The move sets up another showdown in Delaware Chancery Court, where CBS is seeking to get approval for a stock dilution that would strip National Amusements, now run by Shari Redstone, of voting control over CBS.
The CBS board of directors voted 11-3 last Thursday to approve the dilution, but the move was conditioned on approval from the Delaware court. Last Wednesday, shortly before a hearing on CBS’ request for a temporary restraining order, Redstone changed the bylaws to require a 90% supermajority to approve a dividend. If valid, the change would effectively block the dilution.
The amended complaint includes details from the CBS board meeting. Chairman-CEO Leslie Moonves spoke in favor of diluting Redstone’s stock, saying that she has interfered in the company’s operations and is pushing for an inequitable merger with Viacom.
“Mr. Moonves said that he did not think he could successfully lead the Company under these circumstances,” the suit states. “He said that the soul of CBS and its success derived from the independence of its Board and management. He concluded that his duty to all stockholders led him to believe the Stock Dividend was necessary.”
CBS argues that National Amusements’ bylaw changes are invalid under Securities and Exchange Commission Rule 14c-2, which, the company claims, “prohibits a corporate action taken by written consent from becoming effective until at least 20 days after an information statement is provided to CBS stockholders.”