No. 2 never looked so good at IAC…

Companies often announce a new hire to great fanfare, then quietly file the executive’s pay agreement a few days or weeks later. Sometimes, no doubt, it takes a while to finalize the deal. Other times, we’re pretty sure someone wants to avoid attention.

So when IAC/InteractiveCorp. (IACI), Barry Diller’s online empire, filed an 8-K with the terms of employment for Gregory R. Blatt, the chief executive announced back on December 1, we took a closer look. You’ll remember that, at the time, IAC said Diller was making way for Blatt, with high praise, even as IAC and John Malone’s Liberty Media parted ways. So our favorite bit in yesterday’s filing was the way Blatt’s reporting relationship was described in the Summary of Key Terms of CEO Employment Arrangements exhibit:

“Executive reports to the Chairman and Senior Executive of IAC, so long as such individual is Barry Diller; otherwise Executive will report to the IAC Board of Directors (the ‘Board’).”

If that’s not the corporate equivalent of a cult of personality, we’re not sure what is. (OK, actually, we have a pretty good idea: Barry Diller’s compensation, but we footnoted that back in late April.)

In any case, Blatt is getting compensated nicely for playing second fiddle: He’s getting a $1 million salary (a smidgen higher than his boss’s two salaries combined last year), and he gets an option on 750,000 IAC shares at a $32 strike price — a level not seen since August 2008) — half of which vests in two years, and the rest over the subsequent two years.

Blatt also gets as many as 375,000 restricted shares, but the actual number depends on where the company’s stock price is in the 20 trading days before December 1 0f 2012, 2013 and 2014. Essentially, the formula involves dividing the closing price during those windows into the closing price on the day he got the RSUs, which was presumably recently. But it looks like the award has a minimum, too, which works out to somewhere around 125,712 shares — $3.75 million at Monday’s closing price. At the same time, he’ll give up some of the options on shares that he received earlier.

Curiously, Blatt wouldn’t do so badly by getting fired (without cause), and sooner might be better, depending on what IAC’s stock does. He would get at least $1 million cash severance, but could get as much as $3 million, since he would get his base salary for the remainder of the three-year contract. Balanced against that, an increasing number of options and RSUs would vest on his termination as time goes by. Presumably, though, Diller and IAC’s board will see to it that he’ll make more by sticking around and succeeding.

Anyway, all in all, it’s not bad for second banana.

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