The company has pushed back on a lawsuit that claimsViacom chairman Sumner Redstone, CEO Philippe Dauman, COO Thomas Dooley and other board members were overpaid by $36.6 million. “Defendants respectfully request that the Court dismiss the Complaint with prejudice,” said Viacom’s lawyers in a memorandum (read it here) accompanying the motion filed yesterday in Delaware. “Viacom and the Director Defendants (together, the “Defendants”) bring this motion …on the grounds that no demand was made on the Board to bring suit and the Complaint does not adequately allege demand on the Board would be futile and hence excused.” The company also says that shareholder Robert Freedman has not shown in his suit that the board isn’t independent and didn’t make the payout based on evaluated performance of the compensated executives. Freedman filed his initial complaint August 17. He wants the executives to repay the $36,645.750 they received plus his legal fees.
In his suit, Freedman alleges that between 2008 and 2011 the trio and others were incorrectly awarded millions by Viacom’s board’s compensation committee in direct violation of the company’s own 2007 executive pay plan. Freedman also asked the court to force Viacom to not pay such “excessive compensation” again and to let Class B shareholders vote on the 2012 executive pay plan approved at the company’s annual meeting in March. On Monday, Viacom said he’s wrong.
“Even if Plaintiff had adequately alleged that the compensation decisions were not in accordance with the Plan (and the opposite is in fact true), the Complaint still does not allege particular facts to show that the compensation decisions are unprotected by the business judgment rule. Plaintiff alleges no particularized facts raising a reasonable doubt that the Director Defendants acted without due care and on an informed basis, or that they acted disloyally or in bad faith,” said the memo. Viacom’s filing also states that Freeman’s wish to have Class B shareholders vote on compensation would involve a fundamental change in the company’s charter, which presently has designates Class B shares as nonvoting shares. “Not all shares are created equal, and the IRS regulations do not require that they be treated as though they were,” said the company. Freedman is represented by New York firm Barrack, Rodos & Bacine and Wilmington firm Farnan LLP. Viacom, Redstone, Dauman, Dooley and the other defendants are represented by Jon Abramczyk and John P. DiTomo of Wilmington firm Morris Nichols Arsht & Tunnell and Stuart Baskin and Jaculin Aaron of New York’s Shearman & Sterling.