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Leslie Moonves is out at CBS thanks to accusations of sexual misconduct and a settlement between the company’s board of directors and controlling stakeholder National Amusements Inc. He could walk away with a $120 million exit package — and the public might never know.
The settlement was announced on Sunday night and put a coda on the CBS Corp. chief’s reign at the company hours after a second New Yorker exposé by Ronan Farrow detailed six more allegations of misconduct. The deal doesn’t end the ongoing internal investigation into Moonves’ conduct being handled by two law firms, but it will finish litigation between Shari Redstone’s NAI and CBS for control of the company that was scheduled for trial in October.
Under the terms of Moonves’ contract, he was due substantial payments in salary, bonuses and stock rewards over the next four years. If fired “for cause,” however, Moonves would lose much of the pay.
With the internal investigation not complete, terminating Moonves’ contract and denying him promised compensation would have been difficult. CBS might have argued that Moonves violated duties by not telling the board of a LAPD investigation earlier this year (prosecutors elected not to bring charges), but an incomplete internal probe by its appointed lawyers would have bolstered a wrongful termination claim on Moonves’ part. The executive would have claimed CBS made a rash decision based on press reports rather than a deliberative process.
But paying Moonves a large severance package to move forward from the scandal had its own problems. With advocates like Time’s Up demanding there should be “no reward” for Moonves upon exit, this created an optics dilemma for CBS.
The solution was the announcement that Moonves and CBS would donate $20 million to an organization that supports the #MeToo movement plus word that “any payments to be made in the future will depend upon the results of the independent investigation and subsequent Board evaluation.”
A review of the settlement and Moonves’ separation agreement filed with the Securities and Exchange Commission confirms this. The charitable donation will be made within 30 days while an additional $120 million is being held in a “Holdback Trust.”
However, the announcement omitted some key features of the arrangement.
First, within 30 days of completion of the final report of the internal investigation into Moonves, he has the right to demand binding arbitration and fight any conclusions by investigators.
Next, there’s the issue of what CBS can disclose about its investigatory findings.
As part of the CBS/NAI settlement, each has agreed not to issue any disparaging statements concerning the Moonves probe. Once the investigation is concluded, the parties are allowed to put out statements that “are non-defamatory in nature.”
While this might open the door slightly to CBS making a later announcement about the results, there’s an additional confidentiality provision in the Moonves separation agreement. As stated, “[CBS] shall seek to preserve the confidentiality of all written and oral reports by the investigators in the Internal Investigation and all information and findings developed by the investigators or included in such written or oral reports in relation to Executive (the ‘Investigator Information’) and not to make public such Investigator Information to the maximum extent possible consistent with fiduciary duties of directors and all applicable laws.”
The combination of confidentiality requirements and a mechanism for arbitration — plus the punting of Moonves’ ultimate compensation — appears designed to cloak the full outcome.
Is it enough?
Shortly after the publication of The New Yorker article, Time’s Up stated, “We will accept nothing less than full transparency of the investigation’s findings.”
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