensation committee members will have to go. Someone has it wrong. If the CEO is going to lose this much bonus will he stay or will they need to find a new quarterback.

Too much smoke in the back-room and no-one has thought to pull the fire alarm. So maybe I should do it.

By the way Carl Icahn is on the board and perhaps is dissatisfied with this particular underling. The CEO John Antioco bought 220,000 shares at $4.66 reported last Nov 21, 2006. Check out the CFO Larry Zine he seems to have sold big time for the past two years around Christmas time. The last as recently as Dec 21, 2006. John Antioco was also a big seller in previous insider reports over the past two years, disposing of shares around $3.67 and then buying just recently for a dollar more. Mr Antioco, extensive research has shown it is "buy low sell high" which is not what you did. Do you suppose Carl Icahn is explaining that as they go along?