Blockbuster CEO Out

Blockbuster (BBI Quote - Cramer on BBI - Stock Picks) settled a pay dispute with CEO John Antioco by forging a deal that calls for his departure by year-end.

The struggling Dallas-based video rental chain said it will pay Antioco a $3 million bonus for 2006.

Antioco had said his contract calls for him to get $7.6 million in bonuses for his work last year, when revenue dropped 3.5% from a year ago as the company closed stores. But the board told Antioco it would pay him just $2.3 million, citing its right to exercise "negative discretion."

The dispute ended Tuesday with an agreement under which Antioco will get a compromise bonus figure and leave by the end of 2007. He'll also get $5 million in severance by year-end -- down from the $13.5 million he was due at termination under his previous contract.

Antioco had clashed with big shareholder and Blockbuster director Carl Icahn in 2005, when Icahn called Antioco's pay "egregious" and accused him of trying to "blackmail" shareholders by threatening to quit should Icahn's slate win in a proxy fight. Shareholders did elect Icahn's board nominees, but the board chose to retain Antioco as chairman and CEO anyway.

Shares slid 21 cents to $6.90.