Viacom investors pay CEO s legal bills in Redstone spat

By Jessica Toonkel
June 17 (Reuters) - Viacom Inc disclosed on Friday it might foot the bill regarding 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 panel is facing in the battle for control of Redstone's $40 billion mass media empire, which includes CBS Corp and Viacom, investors and corporate governance experts mentioned.

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

Viacom, which owns Comedy Central, Nickelodeon, MTV and Very important, has been struggling to turn around its rankings. Reflecting some of that will weakness, the company's stock is down nearly fifty percent over the past 2 yrs.
On Friday, Viacom said its third-quarter profit would fall well brief of Wall Street anticipation, citing a disappointing domestic box office haul from its latest Teenage Mutant Ninja Turtles movie plus disruption stemming from all the controversy.

Viacom's share 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 the move came on Thursday when Redstone ousted Dauman plus four others from your Viacom board.

Viacom gives fell 1. 4 percent to close at $44. 42 on Friday.

If a judge states the new slate associated with directors, they have the particular authority to overhaul Viacom management, which might include Dauman. If he 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, provides argued that 93-year-old Redstone, who they believe has been 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 Bokep Remaja of Mr. Dauman and Mr. Abrams, they made this clear the problem was about control of Viacom. It really is clearly in the interests of of Viacom's stockholders the Massachusetts actions be pursued in order to preserve the independence associated with Viacom's board. "
The particular fight over control between Dauman and Redstone is usually playing out in courtrooms in Delaware, Massachusetts plus California.

In a May 23 lawsuit filed within 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 is declared mentally incompetent.



National Amusements, in a statement on Friday, mentioned there was "no justification" for Viacom's funding associated with the legal fight against Sumner Redstone. "The require for strong, independent oversight of Viacom could not really be more apparent, " the statement said.

The fact that the company is financing case from its TOP DOG against its controlling shareholder points to the complexities of having a family operate a multi-billion dollar company, stated corporate governance consultant Francis Byrd.
"It does appear to be unseemly but these are usually the sorts of complications you find with a managed 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 possess preferred the board stay out of the energy struggle.
"We would rather they would have remained an observer but they have chosen to take sides, " he said. The ratings agency final month lowered its business governance rating of Viacom from satisfactory to fair, due to the uncertainness engulfing the company.

Standard & Poor's is watching whether or not the power struggle affects you can actually operations, Sarma said.
The organization itself now acknowledges the legal drama will be hurting its bottom collection.
On Friday, Viacom said its third-quarter earnings will certainly miss Wall Street estimates, marking the first time since October 2008 it has put out such guidance.

The company cited the Adolescent Mutant Ninja Turtles movie and a delay in completing an agreement with an unnamed streaming movie provider. It also held responsible the latter on "the recent and highly general public governance controversy. "
The particular media company also said it expects domestic ad sales to decline about 4 percent in the particular third quarter ending 06 30, an improvement from final quarter's decline of 5 percent.

Viacom said this expects adjusted earnings of about $1. 00 in order to $1. 05 per share in the quarter. Analysts, typically, were expecting a profit of $1. 37 per share, according in order to Thomson Reuters I/B/E/S. (Reporting by Anya George Tharakan in Bengaluru and Anna Driver in Nyc; Editing by Nick Zieminski plus Bernard Orr)