Bloomberg News

Liberty Directors Opposed by Adviser Over Malone Pay

May 30, 2008

Liberty Media Corp. shareholders should withhold support from two directors to protest Chairman John Malone's pay, a proxy adviser says.

Proxy Governance Inc., part of Vienna, Virginia-based FolioFN Inc., urged shareholders (LINTA:US) in a May 28 report not to back David Rapley and Larry Romrell for Liberty's board. Rapley, 66, and Romrell, 68, have been on the board since 2006 and served at other Malone-backed companies.

The proxy (LCAPA:US) firm zeroed in on Malone's five-year employment agreement, which calls for as much as $121.1 million in severance pay if the 67-year-old executive leaves Liberty. Most of that money is compensation Malone has deferred since 1982 and which pays annual interest of as much as 13 percent.

``This is excessive,'' said Alesandra Monaco, vice president of research at Proxy Governance. The agreement, which renews every day to ensure Malone is always guaranteed five years of employment, ``puts the compensation committee in a position where they don't have much ability to make changes.''

Malone's 2007 compensation totaled $5.18 million. It included $3.77 million in option and stock awards, deferred pay of $214,000 and a salary of $2,600, according to Englewood, Colorado-based Liberty's annual proxy statement.

The total includes $1.19 million in perks such as reimbursement for tax planning and the use of a company apartment in New York.

Liberty spokesman John Orr couldn't be reached for comment.

`Reasonable' Pay

Overall, ``the company's executive compensation appears reasonable given its performance,'' the Proxy Governance report said. Liberty Chief Executive Officer Greg Maffei makes 27 percent less than CEOs at similar companies and other Liberty executives make 59 percent less than peers, the report said.

Liberty owns the QVC home shopping network, the Starz cable movie channel and minority stakes (L:US) in companies such as Time Warner Inc., IAC/InterActiveCorp and Viacom Inc. Its largest outside holding is 48 percent of satellite broadcaster DirecTV Group Inc., worth more than $15 billion.

Liberty Interactive, a tracking stock tied to QVC, rose 19 cents to $16.99 at 4 p.m. New York time in Nasdaq Stock Market trading (LINTA:US). The stock has fallen 11 percent this year.

Malone controls 33 percent of the votes at Liberty and Proxy Governance sees little chance that Rapley and Romrell will be defeated at the June 6 annual meeting, Monaco said. The company issued the report to focus attention on what it considers a deal that insulates Malone from board and shareholder oversight.

``He's not going to vote against his own pay package,'' Monaco said.

To contact the reporter on this story: Tim Mullaney in New York at

To contact the editor responsible for this story: Jennifer Sondag at

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