UPDATED with Viacom comment: Gabelli Asset Management’s Mario Gabelli controls 11.4% of Viacom shares, and 11.7% of CBS, according to their latest proxies. That makes him both companies’ No. 2 owner after Sumner Redstone’s National Amusements with nearly 80%. So it’s noteworthy that Gabelli wants Viacom to clarify whether the 92 year old, who’s Executive Chairman of both companies, is up to the job following last week’s suit by former caregiver Manuela Herzer who calls him a “living ghost.”
“Too many people are calling me and saying: ‘What’s really going on?'” Gabelli told Reuters today. “It would be appropriate for a company trading on the New York Stock Exchange to basically make a statement with some kind of veracity … Is he or isn’t he in the position where he should be chairman emeritus or something?”
The comment follows Gabelli’s tweet yesterday calling for Viacom to “give to Hollywood what belongs to H…but give to all shareholders what the Board of Directors know about Executive Chair.”
Shares in Viacom are down 4.2% in afternoon trading. CBS is off 2.2%.
The chairman of the Viacom board’s Governance and Nominating Committee, William Schwartz, says: “As has been widely and publicly disclosed, Mr. Redstone’s physicians have publicly attested that he is mentally capable, and this information is consistent with other medical and other information available to me.”
Viacom CEO Philippe Dauman said last week that in a November 3 meeting he found Redstone to be “engaged, attentive and opinionated as ever.”
It’s not clear whether Viacom has a legal obligation to shareholders to formally report on Redstone’s condition. The SEC requires companies to report “material” information to shareholders. They’d have strong grounds to sue if they find that it has intentionally withheld that information or, worse, lied to them.
Ordinarily news that a key executive isn’t up to the job would be considered material.
Redstone would seem to qualify as a key executive based on Viacom and CBS’ most recent proxies. Viacom’s board justified his $13.2 million compensation package for 2014 — which included a $2 million salary — by saying that “Under his leadership and vision, the company enhanced its financial position and continued to strengthen its overall business.”
CBS said that he earned his $10.8 million bundle — with $1.8 million in salary — because he “continued to focus on strengthening its financial position and executed strategies to create and deliver value to its shareholders and to position the Company for long-term success.”
But Redstone doesn’t make day-to-day decisions. His age is widely known.
What’s more, Redstone’s influence comes indirectly via his control of privately held National Amusements which owns the Viacom and CBS shares. Although it would stretch credulity, one could argue that the shareholders at the publicly traded companies don’t need a formal report about Redstone’s condition because it’s just an issue for National Amusements.
This week, Superior Court Judge Clifford Klein said he found “no urgency” in Herzer’s plea to have Redstone’s health examined immediately. She alleged that his condition was endangered after she was ousted as his health care agent. The judge noted that Redstone’s receiving around-the-clock care, and his health care agent — Dauman — is a lawyer as well as Viacom’s CEO.