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Bankrupt Hollywood studio MGM is paying its co-CEO Stephen Cooper and his team $375,000 a month on top of a $1.3 million retainer paid to his firm, Zolfo Cooper, MGM court filings, part of its Chapter 11, reveal.
The 64-year-old executive, who was the chief restructuring officer for Enron and Krispy Kreme Doughnuts and currently holds the same title for American Home Mortgage, could also gain a $4 million “success fee” once MGM emerges from Chapter 11.
Officially vice chairman at MGM and a member of the office of CEO, Cooper was drafted in August 2009 by the private-equity firms leading MGM after it ran into trouble with its finances.
His eye-popping deal — which has been amended four times, most recently in September when his firm’s retainer jumped to $1.3 million from $375,000, surprised some Hollywood executives.
While some see the pay package as rich, it is less than the $600,000-a-month fee Cooper reportedly charged Krispy Kreme in 2005. Also, Cooper’s firm earned $107 million for its Enron work.
Some say it’s hard to discern Cooper’s precise contribution during his period of employment with MGM.
A plan to bring Lionsgate activist investor Carl Icahn and MGM together was said to have been the handiwork of former CEO Harry Sloan — while a steering committee of the firm’s creditors, led by Anchorage Advisors and Highland Capital Management, played the biggest role in drafting Spyglass Entertainment chiefs Gary Barber and Roger Birnbaum to run a new MGM.
Cooper, however, won high praise from Jay Goffman, another of MGM’s restructuring experts, who told a judge last week about the role Cooper had played at other firms, according to a recent report in The Wall Street Journal.
A rep for Cooper didn’t immediately respond to a request for comment.
Compensation expert, Thomas Lys, a professor at the Kellogg School of Management, said it was hard to assess whether Cooper’s fee was justified, but added: “The risk is not that huge to him. When a company is in bankruptcy there’s more upside to a person’s reputation than downside.”
Meanwhile, MGM’s bankruptcy proceedings are suddenly back in the spotlight after it emerged that Lionsgate is again talking to Icahn about a merger once the process is complete.
Icahn is one of Lionsgate’s biggest shareholders and also owns around $300 million of MGM debt, giving him a big voice in the future of the studio behind the James Bond franchise.
Lionsgate Vice Chairman Michael Burns appeared on CNBC yesterday confirming that the two parties had held a meeting in New York on the subject within the last few days.