Viacom to Cover Philippe Dauman's Legal Bill in Sumner Redstone Lawsuit
Viacom will cover their costs related to a lawsuit that seeks to invalidate Dauman's removal as trustee of controlling shareholder Sumner Redstone's National Amusements Trust.
Viacom said Friday that it entered into an indemnification agreement with chairman and CEO Philippe Dauman and board member George Abrams on Monday that will cover their legal and other costs related to a lawsuit that seeks to invalidate their removal as trustees of controlling shareholder Sumner Redstone's National Amusements Trust.
The indemnification agreements "were approved in advance by a committee comprised of independent members" of the company's board, according to a regulatory filing. The move could bring a challenge from the Redstone and his daughter Shari.
The news comes a day after Sumner Redstone moved to replace five Viacom board members, including Dauman.
The filing said: "Under the agreements, Viacom will pay or promptly reimburse Mr. Dauman’s and Mr. Abrams’ costs and expenses (including attorney’s fees, expert witness fees and fees of public relations and other consultants) actually and reasonably incurred."
Costs covered are ones in connection with a lawsuit filed by Dauman and Abrams on May 23 in Massachusetts, "seeking to invalidate their removal" as trustees of the Sumner M. Redstone National Amusements Trust, as directors of National Amusements and as managers of certain subsidiaries of National Amusements, and a petition filed on May 23 by attorneys for Redstone in California "seeking the court’s confirmation of the validity" of the removals.
Under the indemnification deals, Dauman and/or Abrams will have to repay Viacom if a court finds that their decision to sue in Massachusetts meant that the executive "acted in breach of his fiduciary or other duties to Viacom or that he has not acted in good faith and in a manner reasonably believed to be in, or not opposed to, the best interest of Viacom." They must also pay for any “recoupment or other economic recovery of costs and expenses” in the two cases.
National Amusements had this statement:
"Viacom’s disclosures reveal that, under Philippe Dauman’s leadership, Viacom is diverting valuable corporate resources to mount a legal and PR campaign against Sumner Redstone, despite the fact that Redstone is Viacom’s Founder, Chairman Emeritus and controlling shareholder. There is no justification for Viacom to use company dollars to fund Dauman’s and George Abrams’ unfounded attack on Redstone’s lawful decision to remove them as trustees from Redstone’s trust, especially in light of Viacom’s announcement that its fiscal third-quarter earnings will fall short of estimates. The need for strong, independent oversight of Viacom could not be more apparent.”