By : Erik Gruenwedel | Posted: 06 Apr 2010
Blockbuster reported a net loss of more than $550 million in fiscal 2009 but still awarded senior executives nearly $1.5 million in “discretionary” bonuses, according to an April 6 proxy filing sent shareholders.
Dallas-based Blockbuster is in the process of shuttering nearly 1,000 underperforming stores while rolling out 10,000 Express kiosks with partner NCR Corp., and expanding by-mail and digital distribution.
The company said that due to the economic downturn and ongoing fiscal challenges, it did not award customary annual bonuses, opting instead to award discretionary bonuses.
As a result, CEO Jim Keyes, who earned a base salary of $750,000, received a cash bonus of $400,000 for his effort in securing completion of a $675 million senior secured notes offering last fall, according to the filing.
Blockbuster said the bonus represented 80% of what Keyes would have been entitled to.
CFO Thomas Casey and general counsel Eric Peterson received cash and stock discretionary bonuses of $325,000 and $200,000, respectively, for their contributions in securing the notes and related “cost-cutting” efforts.
Both executives earned 2009 base salaries of $500,000 and $457, 700, respectively.
Chief merchandising officer Bill Lee ($266,500 salary) and Phillip Morrow, chief information officer ($350,000) did not receive discretionary bonuses.
However, due to a provision in his contract, Lee did pocket $520,000 in bonuses, including $270,000 as a “sign-on” bonus.
Interestingly, Peterson (who was cited for his “strong judgment and guidance” in 2009), Morrow and Lee have all left Blockbuster, but not before taking more than $1.2 million in combined severance payments.
By comparison Netflix, which generated nearly $116 million in net income in 2009, as a rule does not award bonuses to senior executives, preferring instead that employees “perform” at a level deserving of a bonus, according to a regulatory filing.
Netflix accounts for bonuses when determining overall compensation, according to a regulatory filing.
Blockbuster holds its annual shareholder meeting May 26 in Dallas.