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Hefner, Leading the Private Playboy, Has Salary Set at $1M

Hefner, Leading the Private Playboy, Has Salary Set at $1M
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Jan 24, 2011 9:00 PM PST    Text size: 
HOLMBY HILLS, Calif. — In a sea of filings with the Security Exchange Commission, founder Hugh Hefner and his team have outlined Playboy's transition to a private company.

Hefner, according to one of the numerous filings, will agree to an annual base salary of $1 million and entitled to his permanent residence at the Playboy Mansion. Hefner's salary in 2009, the last year recorded, also was $1 million.

The filings with regulators include all kinds of information on the company in presentations to board members on company divisions, including pay per view, and investor institutions.

The filings also include letters to shareholders and the formal offer to purchase statements.

Hefner’s plan remains a good one for the Playboy founder, who has been its chief creative officer ever since its beginning in 1953. Hefner is 84.

“If Mr. Hefner’s employment is terminated for cause or Mr. Hefner resigns for good reason, then during the remainder of his life, he may continue to reside in the Playboy Mansion ...," Playboy said in the regulatory statement.

The new agreement also spells out terms of using the Playboy name past his life.

"Following Mr. Hefner’s death or any time at which he no longer owns any equity in purchaser, the surviving corporation may continue using the licensed property in connection with then-existing uses that were previously approved by Mr. Hefner for an annual license fee of $250,000 payable to a charitable foundation or other nonprofit designated by Mr. Hefner or his estate," Playboy said in the filing.

"The surviving corporation also receives a right of first negotiation/offer if Mr. Hefner ever elects to sell, assign or transfer the licensed property to a third party."

Playboy also said that CEO Scott Flanders will receive an annual base salary of $900,000, with an annual increase of $25,000 commencing in March, and an annual bonus opportunity of up to 100 percent of his base salary.

Hefner, who controls Icon Acquisition Holdings, plans on taking Playboy private along with investment firm Rizvi Traverse Management LLC, which was first approached by Playboy to go private in December 2009.

Previous to today's tender offer, Hefner owned about 70 percent of Playboy's Class A common stock and 28 percent of its nonvoting Class B stock.

The transaction values the company at about $207 million, topping Hefner's offer of $5.50 per share in July, though just shy of an offer made by FriendFinder Networks that's valued at $210 million.

Playboy's board of directors revealed in the filing Monday night it had turned down a higher price offer from FriendFinder , indicating the bid's value was less than that of Hefner's all-cash proposal.

Monday night’s SEC filings relative to Playboy can be viewed on its website here.

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