Liberty Serves Up CEO Incentives


Liberty Media Corp.’s new CEO-elect — former Oracle Corp. and Microsoft Corp. chief financial officer Greg Maffei — has 5.5 million reasons to increase the media giant’s stock price, according to documents filed with the Securities and Exchange Commission last Tuesday.

According to the filing, Maffei, who is expected to start his new job in the second quarter of next year, will receive options to purchase 5.5 million shares of Liberty stock priced at $7.95 per share — Liberty’s closing price on Nov. 8, the day the employment agreement was signed. In addition, Maffei will receive an annual salary of $1 million, plus an annual bonus not to exceed $1 million.

Maffei’s stock options would be under water today — Liberty stock closed at $7.88 each on Nov. 15, below the $7.95 strike price. But if Maffei can help boost Liberty shares by as little as $2 each, it could mean an $11 million windfall for the new CEO.

While at Microsoft, Maffei was well-known for his financial engineering skills and was in charge of the software giant’s investments in smaller companies. Those skills should come in handy as Liberty continues to move to simplify its complicated corporate structure.

Liberty says it wants to spin out its interactive-television assets — including QVC Inc. and stakes in IAC/InterActiveCorp and Expedia Inc. — into a new tracking stock next year. In addition to simplifying Liberty’s complicated corporate structure, the deal also is expected to unlock some of the value in the stocks of both companies.

Liberty also revealed the exit package for outgoing CEO Robert Bennett. Bennett — who will remain a director of Liberty at least until its next annual shareholders meeting on April 1, 2006 — announced his retirement in August.

According to the document, Bennett will continue to receive his annual base salary of $1 million through March 31, 2006 and his annual bonus not to exceed $750,000. From April 1, 2006 through March 31, 2008, Bennett will receive an annual salary of $500,000. During that two-year period, Bennett also is entitled to office services and the use of Liberty’s New York City apartment. From April 1, 2008 through April 1, 2014 Bennett’s annual salary drops to $3,000, but he is eligible to receive additional cash from the company based on his hours of service to company matters, billed at an agreed-upon rate.