UPDATE, 2:30 PM: The Viacom chairman wasn’t as busy as he thought following the wave of speculation that his earlier decision to skip the shareholder gathering indicated that he was ill — or just indifferent to other investors: “Mr. Redstone very much wanted to attend the Viacom annual meeting,” company spokesman Carl Folta says. “He was able to change his commitment and will participate in person at the meeting.”
PREVIOUS, 1:46 PM: “Sumner owns a majority of the outstanding shares and has never pretended to be anything other than a benevolent dictator” corporate governance expert Robert A.G. Monks says regarding Redstone’s decision to skip Viacom’s annual shareholder meeting in New York on Thursday. The chairman will deliver a video address, but won’t attend due to an unspecified but “unavoidable conflict,” the company says. That fueled some speculation that Redstone, 88, may be sick. “People have been on the watch for a while; it’s not a good sign,” says one veteran Viacom observer. There’s no health problem, the company told Bloomberg: Redstone attended the Oscar awards ceremony and plans to show up later this month when he’ll be presented with a star on Hollywood’s Walk Of Fame. But that makes Redstone’s decision to skip the annual meeting — an event he called, on a date he presumably set — all the more perplexing to governance experts.
When a company chairman doesn’t appear at his own annual meeting “it’s like having your congressman take a trip to Europe on election day,” says Charles Elson, Director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “It’s highly problematic.” And the chairman isn’t off the hook from facing shareholders just because he controls most of votes. “Minority shareholders have votes too. If he didn’t need them, then why did he take their capital to begin with?” Jim Kristie, long-time editor of Directors & Boards magazine, calls the Redstone situation “astounding.” The annual meeting “is still one of the main venues of corporate democracy,” he says. “It’s the one time of year when (directors) show their faces to the unwashed masses” and answer their questions. Paul Hodgson of corporate governance advisory firm GMI says that it’s “extremely unusual” for the chairman to skip the annual meeting because “he’s the shareholders’ representative.” He adds, though, that Viacom “is well known for its bad governance” — GMI gives it a “D” grade, largely because of the amount of power concentrated in Redstone’s hands. Wall Street, though, seems to be taking the matter in stride. “At the end of the day, it’s a Sumner-controlled company, so the voting on anything is meaningless,” says BTIG analyst Rich Greenfield.