Blockbuster places bet on former 7-Eleven executive as new CEO

Blockbuster Inc. today named James W. Keyes, a former president and CEO of convenience store chain 7-Eleven Inc., as its new chairman and CEO. Keyes, 52, takes over a company that is in the midst of a two-year program of closing nearly 600 of its 8,000 stores and investing heavily in its online service Total Access as it seeks to gain ground on online video leader Netflix Inc.

Blockbuster, No. 51 in the Internet Retailer Top 500 Guide, announced in March that CEO John F. Antioco, 57, would leave the company before his employment contract expires at the end of this year. That announcement followed a disagreement between Antioco and the company’s board over his compensation, which was settled with an agreement that gave him a 2006 bonus of $3.05 billion and a $4.98 million payment upon his departure from the company. He would have received $13.5 million had he been terminated without cause or resigned for good reason on Dec. 31, 2007, under his previous employment agreement.

Keyes, who was president and CEO of 7-Eleven from 2000 to 2005, was given a three-year contract guaranteeing him at least $750,000 in salary and an annual bonus of at least $500,000. In addition, the company issued him $3 million worth of stock and he is obligated to buy another $3 million in Blockbuster stock within 30 days, according to a company filing with the U.S. Securities and Exchange Commission.

“Jim is results-oriented, strategic and able to identify practical, yet highly creative solutions to complicated business problems,” says Carl C. Icahn, a member of the Blockbuster board of directors. “Most importantly, he has a strong multi-unit retailing background and an impressive record of introducing new customer-focused technologies into a business that have driven financial results.”

Keyes joined 7-Eleven in 1985, and served as chief financial officer and chief operating officer before taking over as president and CEO in 2000. He previously worked at Gulf Oil. He graduated from the College of the Holy Cross and received an MBA from Columbia University.

Blockbuster has reported steady growth in its Total Access online video service, and expects to reach 4 million subscribers by the end of the year. But it still trails Netflix, No. 18 in the Internet Retailer Top 500 Guide, which claims 6.8 million subscribers. Blockbuster spent $35 million marketing its Total Access program in the first quarter of this year, a quarter in which it reported a loss of $46.4 million, up from a loss of $1.9 million in the first three months of 2006.