UPDATED with compensation terms: Lionsgate CEO Jon Feltheimer plans to keep his job there until at least May 2023 as part of a new contract that replaces the previous one due to expire in 2018, the company disclosed this morning.
The new deal keeps his annual base salary at $1.5 million, with a bonus targeted to match that, according to an SEC filing.
As an incentive to promote the stock price, and stay to the end of the contract, he has an option to buy 1.15 million shares at $19.68 per share (the closing price on Tuesday) and another 1.15 million at $24.60 per share. They will vest in annual installments over a five year period beginning May 22, 2018.
On top of that, Feltheimer can receive a $5 million bonus if Lionsgate meets undisclosed performance goals following the close of its $4.4 billion deal to buy Starz, which will double the company’s scale. Shareholders are due to approve the agreement on November 1. On November 3 Lionsgate plans to report its earnings for the September quarter.
Last year the CEO’s compensation came to $10.9 million, according to the company’s 2016 proxy. The contract signed in 2013 provided for a huge slug of stock options that lifted his 2014 package to $66.3 million.
Feltheimer’s new agreement provides the studio with “great continuity” as it becomes “a vertically integrated global content platform that unlocks strategic opportunities for our business and creates long-term value for shareholders,” Chairman Mark Rachesky says.
Lionsgate notes that, in addition to the Starz deal, Feltheimer oversaw its investment in reality producer Pilgrim Media Group, a strategic partnership with Discovery Communications and Liberty Global and a majority investment in the UK’s Primal Media.
Still, Lionsgate shares have lost nearly 52% of their value over the last 12 months. Many investors are uncertain about the prospects for the Starz union, and question Lionsgate’s ability to become more powerful in television as its film unit looks for a new franchise that might match the success it had with The Hunger Games.
Prior to this morning’s announcement about Feltheimer’s contract, Wunderlich Securities’ Matthew Harrigan lowered his target price for the stock by $2 to $26 noting the departure last month of Rob Friedman as co-chair of Lionsgate Motion Picture Group co-chair.
He adds, though, that although “there is considerable angst on the near-term release slate, musical La La Land and Hacksaw Ridge garnered strong reviews at Venice Film Festival.”
Separately, Stifel’s Benjamin Mogil warned that while “there is considerable hype around La La Land, festival stars are not always commercial stars.”