Vote Against Blockbuster CEO Urged

A shareholder advisory firm said Monday that Blockbuster Inc. shareholders should vote against Chairman and Chief Executive John Antioco, saying he lacked a strategic vision for the nation’s largest video rental chain and had been overpaid for years.

Proxy advisory firm Glass, Lewis & Co. of San Francisco urged shareholders to back a slate of directors offered by billionaire investor Carl Icahn, raising the stakes for a showdown at the Dallas-based company’s annual shareholder meeting Wednesday.

Blockbuster said in a statement it “has been following a well-planned and broadly communicated strategy that is essential to confront the significant challenges facing our industry.”

Antioco has said if he is not reelected to the board, he will leave Blockbuster. The company has said that could make him eligible to cash out his $54-million severance package.

Blockbuster has said Antioco could be entitled to $27 million in stock options if he is removed for “good cause.”

Besides the stock options, Antioco earned $15.7 million in salary and bonuses from 2002 to 2004 and was slated to take home an additional $5 million in salary under his new contract, which expires in 2009, according to Blockbuster’s March 31 proxy statement.

Antioco’s shares, scheduled to vest in October 2006 and October 2007, are payable in cash immediately if he is terminated, the proxy said.

Icahn, who owns almost 10% of Blockbuster, has accused Antioco of taking the company on a “spending spree” even as profit declined. Icahn has described Antioco’s severance package as unconscionable.

The video rental company is locked in an expensive battle for online customers with rival Netflix Inc.

Blockbuster has more than doubled its spending and cut subscription prices in the last year in an effort to catch up to Netflix, which has more than 3 million subscribers.

Blockbuster, which posted losses of more than $1.2 billion in 2004, was hit with expensive setbacks in recent months when it was forced to withdraw a hostile bid for Hollywood Entertainment Corp. and was accused of false advertising by 47 states and the District of Columbia for its “no late fees” campaign.