The Les Moonves era at CBS Corporation has officially come to its conclusion.
In a widely expected announcement that arrived at the start of the Jewish New Year of Rosh Hashanah, CBS’s Board of Directors entered a new era by finalizing a settlement agreement with its controlling shareholder, the Redstone family’s National Amusements Inc. (NAI).
The agreement sees the end of pending litigation in a Delaware Chancery Court — spurred by the efforts of CBS to dilute the voting power of NAI.
As such, CBS’s full board, following the unanimous recommendation of the board’s Special Committee, unanimously rescinded the Class A share dividend designed to weaken the Redstone family’s control of CBS.
This results in NAI amending its bylaws to undo previous amendments that it adopted following the filing of the Delaware litigation.
All of this comes as embattled Chairman/CEO Moonves has agreed to relinquish his duties, effective Sunday evening (9/9).
Moonves’ departure had been widely expected to occur, with investors reacting positively on Friday to reports disseminated Thursday that the company’s Board of Directors was pitching an exit package to Moonves. At Friday’s Closing Bell, CBS shares were up 3% to $56.06.
According to CNBC, Moonves’ exit package was to consist of $100 million in CBS common stock. CBS did not comment on what Moonves will be receiving as compensation tied to his departure. But, CBS did note that it and Moonves will together donate $20 million to one or more organizations that support the #MeToo movement and equality for women in the workplace. The donation, which will be made immediately, has been deducted from any severance benefits that may be due Moonves following the Board’s ongoing independent investigation of sexual misconduct led by Covington & Burling and Debevoise & Plimpton. Moonves will not receive any severance benefits at this time (other than certain fully accrued and vested compensation and benefits), CBS said, and any payments to be made in the future will depend upon the results of the independent investigation and subsequent Board evaluation.
With Moonves gone, CBS COO Joseph Ianniello will serve as President and Acting CEO while the CBS board conducts a search for a permanent successor. Ianniello joined CBS in 2005 and has been in his current role since June 2013. The chairman position will remain open pending the appointment of a permanent CEO.
Does Moonves’ exit, and the end of pending litigation in Delaware Chancery Court, point to a merger between Viacom and CBS, as both are majority-controlled by NAI?
Not at this time, CBS says. NAI confirmed that it has no plans to propose a merger of CBS and Viacom and has agreed that it will make no such proposal for at least two years after the date of the settlement.
This opens the door to possible reunification talks in fall 2020.
“NAI reaffirmed that it will give good faith consideration to any business combination transaction or other strategic alternative that the independent directors believe are in the best interests of the company and its stockholders,” CBS said in a statement issued Sunday evening.
In fact, in keeping with CBS’s and NAI’s commitment to board independence, five current independent directors and one NAI-affiliated director have stepped down from the CBS board. As such, six new independent directors have been elected to the board.
The ongoing members of the Nominating and Governance Committee have endorsed the new independent directors, and the new CBS board will be comprised of 11 independent directors and two NAI-affiliated directors.
Shari Redstone, Vice Chair of CBS’s Board of Directors and NAI’s head, said, “CBS is an organization of talented and dedicated people who have created one of the most successful media companies in the world. Today’s resolution will benefit all shareholders, allowing us to focus on the business of running CBS – and transforming it for the future. We are confident in Joe’s ability to serve as acting CEO and delighted to welcome our new directors, who bring valuable and diverse expertise and a strong commitment to corporate governance.”
Lead Independent Director Bruce Gordon said, “We thank Les for his 24 years of service. Among his achievements, he established a strong management team, giving us great confidence as we accelerate our succession plans and provide continuity of leadership. This agreement maintains an independent Board that is charged with determining the best course for the future of CBS on behalf of all shareholders.”
Gordon thanked the outgoing directors for their service. “They have devoted many valuable hours looking out for the best interests of this company, which has achieved industry-leading performance during their tenure,” he said. “I welcome the new directors, who bring superb expertise, competence and diversity of perspective.”
The six new independent Board members are Candace Beinecke, Barbara Byrne, Brian Goldner, Richard D. Parsons, Susan Schuman and Strauss Zelnick.
Remaining on the board as independent directors in addition to Gordon are William Cohen, Gary Countryman, Linda Griego and Martha Minow.
On behalf of NAI, in addition to Redstone, Robert Klieger remains on the board.
Additional details about the settlement agreement and the agreement with Moonves are to be included in a CBS Corporation 8-K filing; these documents were not yet available late Sunday.
Meanwhile, the new CBS Board says that it will schedule the company’s annual shareholders meeting for no later than November 30.