Billionaire investor Carl Icahn Thursday said he plans to nominate his own director slate for Blockbuster Inc. (BBI), while criticizing the No. 1 video chain's management.

In a regulatory filing, Icahn, the largest Blockbuster shareholder, said the company is on a "spending spree" with shareholders' money and called its chief executive's pay "unconscionable."

Icahn, who previously built up a large stake in Blockbuster and urged it to bid for rival Hollywood Entertainment Corp. (HLYW), called on the company to use its cash to pay a big dividend to shareholders.

In a letter to John Antioco, Blockbuster chairman and chief executive, Icahn cited published reports about Antioco's 2004 compensation package worth $51 million.

The veteran corporate agitator called the pay "unconscionable," particularly in light of its "grave error" in its failed effort to acquire Hollywood and its lackluster stock performance. Blockbuster's stock has fallen from around $21 a share in September 2003 to trade below $10 for most of 2005.

Hollywood has accepted an $850 million takeover offer from smaller rival Movie Gallery Inc. (MOVI). Blockbuster previously bid $950 million plus assumption of $350 million in debt for Hollywood, but let its bid expire last month, citing regulatory uncertainties of merging the No. 1 and No. 2 video chains and other factors.

Blockbuster dismissed Icahn's motives as self-serving.

Icahn "was heavily invested in our acquisition of Hollywood and that didn't happen for reasons outside our control," said Randy Hargrove, a Blockbuster spokesman. "He is looking for a short-term payback."

In the filing, Icahn said he controls 11.4 million Class A Blockbuster shares -- or about 9.7 percent of that class of stock, and 5.5 million Class B shares -- or about 7.7 percent of that class, through various funds. Icahn said he paid about $147 million for the positions.

"I am determined to bring discipline to the 'spending spree' currently in effect," Icahn said in the letter. "If we cannot bring about these changes to our satisfaction, we plan to attempt to take control of the Board of Directors in the 2006 annual meeting."

In regulatory filings, Blockbuster has said Antioco's 2004 salary and bonus was about $7 million. But he was awarded stock options and other compensation worth many millions more if exercised.

Blockbuster shares closed up 57 cents, or a little over 6 percent, at $9.70 on the New York Stock Exchange (search).