Top dollar for key News Corp man

NEWS Corp president Peter Chernin has become one of the highest-paid media executives in the world with a package worth up to $29m (£15.8m) a year.

Although the new contract, which runs until June 2009, reduces Chernin's base salary to $3.8m from $8.3m, his potential bonus more than trebles to $25m. He is guaranteed a bonus unless the News Corp share price falls by more than 25%.

The deal also includes perks such as the use of a private jet. There is a get-out clause should his boss, Rupert Murdoch, step down as chairman and chief executive. The terms of the pay deal are a warning shot to John Malone's Liberty Media, which has startled Murdoch by building up its stake in News Corp.

If Liberty were to take control of News and dump Murdoch, Chernin could leave without risking his bonus or options and would receive a $40m payout - which he also gets if he is sacked or leaves the company with 'good reason'. The threat of losing both key men is likely to scare off any institutional support should Liberty make a tilt at the company.

Despite the generous terms, the deal, with its easy exit, will do little to quash talk of Chernin leaving News Corp for Walt Disney to replace the beleaguered Michael Eisner. The only constraint is that Chernin must give six months' notice if he wants to quit to become chief executive at another company.

The pay deal is also expected to attract hostility from corporate governance groups already unnerved by News Corp's move from Australia to the more lax regimen-of the US state of Delaware. Chernin is seen as crucial to the News Corporation and this year was paid slightly more than Murdoch himself. He received $17.3m while Murdoch took home $17.2m.