News Corp. president and chief operating officer Peter Chernin could make an easy exit to head up a major publicly traded media company, including The Walt Disney Co., a recent securities filing disclosed.
Chernin, with News Corp. in various executive roles since 1989, has been among the top names suggested to take Disney CEO Michael Eisner’s place after he steps down in June. The leading internal candidate is current Disney president and COO Bob Iger, Eisner’s personal choice to succeed him.
Neither Chernin nor any other Disney outsider has publicly expressed an interest in Eisner’s job.
But a securities filing on Nov. 24 outlining Chernin’s new employment agreement shows the News executive would have a virtually unencumbered path to leave to head up Disney, or any other publicly traded media company.
Chernin must give News Corp. six months notice and receive permission from chairman Rupert Murdoch only if he decides to leave for a privately held company or the private subsidiary of a public company.
That wouldn’t apply to a public company, such as Disney.
HELD UP SIGNING
The carefully worded clause is what apparently held up contract negotiations with Chernin for months. He signed the five-year deal in August.
Chernin also can leave News Corp. with cause if Murdoch vacates the CEO spot and names someone else other than Chernin to replace him.
Murdoch has made it clear he would like to pass the reins to sons Lachlan and James after he leaves. Lachlan Murdoch is currently deputy COO of News Corp.; James is chief executive of British Sky Broadcasting plc, News Corp.’s U.K. satellite-television service.
Also, if Chernin leaves for any reason and does not take another job with a media company, News Corp. will be obligated to enter into a six-year television and film production deal with the COO. And it would be required to purchase at least two movies from Chernin each year.
If Chernin is terminated without cause, he is entitled to a $40 million severance package and all of his stock options and stock-appreciation rights would vest. That’s valued at another $18 million.
Chernin does have plenty of incentive to stay with News.
While his annual salary would be reduced to $3.8 million from about $8.3 million in 2003, Chernin has the opportunity to more than triple his bonus to $25 million from $8 million in 2003 if he meets performance criteria.