Staying long enough at Blockbuster…

September 15, 2010

Lots of articles focus on Blockbuster’s financial challenges, but it was an executive departure memorialized in this 8-K that caught our eye.

Thomas Casey, the company’s CFO, recently notified Blockbuster that he planned to leave when his employment agreement expired on September 11, 2010.

Blockbuster apparently didn’t want Casey to go. In a revised proxy filed this past May, the company disclosed that while it didn’t increase the base salaries for other named executive officers in FY 2010, it boosted Casey’s base salary from $500 K to $650 K per year. It justified the action by stating: “…we believe [the raise] to be appropriate in light of Mr. Casey’s integral role in our current recapitalization efforts.” Elsewhere in the filing, it added that the amendments were “…necessary in order for us to retain this quality executive in challenging industry and economic times.” Blockbuster also promised Casey that if he agreed to sign a new employment agreement and stay beyond September 11, the company would once again raise his base salary to “not less than $700,000 per year.” But that wasn’t enough to persuade Casey to stay.

Since the ink dried on Casey’s May 17, 2010 “Amended and Restated Employment Agreement” just four months ago, we were somewhat surprised to see that the company changed the terms in the Separation Agreement that governed how much Casey got as he headed out the door.

The Amended Employment Agreement originally provided for the payment of a lump sum “Stay Bonus” of $200,000, to be paid to Casey on the earlier of either September 11, 2010 or “the closing date of a recapitalization that materially enhances the Company’s liquidity position….” Yet the Separation Agreement replaces that provision with a sentence that says that if Casey remained employed through September 7 (the same date as the agreement), Blockbuster would pay him a lump sum cash bonus of $100,000.

Although the Separation Agreement is dated September 7, it states that Casey’s “effective termination date” remains September 11. The document doesn’t explain why Casey’s bonus was cut in half, so any speculation on our part would be just that. But after getting such a generous raise this past May, getting an extra $100,000 on his way out the door seems like a nice parting gift.

Back in May, when it gave Casey the raise, the company sure made it sound like he was indispensable. Now shareholders will find out.

Image source: The Truth About via flickr

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