Former Warner Bros. co-chairman Terry Semel, now chief executive of Yahoo Inc., has been granted a 10 million share stock option package, the value of which will be pegged to future performance of the struggling Internet giant.
Combined with 1 million Yahoo shares purchased by Semel, the grant of the 10 million-share option raises his potential ownership stake in the Web portal to nearly 2 percent, Yahoo officials said.
Half of the options are priced at $17.62, Yahoo’s share price on April 16 when it was announced that Semel was joining the company. The remaining 5 million options are priced at $30 to $75, for a total package that provides incentives for him to build the company for the long term, Yahoo said.
Semel officially replaced Tim Koogle as CEO and chairman on May 1. The company said it would announce his salary and bonus compensation in August.
Yahoo’s stock has plummeted by nearly 90 percent in the past year, as much of the market for online advertising evaporated.
Anschutz Taking Over Edwards
Philip Anschutz and Los Angeles investment partner Oaktree Capital Management have agreed to pay $56 million to take control of beleaguered Edwards Theatres Circuit Inc. in a deal that will give the billionaire investor control of an even larger chunk of the of the nation’s theater screens.
Analysts previously put the value of the state’s largest theater chain at almost $300 million and Edwards officials said the company is worth even more. However, Edwards’ debts are likely to surpass $300 million.
Under the plan, Anschutz and an equity fund managed by Oaktree, a distressed-debt specialist, would own 51 percent of the reorganized company.
Members of the Edwards family, which has controlled the business for more than 70 years, would own 49 percent.
As part of the deal, Chief Executive James Edwards III will become vice chairman. Anschutz and Oaktree will control the board.
Anschutz whose sports and media empire includes the L.A. Kings hockey team, most of Staples Center and part of the L.A. Lakers also owns a majority stake in United Artists Theatre Co., which filed for bankruptcy protection last year. He also is trying to take control of struggling Regal Cinemas Inc., the nation’s largest exhibitor.
Edwards owns 59 theater complexes with 690 screens.
Chairman Exits Hughes
The ongoing battle for control of Hughes Electronics Corp.’s DirecTV service took an unexpected turn when the board of the El Segundo-based satellite company abruptly removed Chairman Michael T. Smith.
The move was seen as a bid by the board to eliminate an obstacle to a purchase of Hughes Electronics by Rupert Murdoch’s News Corp. Smith had apparently allied himself with a group of shareholders who felt News Corp.’s bid was too low.
Meanwhile, News Corp. and satellite TV competitor EchoStar Communications Corp. both are pressing ahead with negotiations to purchase DirecTV from Hughes.
Analysts said that Smith’s departure capped growing friction between Hughes and its controlling shareholder, General Motors Corp. Although GM ordered Hughes management earlier this month to concentrate on completing the News Corp. deal, Smith apparently continued to rally support behind the scenes for a rival bid by EchoStar, the only satellite television competitor to Hughes’ DirecTV service.
Harry J. Pearce, vice chairman of GM, who was expected to retire later this year, was named the new chairman of Hughes. Jack A. Shaw, a senior executive vice president of Hughes in charge of all non-DirecTV assets, assumes Smith’s other title, chief executive.
Half the size of DirecTV, EchoStar lacks the cash to acquire GM’s 32 percent controlling stake in Hughes, which is valued at nearly $13 billion. But the company has amassed $1 billion in debt in an effort to build a war chest and is seeking partners for an anticipated bid. DirecTV accounts for about 80 percent of the value of Hughes.
K-Swiss Expands Product Line
Westlake Village-based athletic shoemaker K-Swiss Inc. plans to branch out into the adventure-oriented market, producing and distributing a collection of National Geographic-licensed footwear.
Under terms of the deal, K-Swiss will own 75 percent of the new venture and will license, make and sell the National Geographic line, which will include about 100 styles of shoes.
K-Swiss has formed a joint venture with footwear designer Rugged Shark of Lighthouse Point, Fla., to launch a full-scale line of outdoor and casual men’s, women’s and children’s shoes, officials said. Some of the new products are expected to be available this fall.
The deal reflects the aggressive marketing posture adopted by the National Geographic Society, a nonprofit scientific and educational institution that in the past year has begun heavily licensing its product name. Clothing, maps, books and camera equipment with the society’s yellow rectangular trademark have been sold mostly online and by catalog. The new footwear line will be available at sporting goods stores, department stores and outdoor-oriented shops.
New Chief at Korn/Ferry
Korn/Ferry International has named Paul C. Reilly of KPMG International as chairman and chief executive, ending months of speculation over who would lead the nation’s No. 1 executive search firm.
Reilly, 47, CEO of international operations at KPMG, will succeed Windle B. Priem, who will stay on as a director and recruiter. Reilly is slated to take over his new post July 1.
Despite an industrywide slump, Reilly said that Korn/Ferry is poised to capitalize on the increased demand for executives that is expected in the next 10 years, as baby boomers retire.
Benefiting from a large demand for executives last year, Korn/Ferry exceeded $500 million in revenues for the first time, in the process retaking its status as the nation’s largest search firm.
Despite the slowdown in the job market this year, Korn/Ferry reported $504.4 million in revenues for the first nine months of fiscal 2001 and it is projecting revenues of $650 million for the fiscal year ended April 30, 2001. Net income for the nine months ended Jan. 31 was $23 million, compared to $20.4 million in the like period of 2000.
Reilly joined KPMG as a partner in 1987 and moved through the ranks to become CEO of its international operations in 1998.
Steinberg Sues Former Associate
The sports agent who inspired the film “Jerry Maguire” is suing a former partner for allegedly stealing clients in a bid to start his own firm.
Leigh Steinberg of Assante Corp.’s Steinberg, Moorad & Dunn claims that David Dunn and his new firm, Athletes First, plotted to form its own stable of stars, including New England Patriots’ quarterback Drew Bledsoe and numerous other football players, while working with Steinberg.
Steinberg, who claims the defections would cause substantial damage to his business, is asking a judge to order Athletes First to stop competing with his firm and to reassign to his firm those athletes who left to join Dunn’s firm. Dunn left Steinberg, Moorad & Dunn in February.
Charging fraud, breach of contract, misappropriation of trade secrets and unfair competition, Steinberg is also seeking restitution and unspecified punitive damages.
Winnick Drops Loews Offer
Two weeks after creditors for bankrupt Loews Cineplex Entertainment Corp. raised alarms about a buyout bid by telecom billionaire Gary Winnick’s Pacific Capital Group Inc., the theater operator announced that Pacific Capital has withdrawn its bid.
In February, after filing for protection from creditors, Loews agreed to be purchased by Pacific Capital and Los Angeles-based Oaktree Capital Management LLC.
In security filings last week, Loews announced that Pacific Capital is no longer interested in pursuing a transaction. No reason was given for the company’s withdrawal, but a group of unsecured creditors had called the deal for Loews, which operates about 2,500 movie screens at 300 locations, “fundamentally unfair.”
Childrens Hospital Strikes IT Deal
Childrens Hospital Los Angeles has signed a $100 million deal with El Segundo-based Computer Sciences Corp. to develop its information systems and take advantage of emerging technology.
Computer Sciences will manage Childrens Hospital’s business and clinical information systems, including mainframe and roughly 1,800 desktop computers. The deal calls for 80 information technology workers at the hospital to transfer to Computer Sciences.
Hospital officials said the agreement would help cut operating costs and improve the quality of services at the care-and-research facility.
Rogan Gets Commerce Post
Former Glendale Rep. James Rogan, who lost his bid for reelection to Adam Schiff , D-Burbank, has accepted a top Commerce Department appointment by President George W. Bush.
Rogan, a Republican, was tapped by Bush to be undersecretary of Commerce for intellectual property and director of the Patent and Trademark Office. If he is confirmed by the Senate, Rogan will oversee about 4,000 employees and a budget of close to $1.5 billion, an aide said. The two-term Republican Congressman would become undersecretary of Commerce for intellectual property and director of the U.S. Trademark Office, overseeing the protection of American-made films and other creative works.
Rogan, who has been working in Baltimore for a Washington, D.C.-based law firm, was manager of former President Clinton’s impeachment trial, which he blamed for his reelection defeat.
Before being elected to Congress in 1996, Rogan, 43, served in the California Assembly.
