Viacom to pay Freston $59 mil in severence
EmptyFormer Viacom Inc. president and CEO Tom Freston will receive nearly $59 million in severance and an annual $1 million adviser fee for up to three years under a separation agreement, whose details the entertainment company disclosed in a regulatory filing Wednesday.
Viacom will make termination payments of about $58.9 million to Freston, "consisting of his salary (at an annual rate of $3,013,200), deferred compensation (at an annual rate of $2,600,000 for 2006, increasing by $300,000 per year for subsequent years) and target bonus (equal for each year to two times the sum of Mr. Freston's salary and deferred compensation), in each case for the period from the resignation date through June 30, 2009," the filing said.
Further payments under the package also include about $7.4 million in deferred compensation and approximately $5.7 million of 401(k) plan benefits, according to Wednesday's filing with the Securities and Exchange Commission.
Under the ex-CEO's employment contract, Viacom would have to make 50% of the termination payments within 30 days of Freston's resignation date, with the balance paid later. However, the separation agreement postpones "both the lump sum portion of the termination payments and the payment of any portion of the balance that would otherwise be paid during the first six months following the resignation date until the first business day following the six-month anniversary of the resignation date," the SEC filing said.
Under one clause of his employment pact, Freston has elected to become an advisor to Viacom for a period of three years with a $1 million per-year fee. He has the right to end this arrangement with 14 days notice to Viacom.
All stock options previously awarded to Freston vested on his termination date and will remain exercisable for periods ranging from six months to three years. Viacom will settle an award of 90,141 restricted stock units by delivering Viacom Class B common stock on the first business day following the six-month anniversary of the resignation date, which Viacom estimated will mean "approximately $10 million in previously unrecognized compensation expense" for the company.
Under his package, Freston also has the right to continue to receive certain medical, dental and life insurance benefits through June 30, 2009.