Just as Blockbuster Inc. is starting to win its battle to stay relevant in a rapidly changing business, its top executive says he's moving on.

John Antioco, chairman and chief executive for 10 years, said Tuesday that he has agreed to a lower 2006 bonus and will leave the Dallas-based company by year-end when his contract expires.

That contract, negotiated by Viacom Inc. before it spun off Blockbuster in 2004, has been a sore point between billionaire investor Carl Icahn and Mr. Antioco ever since.

This isn't the first time Mr. Antioco has announced his exit.

Mr. Icahn, who owns 10 percent of Blockbuster's stock, waged a proxy battle two years ago, partly because he thought Mr. Antioco was overpaid.

Mr. Icahn won that battle, gaining Blockbuster board seats for himself and two of his nominees and ousting Mr. Antioco. But the new board persuaded Mr. Antioco to stay.

The latest squabble -- over Mr. Antioco's 2006 bonus and his exit package -- was made public last month at the company's earnings announcement.

During the earnings call, Blockbuster said Total Access, its new combined online rental subscription and in-store program, is scoring against rival Netflix Inc.

Netflix battle

Netflix has more online subscribers, with 6.3 million members, but Mr. Antioco told analysts that Total Access was "exceeding expectations" and would have 3 million online subscribers by the end of the first quarter.

Blockbuster spent $35 million more on advertising in the first quarter to help keep momentum going, Mr. Antioco said, and the ads were bringing more customers into stores.

"It's unfortunate that [Mr. Antioco's exit] is happening now just as these initiatives are working," said Stacey Widlitz, an analyst at Pali Research.

Still, the agreement worked out during Monday's board meeting wasn't a surprise, she said.

"The relationship has been contentious for years. Some relationships get to the point that all you can do is to part ways."

She also said that Mr. Icahn may want to pick a new CEO "who won't spend any money so that the company will look more attractive and he can sell it."

Monday's agreement stipulates that Mr. Antioco will get a 2006 bonus of $3.05 million. That's a compromise between the $2.28 million previously offered by the board and the $7.65 million that he believed his contract entitled him to.

Lump sum

The package includes a lump-sum payment of $4.99 million when he leaves, compared with the $13.5 million Mr. Antioco would have received under his earlier employment agreement.

An SEC filing Tuesday listed Mr. Antioco's 2007 salary at $1.25 million, with a $2.03 million bonus and deferred compensation of $1.45 million.

In a statement Tuesday, Mr. Antioco said he is "pleased that we were able to reach this agreement" because it allows "for management continuity and ample opportunity for an orderly succession by the end of the year."

Blockbuster spokeswoman Karen Raskopf wouldn't speculate about whether there is a leading internal candidate for the job.

Nicholas Shepherd, president of worldwide stores, has been with Blockbuster since 1995, and Larry Zine, chief administrative officer and chief financial officer, joined in 1999.

Ms. Raskopf said she doesn't know Mr. Antioco's plans but said that "it's my understanding that John doesn't plan to retire."

Mr. Icahn said in a statement that "John and the company have reached terms that are clearly in the best interests of the stockholders. I and the rest of the board remain committed to working with our dedicated management team to deliver on the company's financial goals for the year and to continue positioning Blockbuster for improved success now and into the future."