Viacom investors pay CEO s lawful bills in Redstone spat
Simply by Jessica Toonkel
June 17 (Reuters) - Viacom Incorporation disclosed on Friday it could foot the bill with regard to embattled Chief Executive Official Philippe Dauman's legal fight against controlling shareholder Sumner Redstone, even as Wall Street cheers the executive's potential departure.
The detach demonstrates the complicated corporate governance challenge Viacom's board is facing in the battle for control of Redstone's $40 billion press empire, which includes CBS Corp and Viacom, investors and corporate governance experts stated.
"I don't think it's appropriate to use shareholder money for the suit, " said Ben Strubel, the principal with Lancaster, Pennsylvania-based wealth manager Strubel Investment decision Management, which owns non-voting shares of Viacom. "I don't think it's suitable to use shareholder money toward his compensation given the company's performance. "
Viacom, which owns Comedy Main, Nickelodeon, MTV and Paramount, 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 two years.
On Friday, Viacom said its third-quarter income 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 just about all the controversy.
Viacom's share has risen about 15 percent since May 20, when Redstone removed Dauman and board member George Abrams from the seven-person trust that will eventually control Redstone's media disposition. About half of that move came on Thursday whenever Redstone ousted Dauman plus four others through the Viacom board.
Viacom stocks fell 1. 4 % to close at $44. 42 on Friday.
If a judge affirms the new slate associated with directors, they have the authority to overhaul Viacom management, which may include Dauman. If he or she is removed, he or she could potentially receive almost $90 million in severance, according to compensation advisor Equilar.
Still, Viacom's panel, led by lead impartial director Fred Salerno, provides argued that 93-year-old Redstone, who they believe is being manipulated by his child Shari, is not the one making decisions in 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 it clear the issue was regarding control of Viacom. It is clearly in the interests of all of Viacom's stockholders the Massachusetts actions become pursued in order in order to preserve the independence of Viacom's board. "
The particular fight over control among Dauman and Redstone will be playing out in courtrooms in Delaware, Massachusetts and California.
In a May 23 lawsuit filed in Massachusetts, Dauman and Abrams are contesting their removal from Redstone's family trust and the board of National Amusements Inc, the particular holding company for Redstone's voting shares. The trust will control Redstone's risk after he dies or is declared mentally inexperienced.
National Amusements, in the statement on Friday, said there was "no justification" for Viacom's funding of the legal fight against Sumner Redstone. "The require for strong, independent oversight of Viacom could not be more apparent, inch the statement said.
pixabay</a>.com/static/uploads/photo/2016/05/23/11/13/daisy-1410105__180.jpg" alt="bokep" style="max-width:430px;float:right;padding:10px 0px 10px 10px;border:0px;">The fact 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 seem to be unseemly but these are usually the types of complications you find with a managed company where the loved ones drama can easily bleed into the corporate functions, " Byrd said.
Naveen Sarma, a credit analyst with Standard & Poor's, said he would have preferred the board remain out of the power struggle.
"We would rather they would have remained an observer but they have chosen to get sides, " he said. The ratings agency final month lowered its corporate governance rating of Viacom from satisfactory to fair, due to the uncertainness engulfing the company.
Regular & Poor's is viewing if the power struggle affects you can actually operations, Sarma stated.
The company itself now acknowledges that the legal drama is hurting its bottom collection.
On Friday, Viacom stated its third-quarter earnings may miss Wall Street estimations, marking the 1st time since October 2008 it has put out such guidance.
The company cited the Adolescent 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 general public governance controversy. "
visit the up coming website media company also mentioned it expects domestic advertisement sales to decline about 4 percent in the third quarter ending June 30, an improvement from last quarter's decline of five percent.
Viacom said it expects adjusted earnings associated with about $1. 00 in order to $1. 05 per reveal in the quarter. Experts, normally, were expecting the profit of $1. 37 per share, according to Thomson Reuters I/B/E/S. (Reporting by Anya George Tharakan in Bengaluru and Ould - Driver in Nyc; Editing by Nick Zieminski plus Bernard Orr)
