Excitement and money await new CKX CEO…

There have been some important transitions this year at CKX, Inc. (CKXE), the company that owns American Idol and controls the rights to use the images of Elvis Presley and Muhammad Ali.

The latest one came June 28, when the company filed an 8-K to disclose that it had hired Michael G. Ferrel as its new CEO. Although Ferrel’s employment agreement is actually dated May 6, 2010, the company didn—t file it with the SEC until this week.

Ferrel’s agreement with the company runs through February 1, 2013. His base salary starts at $1 million per year, with annual reviews, and the provision that ——the Board may increase, but not decrease, the base salary—. He—ll also participate in the incentive bonus program, receive annual grants of stock, options, and/or other awards, and start with six weeks of vacation.

Of course, Ferrel is taking the reins at a challenging time for the company.

The stock is trading about 30 percent lower than it did this time last year (it’s currently at $5.01 per share), and this past May, Robert F. X. Sillerman, the company’s founder, former CEO, Chairman of the Board, and largest shareholder, resigned. Fairly soon, CKX will have to pony up millions of dollars that are owed pursuant to his departure agreement.

Simon Fuller, who created American Idol, also recently left CKX, but not before he inked a multi-million dollar consulting deal, as well as an option agreement and a compromise agreement.

Sillerman and Fuller have independently expressed interest in buying the company. In fact, Fuller and other investors recently offered to buy outstanding shares for $6.45 per share. Naturally, that led to a lawsuit that reportedly alleged that CKX’s directors —may have breached their fiduciary duties by not acting in CKX shareholders’ best interests in connection with the sale process of CKX.

Meanwhile, Sillerman has filed several amended SC 13Ds in the past month to express his interest in obtaining more of the company. But, in the most recent one, filed June 22, 2010, the document stated:

—The Reporting Persons understand that an entity with which they have engaged in discussions has made a written proposal to the Issuer’s Board of Directors with respect to providing liquidity to holders of the Common Stock of the Company. Mr. Sillerman has written to the Board of Directors of the Issuer and urged it to pursue this opportunity.

This article, published on June 23, said that CKX adopted a Stockholder Rights Plan to —to protect its stockholders from ‘potentially coercive takeover tactics.’

Given the recent executive departures and the various bids to buy the company, we hope that Farrel likes challenges and learns quickly on the job.


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