Viacom investors pay CEO s lawful bills in Redstone vomited

By Jessica Toonkel
June seventeen (Reuters) - Viacom Incorporation disclosed on Friday it could foot the bill for embattled Chief Executive Official Philippe Dauman's legal battle against controlling shareholder Sumner Redstone, even as Walls Street cheers the executive's potential departure.

The detach demonstrates the complicated corporate governance challenge Viacom's table is facing in the battle for control of Redstone's $40 billion media empire, which includes CBS Corp and Viacom, investors plus corporate governance experts said.

"I don't think it's suitable to use shareholder money for the suit, " said Ben Strubel, a principal with Lancaster, Pennsylvania-based wealth manager Strubel Investment decision Management, which owns non-voting shares of Viacom. "I don't think it's appropriate to utilize shareholder money toward his compensation given the company's performance. "

Viacom, which owns Comedy Main, Nickelodeon, MTV and Paramount, has been struggling in order to turn around its rankings. Reflecting some of that weakness, the company's share is down nearly 50 percent over the past two years.
On Friday, Viacom said its third-quarter income would fall well brief of Wall Street anticipation, citing a disappointing household box office haul from its latest Teenage Mutant Ninja Turtles movie and disruption stemming from almost all the controversy.

Viacom's stock has risen about fifteen percent since May 20, when Redstone removed Dauman and board member George Abrams from the seven-person trust that will ultimately control Redstone's media empire. About half of that move came on Thursday whenever Redstone ousted Dauman and four others from the Viacom board.

Viacom shares fell 1. 4 % to close at $44. 42 on Friday.

If a judge affirms the new slate associated with directors, they have the particular authority to overhaul Viacom management, which might include Dauman. If he or she is removed, this individual could potentially receive almost $90 million in severance, according to compensation specialist Equilar.
Still, Viacom's table, led by lead impartial director Fred Salerno, has argued that 93-year-old Redstone, who they believe is being manipulated by his daughter Shari, is not the particular one making decisions within the best interest of all shareholders.

"On the day that Mr. Redstone's representatives acted to get rid of Mr. Dauman and Mister. Abrams, they made this clear the matter was regarding control of Viacom. It really is clearly in the passions of all of Viacom's stockholders that this Massachusetts actions end up being pursued in order to preserve the independence associated with Viacom's board. inch
The particular fight over control among Dauman and Redstone is playing out in courtrooms in Delaware, Massachusetts plus California.

In a May 23 lawsuit filed in Massachusetts, Dauman and Abrams are contesting their removal from Redstone's family rely on and the board associated with National Amusements Inc, the holding company for Redstone's voting shares. The believe in will control Redstone's stake after he dies or even is declared mentally incompetent.

National Amusements, in the statement on Friday, stated there was "no justification" for Viacom's funding of the legal fight towards Sumner Redstone. "The require for strong, independent oversight of Viacom could not be more apparent, inch the statement said.



bokep sma online The truth that the company is financing a lawsuit from its CEO against its controlling aktion�r points to the complexities associated with having a family run a multi-billion dollar company, stated corporate governance consultant Francis Byrd.
"It does look like unseemly but these are the types of complications you find with a controlled company where the family members drama can easily bleed into the corporate functions, " Byrd said.

Naveen Sarma, a credit expert with Standard & Poor's, said he would have preferred the board remain out of the power struggle.
"We would instead they would have continued to be an observer but they will have chosen to take sides, " he mentioned. The ratings agency final month lowered its business governance rating of Viacom from satisfactory to reasonable, due to the doubt engulfing the company.

Standard & Poor's is watching if the power struggle impacts the company's operations, Sarma said.
The company itself now appreciates the legal drama is hurting its bottom collection.
On Friday, Viacom mentioned its third-quarter earnings will miss Wall Street estimations, marking the very first time since Oct 2008 it has place out such guidance.

The company cited the Teenage Mutant Ninja Turtles film and a delay within completing an agreement along with an unnamed streaming video provider. It also held responsible the latter on "the recent and highly open public governance controversy. "
The media company also said it expects domestic ad sales to decline regarding 4 percent in the third quarter ending June 30, an improvement from final quarter's decline of five percent.

Viacom said it expects adjusted earnings of about $1. 00 in order to $1. 05 per share in the quarter. Experts, typically, were expecting a profit of $1. 38 per share, according in order to Thomson Reuters I/B/E/S. (Reporting by Anya George Tharakan in Bengaluru and Ould - Driver in New York; Editing by Nick Zieminski plus Bernard Orr)