Carl Icahn, the largest single shareholder of

Blockbuster

(BBI) - Get Report

, plans to nominate a slate of directors for the company's board, after management rebuffed his suggestion that the company pay a higher dividend.

Icahn, who controls about 9.7% of Blockbuster's class A shares and 7.7% of its class B shares, said he will nominate directors for election at the company's annual meeting, which is currently scheduled for May 11.

In a filing with the

Securities and Exchange Commission

, Icahn also accused Blockbuster's management of mishandling its attempted acquisition of

Hollywood Entertainment

(HLYW)

and said the company is wasting money.

An attached letter to John Antioco faulted the Blockbuster CEO for taking too large a compensation package in 2004 and warned of a possible battle for control of the board.

"I am determined to put into nomination a slate, which if elected will attempt to bring discipline to the 'spending spree' currently in effect, control any further egregious bonuses, strongly urge the board to give greater dividends to the shareholders and be sure that any offers for the company see the 'light of day'," Icahn wrote.

"If we cannot bring about those changes to our satisfaction, we plan to attempt to take control of Board of Directors in the 2006 annual meeting."

Blockbuster dropped the Hollywood bid on March 25, leaving the chain in the friendly hands of

Movie Gallery

(MOVI)

, which had a definitive agreement to buy it for $13.25 a share in cash.

Randy Hargrove, a spokesman for Blockbuster, said that Icahn was "heavily invested in our acquisition of Hollywood Entertainment, something that didn't happen for reasons outside of our control."

Icahn said he communicated the concerns in a conversation with Antioco on Tuesday, requesting a postponement of the annual meeting in order "to explore methods of enhancing shareholder value" on terms both sides would find acceptable.

The proposals were rejected on Wednesday.