Viacom Board Votes to Eliminate Sumner Redstone’s Annual Salary
Viacom’s board of directors on Wednesday voted to eliminate paying ailing founder Sumner Redstone’s annual salary, a person briefed on the matter confirmed to The Hollywood Reporter.
Redstone, who was paid $2 million as chairman of the media giant in 2015, had already seen his compensation package slashed last year, owed to his "reduced responsibilities," the company said in January.
At that time, Redstone was executive chairman, but a month later he was made chairman emeritus and Philippe Dauman assumed the executive chairmanship in addition to his CEO title.
Viacom has been searching for a way, according to insiders, to distance itself from its billionaire founder ever since telephone audio emerged a few weeks ago of him allegedly organizing orgies and other sexual trysts with unknown parties.
The website Radar Online released the profane audio, probably several years old, considering Redstone's speech is severely impaired nowadays, just as it appeared the 92-year-old media mogul was wrapping up a lawsuit involving former girlfriend Manuela Herzer.
While a judge ruled that Redstone had the right to remove Herzer as his healthcare agent once their relationship soured, a recorded deposition of him was likely unnerving to some Viacom board members and executives — as well as investors.
Several times, Redstone called Herzer a "f—ing bitch" and his speech was so slurred he required an interpreter. Some of his answers were so jumbled he was asked to spell the words he meant to say, but he was unable to do so.
Viacom brass and investors were likely relieved to hear the judge put an end to the months-long fiasco, but shortly after Herzer lost her case, her lawyers filed a new lawsuit, this time alleging that Redstone's daughter and board member Shari Redstone conspired to turn her father against Herzer. Also named are Shari's sons and some of Sumner's staffers, and Herzer is seeking $100 million.
The move to cut Sumner Redstone's compensation to zero likely signals the board's intentions to exert more control over the direction of Viacom, which is seeking an equity partner for its Paramount film studio, a plan he allegedly objects to.
Redstone, though, technically controls Viacom through National Amusements, which owns nearly 80 percent of Viacom's voting shares. A seven-member trust that includes both Shari Redstone and Dauman would control that stake should Sumner Redstone die or, perhaps, if he were to become too incapacitated to make rational decisions.
Such a scenario likely sets up a power struggle between Dauman and Shari Redstone, given she was the only board member to object to Dauman replacing her father as executive chairman in February.
Meanwhile, Viacom shares have been suffering, down some 40 percent in the past year while the S&P 500 is off just 4 percent. On Wednesday, the stock was off 1 percent but gained it back after the closing bell, when news surfaced of the board's decision to eliminate Redstone's compensation.