Viacom's Dauman Guards His 'Golden Parachute' Amid No Signs of Settlement

Viacom CEO Philippe Dauman stands to keep his job or receive an $84 million payout depending on how courts in Massachusetts and Delaware rule in the coming days.
By Leon Lazaroff ,

Over the course of 10 years as chief executive of Viacom (VIAB) - Get Report , Philippe Dauman's compensation has totaled about $400 million. If courts in Massachusetts and Delaware rule against him in the comping days, Dauman stands to get another $84 million.

Mindful that such information might give the impression that months of wrangling with Shari and Sumner Redstone over control of Viacom was simply about money, Dauman and his No. 2, Chief Operating Officer Tom Dooley, appear to have waited until the last moment before officially exclaiming that yes, they'll take their payouts if it comes to that.

Monday marked the 29th day since the Redstones, through their holding company National Amusements Inc., moved to replace Dauman and four of his supporters on Viacom's board. According to Dauman's employment contract, the 62-year-old chief executive had to inform the company within 31 days of an action that would allow him to resign with good reason.

Getting booted off Viacom's board was such an action. 

Dauman and Viacom immediately challenged the June 16 board shake-up in Delaware Chancery Court. More than likely being removed as a Viacom director is precursor to being fired. National Amusements, which control nearly 80% of Viacom's voting stock, told Delaware it was legally empowered to replace Dauman along with George Abrams, Blythe McGarvie, Frederic Salerno and William Schwartz.

Those five directors, however, will remain on Viacom's board until Delaware makes its decision.

Shari Redstone has frequently criticized the board for a variety of decisions including awarding Dauman a compensation package in 2015 of more than $54 million despite Viacom's stock price losing half its value over the past two years. Prior to the shares gaining since April 15 on expectations of a management shakeup, Viacom had lost 55% since April 2014. Since April 15, Viacom has gained about 16%.

Sources close to the proceedings warned against reading Dauman's letter as a sign that a broader settlement may be in the offing. At present, both sides remain confident they will prevail in court, precluding the need to reach a settlement. 

Unless Dauman's employment contract were to be challenged, the Viacom CEO already stands to receive a handsome "golden parachute."

But before Delaware makes its ruling, a Massachusetts probate court has been asked by a Delaware judge to decide whether Sumner Redstone was mentally competent to remove Dauman and Viacom board member George Abrams in May as directors of National Amusements as well as the seven-member trust that will control Viacom and CBS (CBS) - Get Report after he dies or becomes incapacitated.

Viacom sued Shari Redstone in Canton, Mass., where the trust was incorporated, charging that she was taking advantage of her father's declining health to wrest control of the company from Dauman and his executive team. Shari Redstone's legal team has countered that she only wants to improve Viacom's operations by installing a new management team.

With Delaware Chancery having set a hearing on July 29, observers say it's likely the Massachusetts court will make a ruling in the coming days.

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