Lionsgate made the announcement Thursday morning before the opening of the stock market. Feltheimer, 65, and Vice Chairman Michael Burns have been in charge of Lionsgate for the past 16 years.
Lionsgate’s board took a similar step in 2013 when Feltheimer was given a five-year deal to 2018.
The announcement comes three and a half months after Lionsgate announced a $4.4 billion deal to acquire premium cabler Starz, which is expected to close by the end of the year. The acquisition has been touted by Feltheimer as doubling Lionsgate’s scale — giving the combined entity more leverage to compete with corporate behemoths such as Disney and improving its ability to exploit fast-growing digital media platforms.
“We are pleased to extend Jon’s tenure as CEO until 2023, providing Lionsgate with great continuity as he and Michael Burns continue to lead the company’s evolution into a vertically integrated global content platform that unlocks strategic opportunities for our business and creates long-term value for shareholders,” said Chairman Mark Rachesky in a statement.
“We were early believers in the value of premium content in today’s ecosystem, and we believe that the Company continues to take the right steps to move closer to consumers, adapt to market developments and capitalize on opportunities in a fast-changing environment.”
Lionsgate noted in the announcement that during Feltheimer’s 16 years as CEO, the company’s feature film business has grown to an average of nearly $2 billion annually at the worldwide box office, while its television business includes nearly 80 series on 40 networks and a library that handles more than 16,000 motion picture and television titles. It’s also building streaming channels, describing itself as an innovator in creating and delivering content to online platforms.
In addition to its deal to buy Starz, Lionsgate noted that it made a majority investment in reality producer Pilgrim Media Group and formed a strategic partnership in late 2015 with Discovery Communications and Liberty Global — both which have John Malone as their largest shareholder — in a step that wound up leading to the Starz deal.
Lionsgate’s executive ranks have remained stable in recent years until last month, when Rob Friedman departed as co-chair of Lionsgate Motion Picture Group and was named special advisor to Feltheimer. Earlier this week, Bobby Cohen departed his post as the studio’s co-president of production and moved into a production deal.
Lionsgate has seen its largest success from “The Hunger Games” movies, which launched in 2012, grossed nearly $3 billion, and transformed Jennifer Lawrence into a worldwide star. But it has struggled to duplicate that since with the “Divergent” series and misfires like “Gods of Egypt.”
Its top grosser this year is “Now You See Me 2” with $360 million worldwide. But its “Deepwater Horizon” — which carries a $110 million price tag — has performed only moderately with $41 million domestically in its first dozen days.
Lionsgate has a pair of potential awards season contenders in Damien Chazelle’s “La La Land” and Mel Gibson’s “Hacksaw Ridge” — both which premiered to strong reviews at the Venice Film Festival. Other prominent upcoming titles include “Power Rangers,” which opens in March, and Boston Marathon bombing drama “Patriots Day,” starring Mark Wahlberg.
Unlike the six Hollywood major studios, Feltheimer and Burns have operated Lionsgate’s movie business using a strategy of pre-selling the international rights to films — which limits the risk but also takes away some of the potential upside on breakout hits.
Lionsgate has reported better-than-expected earnings in its last two fiscal quarters. In late July, Lionsgate reported earnings of $1.3 million, or 1 cent a share, for its first fiscal quarter ending on June 30 and a 35% jump in revenues to $553.6 million — both above Wall Street estimates.
It has seen strong performance for “Orange Is the New Black,” which launched its fourth season on on Netflix in June and was renewed earlier this year for three more seasons. Other shows include “Greenleaf,” “Monica the Medium,” “Casual,” “Feed the Beast,” “Graves,” “Guilt” and “Nashville” as well as the game and talk shows “Family Feud,” “The Wendy Williams Show” and “Celebrity Name Game” and the reality series “The Ultimate Fighter” and “Street Outlaws.”
Lionsgate disclosed in July that Feltheimer received pay of $10.9 million for the fiscal year ended March 31 — up 61.5% from the $6.7 million he made in the previous year. Feltheimer’s package included $1.5 million in salary, $4.1 million in stock awards, $5.3 million in option awards, and $95,113 in other compensation ($18,761 in club membership dues and $71,882 for personal use of the company-leased jet).
The company disclosed Thursday in a regulatory filing that his annual base salary remains at $1.5 million, with a bonus targeted to match that.
He has an option to buy 1.15 million shares at $19.68 per share (the closing price on Tuesday) and another 1.15 million at $24.60 per share. They will vest in annual installments over a five year period beginning May 22, 2018.
Feltheimer can also receive a $5 million bonus if Lionsgate meets performance goals following the close of the deal for Starz.
Shares of Lionsgate declined by 58 cents, or 3%, to $18.64 on Thursday. Shares were trading above $30 at the start of the year but declined to the $20 range in February after Lionsgate said it was exploring acquiring Starz.