×

Viacom stock continues run

Redstone may retain chairmanship after stepping down as CEO

Still riding the good will of a strong second-quarter earnings release and reassurances of a smooth management succession plan, Viacom extended its stock gains to Friday, gaining 21¢ to close at $35.14 on a trading day when almost every other entertainment company lost ground.

In fact, Viacom seems well on its way to becoming the media poster child for good corporate governance, as it formally mapped out parameters for the transfer of power to one of the company’s new co-president-chief operating officers, Tom Freston or Leslie Moonves, when chair-CEO Sumner Redstone steps down on or before the end of 2007.

In new employment contracts filed with the Securities and Exchange Commission last week, board sought to ensure an orderly shift by an unusual requirement that the runner-up (who would be appointed sole president-COO) remain with the company for 18 months after his rival is appointed to the CEO throne.

Former MTV topper Freston and CBS chief Les Moonves may quit with salary and benefits if the company does not name a CEO by the end of 2007 or Redstone refuses to relinquish the reins.

Redstone may still retain the chairmanship after he steps down as CEO.

Wording of contract also makes it unlikely that Redstone’s daughter Shari will succeed her father, analysts said — though technically it is not impossible that a different CEO candidate could be appointed.

Lack of clear succession plans tends to weigh down company stock, as evidenced by the many questions surrounding Michael Eisner’s fate at Disney.

Redstone’s new employment contract calls for $3.5 million in base salary plus $2 million in deferred compensation, which represents an effective $500,000 pay increase over 2003.

Freston and Moonves have contracts that run through June 30, 2009, and both receive an annual salary of $3 million plus $2 million in deferred compensation. Both will be eligible for bonuses worth up to 200% of their $5 million salaries plus 1.5 million class B stock option grants.

By Hollywood standards, analysts said they were not particularly concerned with the salary and bonus levels (up to $15 million), particularly if the men perform well. One admitted he was far more appalled by the hefty severance payments to former prexy Mel Karmazin ($35 million) and Paramount head Jonathan Dolgen ($20 million) than by the amounts that Freston and Moonves stand to gain.

More Scene

  • LGBTQ Film Festival Outfest Opens With

    Outfest Opens With Documentary About Gay Porn Shops Circus of Books

    Granted, the red carpet at the opening night of Outfest in DTLA may not have been the most star-studded but it was without a doubt the most diverse, inclusive and, yes, fabulous. “I’ve never been here before,” admitted “RuPaul’s Drag Race” vet Trixie Mattel, who stars in the documentary “Moving Parts.” “It’s supposed to be [...]

  • Alamo Drafthouse Opens New Downtown Los

    Alamo Drafthouse Storms into L.A. with New Location

    “Cinema is alive and well tonight!” Alamo Drafthouse founder Tim League declared at the theatrical venue’s ribbon-cutting ceremony on Thursday night, where a gathering of 160 employees cheered and sliced into a strip of 35mm film in keeping with the company’s tradition. Despite dire predictions heralding the end of the theater-going experience, League was upbeat [...]

  • America Ferrera'Superstore' TV show photocall, Comic

    America Ferrera Blasts 'Send Her Back' Chant: 'Embarrassing and Shameful'

    America Ferrera has been a longtime political activist who has focused a large part of her work on immigrant rights. She’s now speaking out about the chant of “send her back” targeting Democratic Rep. Ilhan Omar that was shouted at a President Donald Trump rally earlier this week. “It’s devastating and shocking and embarrassing and [...]

More From Our Brands

Access exclusive content