Viacom boss may soon pull gilded ripcord

June 17, 2016

The author is a Reuters Breakingviews columnist. The opinions expressed are her own. 

Viacom boss Philippe Dauman may be on the verge of pulling a gilded ripcord. Media mogul Sumner Redstone, who controls the owner of MTV and Paramount, says he has lost his trust in his chief executive and just threw him off the board to make the point. If cut loose altogether, he’d leave with a package worth an astonishing $84 million.

Dauman’s tenure atop Viacom is probably coming to an ignominious end. The ailing Redstone fired off a terse missive on Wednesday expressing wariness about his handpicked steward of the company, but also those who support him. Being removed as a director makes Dauman a rare CEO without a seat in the boardroom.

Redstone, who controls 80 percent of Viacom through his National Amusements holding company, has been good to Dauman. He has been awarded over $400 million in salary, bonuses, equity awards and other benefits during his nearly 10 years with the company, according to an analysis by compensation consultancy Equilar.

Those are handsome sums for having done so little for investors. Since 2006, when Dauman was appointed CEO, Viacom has generated a total shareholder return of about 40 percent. That pales in comparison to rivals. Over the same span, the comparable figure at CBS, which is also controlled by Redstone, Time Warner and Walt Disney are 132 percent, 177 percent and 277 percent, respectively.

What’s more, according to Viacom’s latest proxy, Dauman would be entitled to nearly $95 million if terminated without “cause” or resigning for “good reason.” That includes $12 million of salary, $60 million in bonus and $19 million in accelerated equity awards. After factoring in what Dauman already has been paid under his contract, the total package shrinks to about $84 million.

It’s a golden parachute that would rival those of Michael Ovitz, who was axed as Disney’s president after just a year and walked off with $130 million, and Carly Fiorina, who departed a weakened Hewlett-Packard with a $40 million sendoff. These rewards, often for failure, are among the most troubling staples of executive suites. Dauman’s may be one of the more egregious examples given the results. Considering the corporate governance debacle at Viacom, however, it may be an oddly fitting coda to his story.

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