Viacom revamps Redstone's pay package
EmptyNEW YORK -- Viacom Inc. executive chairman and controlling shareholder Sumner Redstone will get a smaller cash salary and target bonus under a new compensation package, which links the majority of his pay to the company's stock performance, the company said Monday.
The changes, which take full effect in the new year, come after investors and governance watchdogs have repeatedly pointed out Viacom's high pay for top executives. The media mogul's new compensation package also mirrors similar equity-driven agreements that the entertainment company recently struck with new Viacom president and CEO Philippe Dauman and senior executive vp and chief administrative officer Thomas Dooley.
Overall, Redstone will lose $4.65 million in annual guaranteed and target bonus pay under the modified pay agreement.
"This is a highly progressive arrangement that will put the compensation of Viacom's most senior executives directly in line with the interests of its shareholders," said Robert Kraft, chairman of the compensation committee of Viacom's board, in a statement. "These revamped packages signal a new direction in Viacom's strategy for compensating its senior executives and result from the significant progress the Viacom board has made in replacing guaranteed cash compensation with performance-based rewards."
Redstone said Monday that he has "long been in favor of the pay-for-performance model," arguing that it is "good for shareholders and good for the company." He also signaled that Viacom shareholders have requested such a compensation model.
While some on Monday suggested that the new pay arrangements at Viacom could also lead to changes in the compensation scheme that Redstone gets from CBS Corp., which he controls as well, others said this may not be the case as the two firms have been run separately since their split about nine months ago.
A CBS spokesman declined comment on any possible changes.
Under his new arrangement, Redstone's salary will be reduced from $1.75 million per year to $1 million. The pact also does away with his deferred compensation, which amounts to $1.3 million per year. Redstone's target cash bonus comes down from $6.1 million to $3.5 million a year.
In addition, Redstone will receive an annual award of stock options with a grant-date value of $3 million plus performance share units with the same grant-date target value.
"The value, if any, realized from PSUs will depend on the total shareholder return of Viacom Class B common stock compared with the total shareholder return of companies comprising the Standard & Poor's 500 Composite Index over a measurement period of, in general, three years and, in certain circumstances, earnings per share over the period," Viacom said in a statement.
Finally, Redstone also agreed under his new pay package to convert, effective Wednesday, about $9.4 million in remaining deferred compensation to stock-option equivalents of the same value. These option equivalents have an exercise price equal to the closing price of Viacom's Class B stock on the conversion date and will vest over four years.
Class B shares of Viacom closed up 1.5% at $37.58.