Viacom Has Slashed Sumner Redstone’s Pay by Nearly Half
Media giant Viacom said on Wednesday it cut the compensation of its top two executives, executive chairman Sumner Redstone and CEO Philippe Dauman, as the company faced business pressures and a sharp drop in its share price.
Although Viacom (VIAB) did not give exact reasons for the pay cuts, they were disclosed amid much criticism of the company’s high compensation and as the 92-year-old Redstone faces questions about his health and leadership abilities.
In a statement, Viacom said for its fiscal year ended Sept. 30 Redstone’s annual compensation declined 85% to $2 million as “he became ineligible to receive a bonus,” which was $10 million in the prior fiscal year.
Representatives said they would not give more details about the wording or say if it reflected a decision by Viacom’s board of directors, which has been under fire for lax oversight of executive compensation.
Viacom also said that the bonus paid to its CEO Philippe Dauman declined 30% to $14 million in fiscal 2015, while his contractually provided salary of $4 million and an annual equity award worth $18.9 million were not much changed from the prior year.
Viacom said it would give more details in its forthcoming proxy statement, expected this week.
Shares of Viacom Inc fell 44% to $43.15 in the 12 months ended Sept. 30, 2015 and closed Wednesday at $40.67.
Viacom, whose networks include Comedy Central, MTV, and Nickelodeon, has taken much criticism in recent years over its high executive pay even as it struggled with slipping ratings while more consumers ditched pricey cable television subscriptions.
Meanwhile, questions about the health of Redstone have also prompted shareholder concerns about his fitness to oversee the company.
Most recently, a Jan. 19 shareholder lawsuit filed in the Delaware Court of Chancery against the boards of Viacom and CBS Corp alleges the companies improperly paid millions for Redstone’s services as executive chairman “while he was physically and mentally incapacitated.” It also said the Viacom board misrepresented Redstone’s deteriorated physical and mental condition.
Last year, Institutional Shareholder Services—the large proxy adviser—recommended that Viacom investors withhold their support for all five members of the company’s executive compensation committee.
In a note to investors ISS wrote that “The current pay and performance misalignment driven by ongoing problematic pay practices indicates poor stewardship of the board’s Compensation Committee.”
Nonetheless all the directors were reelected by wide margins at the company’s annual meeting last year, reflecting how Redstone controls a supermajority of the company’s Class A voting shares through his holding company, National Amusements.