Chernin’s Contract Permits Departure for Disney

Nov 26, 2004  •  Post A Comment

News Corp. President and Chief Operating Officer Peter Chernin is free to jump ship for a top job at a competing media company, and doesn’t even have to give notice to do it, according to a filing with the Securities and Exchange Commission.

The filing, submitted late Wednesday by News Corp., is sparking new speculation that Mr. Chernin may be a candidate to replace outgoing Walt Disney Co. CEO Michael Eisner. Mr. Eisner announced in September that he would not renew his employment contract when it expires in September 2006, spurring the Disney board to launch a search for a replacement.

Mr. Chernin had long been seen as a candidate to replace Mr. Eisner, but that speculation sputtered in August, when Mr. Chernin inked a new five-year contract with News Corp.

However, now that the details of his pact with News Corp. are in sharper focus, he once again may be viewed as the top outsider for the top Disney job. Disney President and COO Robert Iger is considered the top internal candidate.

According to the filing, Mr. Chernin would require six months’ notice and permission from News Corp. Chairman and CEO Rupert Murdoch if he were to vie for the CEO position of an entertainment company that is a direct or indirect subsidiary of a public company. Such companies include Sony Pictures Entertainment and General Electric’s NBC Universal. However, Mr. Chernin is free to jump to a company such as Disney or Time Warner without warning or clearance from Mr. Murdoch.

But if he were to bolt, Mr. Chernin would be giving up a compensation package described in the filing as a base salary of $3.8 million and an annual bonus that could reach $25 million, based on meeting certain performance targets.