Viacom’s board of directors voted Thursday evening to approve a settlement with media mogul Sumner Redstone that will oust chief executive Philippe Dauman, ending a months-long battle for control of the media empire behind MTV, Nickelodeon and Paramount Pictures, according to three people familiar with the company.
The board has given preliminary approval to a complex proposal that will hand Dauman, who has led Viacom since 2006, a near $72.5 million exit package in stock and equity, according to a source close to the negotiations. That number could balloon to $90 million with the inclusion of other incentives and compensation, according to another source. No matter what the final tally is, Dauman’s golden parachute once he leaves Viacom will go down as one of the most lucrative in corporate America history.
The future of Viacom’s leadership has also been nailed down in the pending agreement, which teams of lawyers are now parsing through before any official announcement is made. Longtime Dauman lieutenant Thomas Dooley will be named interim chief executive ; and the agreement calls for the board to be temporarily expanded to add five new members backed by Redstone, though the size is expected to shrink back down to 11 members by Viacom’s annual meeting next year, sources said.
Any deal must still be officially approved by legal teams for Viacom, Redstone and Dauman, and is still not official. An announcement — which was seen as a victory for Redstone and his daughter Shari Redstone — could come as soon as tonight or potentially on Friday morning. Though, a source briefed on the matter said that all of the parties are hung up on one detail of the settlement that must be approved before any confirmation from Viacom.
The rich payday would put to an end months of legal wrangling and maneuvering from both sides after the 93-year-old Redstone tried to kick Dauman and four others off of Viacom’s board of directors. Dauman had claimed his ailing boss did not have the mental or physical capabilities to make such a decision and was under the undue influence of Shari Redstone.
The case was scheduled to be heard next month. Dauman’s departure would also ignite intense speculation about what Redstone, whose family trust National Amusements controls the voting rights for both Viacom and CBS, plans to do to invigorate the beleaguered company.
“We hope the end is near, even though Viacom will have to give him a big check to walk out the door,” said Eric Jackson of SpringOwl Asset Management, which owns a few thousand shares of Viacom and has been outspoken in Dauman’s removal for more than a year.
Shares of Viacom surged more than a percent in after-hours trading, a signal that Wall Street was cautiously optimistic that the drama between Redstone and Dauman might finally be winding down. The stock and Viacom’s market value had been sliced in half under Dauman’s leadership in the last year, though has recovered as investors pumped money into the deflated stock on speculation of a management change.
A spokesman for Viacom did not immediately return telephone calls for comment. The story was first reported by Reuters.
If the settlement is approved, Dauman’s ouster would be the final chapter in a long and colorful history working for Redstone. The two met when Dauman worked for a law firm and had to handle a Securities and Exchange Commission filing for Redstone. Dauman then got an advisory role in Redstone’s 1987 hostile takeover of Viacom.
“I have worked closely with Philippe Dauman for many years, and I have a comfort level with him and high regard for his leadership abilities, strong financial and operational skills, and superb judgment,” Redstone said at the time of his appointment. In recent years, he often called him “the wisest man” he has ever known.
In early 2015, Viacom extended his employment contract through the end of 2018. But when Dauman was also named chairman in February, with Redstone becoming chairman emeritus, vice chair Shari Redstone opposed him. Many in Hollywood believe she has for months been orchestrating a careful campaign to strip the executive of his duties. One person with knowledge of their relationship said that Redstone used to task Dauman with communicating things to daughter Shari, including bad news, contributing to their more than rocky relationship.
In May, the corporate and family drama erupted as Dauman and another longtime Redstone ally were ousted from the mogul’s trust, which will control both Viacom and CBS once Redstone dies or is no longer able to oversee things. Redstone controls both companies via his National Amusements, which holds nearly 80 percent of the voting stakes in the companies. The next month, Redstone followed that up by firing Dauman, George S. Abrams, Blythe McGarvie, Frederic Salerno and William Schwartz from the Viacom board in one of the biggest assertions of power in corporate history.
“It’s sad that my clients, the shareholders, have been paying these legal bills,” said Mario Gabelli, whose firm is the second-largest holder of voting shares behind Redstone. “I’m tired of this. They’ve been in courts in Los Angeles, in Boston, in Delaware. You can’t make this stuff up!”
Aug. 18, 8:20 p.m. PT: Updated with terms of Dauman’s settlement
Paul Bond and Kim Masters contributed to this report.