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Chernin free to jump ship

Exec may take the easy way out

As Walt Disney continues its CEO star search, documents filed with the SEC last week indicate that Peter Chernin’s new employment contract would let the News Corp. chief operating officer jump to the top job at another publicly traded media company like the Mouse with no strings attached.

It’s not clear whether Disney could or would match Chernin’s heady compensation package. For fiscal 2004, Chernin received an $8.3 million base salary, an $8 million bonus and 500,000 stock options valued at $1.79 million, according to the filing. News Corp.’s fiscal year ends in June.

Chernin’s contract also grants him an Ovitzian-like severance package if he’s terminated without cause, including a lump sum payment of $40 million and the vesting of all his stock options.

And the contract hints that Chernin may not be married to the excutive suite: It stipulates that if his employment is terminated for any reason — including for cause — he may require News Corp. to enter into separate six-year film and television production agreements:

“The motion picture agreement will provide for the purchase by (News Corp.) of at least two motion pictures per year, and both the motion picture and television production agreements will contain terms relating to guarantees, fees and compensation at least as favorable as the most favorable agreements entered into by (News Corp.) and any other producer. The production agreements will provide (News Corp.) with the first look with respect to any television programming or motion picture projects developed thereunder.”

Provisions permitting Chernin to ankle under certain conditions were said to have held up contract talks for months, provoking jitters on Wall Street, where he’s very highly regarded. Chernin eventually agreed last summer to reup for five years. But with the terms of his contract now public, investors will have to grudgingly accept that he may not be a permanent fixture atop the giant media conglom.

Chernin has been richly rewarded at News Corp. But the company’s chairman-CEO Rupert Murdoch has made it clear he plans to pass the baton to either or both of his sons, Lachlan and James.

According to the filing, if Chernin wants to leave to head up a media company that’s not publicly traded but is a unit of a larger publicly traded company — like NBC Universal or Sony Pictures Entertainment — he’d be required to give six months’ notice and seek Murdoch’s blessing.

Well compensated

Filing lists the compensation of News Corp.’s five highest paid execs. Rupert Murdoch received a $4.5 million salary and a $12.5 million bonus for fiscal 1994. Chief financial officer David DeVoe earned a base salary and bonus of about $2.3 million each and 250,000 stock options valued at $895,000.

Lachlan Murdoch earned a salary of $1.8 million, a $2 million bonus and 187,500 options worth an estimated $671,250. Chief counsel Arthur Siskind earned $2.1 million in salary, a $1.3 million bonus and 250,000 options valued at $895,000.

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