Jeffrey Katzenberg, DreamWorks Animation SKG Inc's chief executive, has been hit with a proposed class action lawsuit over what a minority shareholder called an "extraordinarily valuable" side deal he struck as part of the $3.8 billion sale of the studio to Comcast Corp.
Comcast, the owner of NBCUniversal and the largest U.S. cable distributor, agreed in April to pay $41 in cash per DreamWorks share and Katzenberg agreed to vote his controlling stock for the deal, assuring investor approval. The deal for is expected to close by the end of this year.
Monday's class action complaint by Ann Arbor City Employees Retirement System, a DreamWorks shareholder, claims Katzenberg breached his duty to minority shareholders by reaching a lucrative consulting deal for himself.
Once the deal closes, Katzenberg will become the chairman of DreamWorks New Media, which will oversee Awesomeness TV, an online studio for teen-oriented content, and a 3-D animation business.
While Katzenberg will only be paid $1 annually as a consultant, he will also collect 7 percent of the profits from DreamWorks New Media in perpetuity. ...
Seven percent in perpetuity? That could generate a nice cash flow.
It is good to be king, even if you are an outgoing king.