Redstone Team Says There’s “No Justification” For Viacom To Pay Dauman’s Legal And PR Bills

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UPDATE, 2:28 PM: Here’s Viacom’s answer to those who object to its decision to pay CEO Philippe Dauman’s legal and PR bills in his effort to have controlling shareholder Sumner Redstone found incompetent: Blame Shari Redstone, the company Vice Chair who Dauman says is serving as a “puppet master” to her 93-year-old father.

Dauman wants a Massachusetts court to find that she orchestrated an effort to have him and director George Abrams dumped from the family trust and the board of National Amusements, which controls Viacom.

“On the very day” that notice went out, Viacom says, “Shari and her representatives…made it obvious the issue is control of Viacom. It is certainly in the interests of all of Viacom’s stockholders that the Massachusetts actions be pursued in order to preserve the independence of Viacom’s board.“

PREVIOUS, 1:35 PM: Sumner Redstone’s camp is none too happy about Viacom’s decision to pay the legal and PR expenses for CEO Philippe Dauman’s effort to remain on the controlling shareholder’s family trust and the board of National Amusements.

Dauman and director George Abrams are “diverting valuable corporate resources” to a campaign to have Redstone, 93, declared incompetent, Redstone-controlled National Amusements says in a statement.

“There is no justification for Viacom to use company dollars” for the cases. That’s especially relevant “in light of Viacom’s announcement that its fiscal third-quarter earnings will fall short of estimates. The need for strong, independent oversight of Viacom could not be more apparent.”

PREVIOUS, 4:02 AM: Viacom shareholders will pick up legal and PR expenses for CEO Philippe Dauman and director George Abrams’s efforts to maintain their positions on the Redstone family trust and the National Amusements board, the company disclosed this morning in an SEC filing.

The company agreed on Monday to indemnify the execs for their courtroom battles in Massachusetts and California to demonstrate that controlling shareholder Sumner Redstone cannot manage his own affairs.

Viacom will “pay or promptly reimburse” Dauman and Abrams for their costs and expenses “including attorney’s fees, expert witness fees and fees of public relations and other consultants,” the filing says.

The execs want the Massachusetts Probate and Family Court to overturn a move by Redstone — or, they say, the people around him — to oust them from key positions in his media empire. On May 20 they were told that he wants them off his family trust and the National Amusements board.

The trust will control Redstone’s 80% stake in National Amusements when he’s unable to do so. The theater chain owns 80% of the voting shares in Viacom and CBS.

Dauman and Abrams say that the moves were invalid because Redstone is already incompetent and being manipulated by his daughter, Shari — who’s President of National Amusements and Vice Chair of Viacom and CBS.

Redstone’s camp says he’s still calling the shots. It asked a California Superior Court in Los Angeles to validate the Chairman Emeritus’ ability to dump Dauman and Abrams.

Under the indemnification agreement, Dauman and Abrams will repay Viacom if a court finds that their decision to sue in Massachusetts breached their fiduciary duties or was not in “the best interest of Viacom.”

They’ll also fork over any cash from any “recoupment or other economic recovery of costs and expenses” in the two cases.

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