The sale of a 49% stake in Paramount as well as big raises for Viacom executives appear to be off the table for now: They’re among the decisions that the entertainment company’s board can’t make while Delaware’s Chancery Court weighs a contested move by controlling shareholder National Amusements to replace five directors including Viacom CEO Philippe Dauman.
The court approved the so-called Status Quo Order on Monday, which Viacom included today in an SEC filing.
Viacom’s current board will stay in place until the court rules on the National Amusements moves, which the entertainment company’s Lead Independent Director is contesting. The Sumner Redstone-controlled theater chain owns 80% of Viacom’s voting shares.
But Viacom’s board is limited to acting on “the routine day-to-day operations of Viacom and its subsidiaries” unless it gives National Amusements five business days’ written notice.
Meanwhile the board can’t declare any spin-off or distribution of stock. It also can’t give away stock outside of “mandatory provisions of existing agreements in existence as of June 15, 2016.”
The board can’t make a deal that requires shareholder approval.
That specifically includes “any transaction that is material to the business of Paramount Pictures” including “any disposition of equity or assets of Paramount Pictures and its subsidiaries to a party other than the Consolidated Company.”
The board can’t increase the compensation or benefits for “current officers and employees.” It also can’t hire or fire “subject to certain exceptions including if such action is pursuant to agreements in existence as of June 15, 2016 or would not have required Board or Board committee approval prior to June 27, 2016.”
Directors can’t hire a financial adviser whose fees would “reasonably be expected to exceed $10 million.”
The board also is barred from “instituting or funding legal proceedings” for cases involving the company or Dauman in Delaware, Massachusetts or California. That doesn’t include Viacom’s indemnification obligations that were in effect on June 16, 2016.
The date seems to mean the company can stick with its decision to pay legal and PR expenses for Dauman and director George Abrams’ efforts to stay on Sumner Redstone’s family trust and the board of his National Amusements theater chain.