This story was updated at 6:39 p.m.
Avi Arad, the longtime head and bombastic public face of Marvel Studios, ankled the company Wednesday to become a producer.
Many in Hollywood and on Wall Street were speculating as to the reasons for his departure, but the timing couldn’t have been more perfect for him.
Not only is Arad basking in the glow of the boffo $122.9 million opening for “X-Men: the Last Stand”– which made it politically easier to exit now — but he has 3.15 million shares in Marvel Entertainment that vested last Friday.
Arad immediately moved to sell the shares Wednesday, making nearly $60 million in the process.
Sale of nearly 4% of the company’s total outstanding stock is sure to drive Marvel shares down further today. They were already down 4% Wednesday amid investor concern about Arad’s departure.
Despite the personal benefits for Arad, move is curiously timed, as the ink was barely dry on the release announcing Arad’s new role. Also, Marvel is engaged in its own stock buyback program — a gesture meant to show confidence in the future of the shares — and an exec’s stock selloff is likely to undercut those efforts.
Departure mere days after his stock fully vested lends credence to the view that he has been planning to ankle for a while.
Indeed, sources said the company has been prepping for Arad’s departure for months, most notably by hiring former Beacon Pictures and Dimension exec Michael Helfant as president and chief operating officer in November and upping longtime Arad aide Kevin Feige to production prexy in January.
Helfant will now head Marvel Studios, with Feige as his No. 2.
“If you look back, Helfant was a trigger sign,” one insider said. “Look at all the people who have come to surround Avi.”
In an interview, Arad declined to comment on the sale or to pinpoint when he decided to leave.
He still owns some 1.5 million Marvel shares.
A former toy creator, Arad took over as Marvel’s top executive in Hollywood in 1993. He became a major industry figure as he ended the comicbook company’s history of making shlock movies and set up partnerships for successful film franchises including “Spider-Man,” “X-Men” and “Blade,” as well as the less successful “Hulk,” “Daredevil” and “Elektra.”
Under the new deal, he will produce all future “Spider-Man” movies at Sony, including next year’s “Spider-Man 3,” and the first two pics on Marvel’s internally produced slate: “Iron Man” and “The Incredible Hulk.”
Arad told Daily Variety that he hopes to produce future Marvel pics as well.
“After we do these movies, I’m sure I can pick up another one and another, unless we screw them up and then I’m toast,” he joked.
Arad will serve as a “creative adviser” to Marvel and be paid under his current contract through the end of the year, after which his compensation will be tied to the performance of the movies he produces.
With gross points on Marvel’s future pics, especially “Spider-Man 3,” Arad could do even better financially than the $1 million salary and up to $4 million in bonuses and incentives he received under his current contract. That increased compensation made some investors skittish. They feel the deal works in Arad’s favor more than it does Marvel’s.
Some on Wednesday speculated that Marvel leadership had started to fret about its rash of upcoming pics, which are being funded through debt financing from Merrill Lynch, with film rights to the characters as collateral.
But insiders indicated Arad was not comfortable with the business responsibilities of his job now that Marvel was financing its own pics, preferring a more hands-on role as producer.
“We have built a team that can make our movies, and right now the emphasis should be on our 2008 slate, so working on them as a producer became a really smart thing to do,” he asserted.
The move baffled many on Wall Street. Several analysts on a conference call asked why Arad’s creative duties meant he had to give up his corporate title and even his board seat. Arad stuck to his guns, declaring he needed to be free of administrative minutiae to focus on Marvel’s ballooning slate. No one seemed convinced.
“This is not a ringing endorsement of company strategy,” said Banc of America analyst Michael Savner.
Arad was by far the most visible executive at Marvel Entertainment, where CEO Isaac Perlmutter keeps a very low profile. Arad’s position as CEO of Marvel Entertainment subsid Marvel Studios won’t be filled.
Day-to-day work at the company isn’t expected to change, since Arad has essentially been working as a producer on Marvel pics while other execs handled business duties, at least of late.
“As a functional matter, this isn’t terribly inconsistent with what was the plan from the get-go,” explained Helfant.
Only difference will be that Arad can produce outside pics as long as they don’t fall in the competitive superhero, sci-fi or fantasy genres. First non-Marvel pic on the slate for Avi Arad Prods. is “Bratz,” based on the tarty toy line (Daily Variety, May 16).
When Marvel first revealed the slate of pics to be financed with Merrill Lynch’s money, many noted it was full of little known characters such as Cloak and Dagger and Power Pack. But Arad was able to get back rights to Iron Man from New Line and secure a Hulk sequel, which put the financial community more at ease.
They are expected to be the first pics Marvel finances, with at least one targeted for release in 2008. Jon Favreau is already on board to direct “Iron Man,” and Arad said he expects to sign a director for “Hulk” within 45 days.
All of Marvel’s internally produced pics will be distributed by Paramount except for “The Incredible Hulk,” which will go out through Universal.
Company execs said the Arad departure wouldn’t affect the Merrill Lynch funding, but at least one Wall Streeter suggested the transition could again make investors nervous.
The Merrill Lynch deal calls for Arad or someone “reasonably acceptable” to the investment bank to oversee the first three movies before Marvel can greenlight those films and begin to draw funds, explained Marvel Entertainment vice chairman Peter Cuneo. He added that Arad’s future relationship with the company will thus “not become an issue until we reach the greenlight stage of the third movie.”
(Pamela McClintock and Jill Goldsmith contributed to this report.)