UPDATED with Viacom response: Five of Viacom’s directors will be replaced no matter what a court decides about Sumner Redstone’s competence, the National Amusements board said today in a letter to the entertainment giant.
The theater company, which owns 80% of Viacom’s voting shares, says it is “deeply concerned with the time and resources being devoted to malicious and ultimately pointless attacks on Sumner and his family, rather than to business and management decisions that will redound to the benefit of all shareholders.”
Viacom CEO Philippe Dauman and director George Abrams are challenging Redstone’s effort to oust them from his family trust and the National Amusements board. They say the 93-year-old mogul is incompetent and being manipulated by his daughter, Shari, who’s Viacom’s Vice Chair.
The “highly personal and vicious attacks on Sumner’s capacity and Shari’s honesty and integrity are offensive and unacceptable,” today’s letter says.
Even if Dauman and Abrams remain on both groups, “a majority of the trustees who would act were Sumner to be deemed incapacitated ratified the trustee removals and, on behalf of the Trust (as shareholder of National) voted to reconstitute the National board. … In other words, Mr. Dauman and Mr. Abrams would have been outvoted.”
It adds that “the composition of the National board in a world in which Sumner did not have capacity is identical to that in which he did. … There is no world in which Mr. Dauman and Mr. Abrams could have vetoed that decision.”
The letter comes ahead of a Thursday hearing at the Massachusetts Family and Probate Court to consider Dauman and Abrams’ challenges.
In addition, the Chancery Court in Delaware, where Viacom is incorporated, is looking at whether National Amusements has the right to change the company’s directors and bylaws. The judge said Redstone’s decision-making ability could factor into his ruling.
Responding to the National Amusements letter, Viacom said: “The implications would be grave if a Court were to rule that recent changes were infected by Shari Redstone’s undue influence and any improper acts allegedly in Sumner Redstone’s name. Any ‘vote’ made under these circumstances would be meaningless. Individuals who have taken part in such a scheme could and should be ruled unfit to serve as trustees or board members.”
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