UPDATE with Shari Redstone statement, more details: Ailing Sumner Redstone, 92, has stepped down as CBS’ executive chairman, becoming Chairman Emeritus. He either has — or soon will — do the same at Viacom, where he’s also executive chairman.
But while CBS gave the chairman job to CEO Les Moonves, with the support of Vice Chair Shari Redstone, Sumner’s daughter says she won’t be so accommodating toward Viacom CEO Philippe Dauman at a board meeting tomorrow.
She and Dauman have been angling to control the Redstone empire. Unlike Moonves, Dauman is a member of the seven-person trust that includes Shari and will control Sumner Redstone’s 80% stakes in Viacom and CBS after his demise.
“As has been accurately reported, my father’s Trust states his intention that I succeed him as (non-executive) Chair at CBS and Viacom, and also names me as a Trustee after his death,” she says. “However, it is my firm belief that whoever may succeed my father as Chair at each company should be someone who is not a Trustee of my father’s trust or otherwise intertwined in Redstone family matters, but rather a leader with an independent voice.”
The developments sent CBS shares up more than 4% in post-market trading, while Viacom — which has been struggling with declining ratings and ad revenues — is up more than 10%.
Viacom investors are excited by “the prospect of a sale of some or all of the business, and don’t believe they have it with Viacom given the intersecting shareholder control-board governance-management structure of the company,” Pivotal Research Group’s Brian Wieser says. That’s why “any change at the top will be viewed positively… and today’s news suggests that it may be coming sooner rather than later.”
Activist investor Springowl, which recently complained about Viacom’s management and performance, called on the board “to appoint an independent director as Executive Chairman and that it not be Philippe Dauman.”
Before naming Moonves as chairman, the CBS board offered to make Shari the non-executive chair. She declined “in light of her other professional and personal responsibilities, and in recognition of her confidence in Mr. Moonves,” the company says.
Moonves and Dauman have provisions in their contracts that entitle them to to leave with lavish payments if they are not made chairman of their respective companies after Redstone steps down or dies.
Dauman took charge of the elder Redstone’s health care decisions in October. That’s become the focal point of a dispute with Redstone’s former companion Manuela Herzer. She had been in charge of his health decisions, and sued saying that he was a “living ghost” not capable of deciding to make a change.
On January 28, Redstone underwent a one-hour medical examination ordered by the court.
CBS and Viacom shareholders have questioned whether Redstone is still able to fulfill his duties as chairman of the companies, entitling him to a salary. Last month, Viacom announced Redstone’s compensation package for 2015 was slashed by 85% to $2 million from $13.2 million.
“I am honored to accept the chairmanship of this great Company,” Moonves says. “I want to thank Sumner for his guidance and strong support over all these years. It has meant the world to me.”
Shari adds that she has been “fortunate to work with Les and he has clearly established himself as a creative and effective leader who understands both the challenges and the opportunities that are shaping today’s media landscape. I am sure he will make a great Chair and I look forward to working with him for many years to come.”
Moonves is one of the nation’s highest paid executives. He saw $57.2 million in compensation in 2014, CBS reported in its proxy. His packages averaged $62.8 million a year in the five years that ended in 2014.
CBS’ stock value (adjusting for dividends) has appreciated nearly 250% since the beginning of this decade, far outpacing the Standard & Poor’s 500 which was up about 73%.
But Wall Street has lost some enthusiasm for the shares lately as many wonder about television’s ability to compete with digital media. CBS has lost about 15% of its value in the last 12 months while the S&P dropped 5.2%.
In late 2014, the company extended Moonves’ contract by two years to mid-2019. The agreement included incentives to keep him on board as a “Senior Advisor and/or Producer” for an additional five years after the term ended.