The boards of CBS and Viacom violated their responsibilities to shareholders by compensating Sumner Redstone for serving as Executive Chairman of each company even though he’s “physically and mentally incapacitated,” a shareholder suit at Delaware’s Chancery Court alleges today.
The plaintiff, E.F. Greenberg, wants the court to order Redstone and his daughter, Shari Redstone, to repay CBS and Viacom for any inappropriate payments, plus restitution. The shareholder — said to have held stock in both companies since early 2010 — also wants the companies’ directors to stop any payments to the Executive Chairman and implement a “successor plan.”
Viacom says the suit is “without merit.” CBS declined comment.
At the center of the complaint are payments that both companies made to Redstone in the fiscal years beginning in October 2013. The suit says CBS paid him $22 million, while Viacom awarded $24 million, ostensibly for his work.
“It is simply inconceivable that the Compensation Committee could have made an objective determination of Mr. Redstone’s ‘performance’ or if they had consulted any of his caregivers and medical professionals regarding his physical and mental condition and/or consulted with (and received honest responses from) Ms. Redstone and defendant Dauman,” the suit says.
That seems to reflect a “deeply troubling pattern of highly questionable practices and waste of corporate assets.”
The new charges build on ones in a separate suit by Sumner Redstone’s former companion Manuela Herzer, who was replaced as his health care agent in October. She says that the 92-year-old is a “living ghost” who was not competent to make the decision to turn the affairs over to Dauman.
The Viacom chief says that Redstone is still as “engaged, attentive and opinionated as ever.”
He has not participated in CBS or Viacom quarterly earnings calls since November 2014 and did not attend either of their annual meetings last year.
Meanwhile, the new suit charges, “it is not clear who will succeed Mr. Redstone” while Dauman “has insinuated himself into a position of influence … and appears to be behind the movement to take control of what remains of Mr. Redstone’s life.”
CBS and Viacom are incorporated in Delaware, where the Chancery Court specializes in handling corporate governance disputes.