The change at the top comes two days after the company announced, in an SEC filing, that it would close another 282 units this year. The downsizing follows the closure of 290 units in 2006.
Antioco's resignation is no surprise. This March he announced that he would step down this year. His recent tenure has been marred by complaints by board member Carl Icahn over Antioco's 2006 compensation. According to published reports, Antioco was initially supposed to receive a bonus of nearly $7.7 million for the year, but Icahn persuaded the board to use "negative discretion" and cut the bonus to just north of $3 million.
According to an SEC filing, under a three-year contract, Keyes will receive a salary of at least $750,000 a year and a bonus of up to $500,000. In addition, he will be given $3 million in shares that will vest three years from his appointment, and he has also agreed to buy $3 million shares within 30 days of his appointment.
In a statement announcing Keyes' appointment, Blockbuster said that although the appointment is effective immediately, Antioco "will be assisting with an orderly corporate transition." In early trading following the announcement, shares of BBI were trading at $4.58 a share on the NYSE, up 6.3% from the previous day. This compares with a 52-week high of $7.30 a share on this March 12 and a 52-week low of $3.51 a share on Aug. 7, 2006.
Keyes headed 7-Eleven between 2000 and 2005 and retired when the company was sold in 2005. By then, the convenience store chain had produced 36 consecutive quarters of same-store sales increases.
Blockbuster is moving in the other direction. It had revenues of $5.5 billion in 2006, down from $5.9 billion in 2003. Locked in fierce competition with Netflix, it has focused on growing its online rental business. In November 2006 Blockbuster introduced "Total Access," a plan that allows online subscribers to return rented DVDs at stores, rather than through the mail, and obtain a replacement immediately.
In the statement announcing Keyes' appointment, Icahn credited Antioco with helping put the Total Access plan in place and said it "should help position the company for future growth." Blockbuster operates approximately 8,000 units, about 5,000 of which are in the US. Stocking stores' libraries to meet Total Access demand is expensive, and contributed to a loss of $49 million in this year's first quarter.
In a June 27 SEC filing, the company said it intends to "strike the appropriate balance between continued subscriber growth and enhanced profitability." By the end of the first quarter of this year, Blockbuster had more than three million online subscribers. This compares with 6.8 million subscribers to Los Gatos, CA-based Netflix Inc., which operates only online.
In the statement, Icahn credited Keyes with "a strong record of introducing new customer-focused technologies into a business that have driven financial results. With his extensive background in finance, operations and marketing, and as a former CEO of a Fortune 500 company, he is exactly the right person to become the next leader of Blockbuster."
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