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Vid board’s busted

Shareholders sweep in Icahn's dissident slate

DALLAS — Capping a long and often bitter battle for control of homevid giant Blockbuster, shareholders have apparently swept Carl Icahn and his dissident slate of directors onto the company’s board, ousting longtime chairman John Antioco and two other incumbents.

At an often confusing annual meeting Wednesday, Blockbuster general counsel Edward Stead said the official tally of votes for the board would not be available for several days but that it “appears that the dissident slate will be elected.”

If so, result would be a stinging rebuke to Antioco, who had declared the contested vote a referendum on his leadership and an ambitious strategic plan he launched. Rejection of an incumbent board slate is extremely rare at publicly held companies.

Looking chastened and haggard, Antioco told shareholders, “I’d be lying if I said this is a happy day, because it’s not.”

He might not be departing quite yet.

Prior to the meeting, the incumbent board agreed that it would meet immediately after the proceedings, and it is expected to reappoint Antioco — his removal by the shareholders notwithstanding — and perhaps re-elect him chair, according to Stead. Antioco also would be asked to remain as CEO under the plans formulated prior to the meeting.

A spokesman for Icahn at the meeting said the famed corporate raider would support such moves. Antioco had previously threatened to step down as chief exec if he was not re-elected to the board, and it was unclear whether he had backed off that threat.

Losing his seat would give him formal cause under his contract to end his employment at Blockbuster and collect a severance package estimated to be worth as much as $51 million.

Antioco’s threat infuriated Icahn, who has savagely criticized Antioco’s hefty pay package.

Afterward, Antioco went immediately into the special board meeting without speaking to reporters. Should he stay on, he would be facing a split board, with as many as three members openly hostile to his leadership and critical of his pay.

It was unclear Wednesday whether the board seat he would occupy would be a new seat, or whether Icahn or one of his candidates would not take a seat to leave an opening for Antioco.

In addition to Icahn, the newly elected directors are Strauss Zelnick, former prexy of BMG Entertainment and a former Fox executive (he also sits on the board of Daily Variety parent company Reed Elsevier), and Edward Bleier, a longtime exec at Warner Bros., now retired.

The ousted directors, in addition to Antioco, are Linda Griego and Peter Bassi.

The keenly anticipated annual meeting was expected to feature a showdown between Icahn and Antioco, who have been dueling for weeks via tit-for-tat filings with the Securities and Exchange Commission.

But Icahn was a no-show. His spokesman said the financier spent the night before the meeting trying to negotiate a settlement with the company and major shareholders that would have allowed him to achieve his goal of greater fiscal discipline without disrupting the makeup of the board.

“Unfortunately, we were not able to achieve a workable settlement,” the spokesman said.

When it came time to open the floor for questions, no shareholder stood to challenge Antioco.

Although the lack of fireworks eased some of the tension in the packed and windowless meeting room, confusion reigned through most of the proceedings.

After the meeting was called to order, Stead asked for certification that a quorum existed, only to be told that the proxy service that was counting the votes was “still working on it.”

That led to an adjournment that lasted about 30 minutes, as Blockbuster officials huddled with proxy service Corporate Election Services to figure out whether the meeting could continue. Under SEC rules, 50% of the eligible votes must be represented, either in person or by proxy, to have a quorum.

Blockbuster has roughly 118 million shares of Class A stock outstanding and 72 million shares of Class B, which carry two votes each.

For a quorum, it needs to have 50% of those 260 million votes, or 130 million votes represented. But due to the contested board vote and the prevalence of ticket-splitting among votes, obtaining an accurate count of the number of votes cast was proving difficult.

After the huddle, Stead returned to the podium to declare another adjournment to try to sort out the problem.

But before the meeting could resume, attendees had to check in a second time to re-enter the meeting room.

When Stead finally returned to the stand, he declared that a quorum existed and that it appeared the dissident slate of directors had been elected.

The two major shareholder advisory services that analyze public company financials and governance practices and make voting recommendations for pension funds and institutional stockholders — Institutional Shareholder Services and Glass Lewis — both endorsed the two members of Icahn’s slate but not Icahn himself.

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