It’s not a good day to be a bigwig at Viacom. Both Sumner Redstone and Phillippe Dauman are coming under pressure from The Wall Street Journal and media analyst Rich Greenfield. His Pali Research says, “While we have yet to talk to an owner of VIA/B stock who disagrees with our view Viacom management is an impediment to realizing the full potential of its assets, we walked away from the Q1 2009 conference call even more convinced that the Board of Directors (controlled by Sumner Redstone) has no intention of changing management (a key reason behind our recent downgrade). In fact, they believe he is doing a fantastic job, to quote Mr. Redstone from yesterday’s call: “I will…turn this call over to my great friend and the greatest CEO of all, Philippe Dauman.”
Greenfield notes that when Dauman was appointed President and CEO of Viacom, replacing Tom Freston, he described his compensation package as this: “If the shareholders do well, I will do well. If they don’t do well, I won’t do well. I want to live with that.” Yet in 2008, VIA/B shareholders experienced a 57% decline, while Dauman saw his cash compensation rise 15% to $10.4M (not to mention additional millions in stock/options),” the analyst complains. (And let’s not forget that Redstone’s other minion, Les Moonves is earning overall compensation, including stock and option awards, valued at about $32 million. That’ less than the $36.8 million he took home in 2007. But not by much considering the CBS Inc stock price is on life support.)
And The Wall Street Journal also suggests that Viacom needs management changes. “At the very least, … CEO Philippe Dauman needs to overhaul management at the cable networks unit. While he cleaned house early on, he left in place the unit’s top executive, Judy McGrath, an MTV veteran. Viacom says Ms. McGrath has Mr. Dauman’s continued support. If results don’t improve, more drastic options include replacing Mr. Dauman himself. Mr. Redstone said when he fired Mr. Freston that he had just ‘one goal: to do what is best for Viacom.’ It’s time for him to show that’s still the case.”
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