The question of whether CBS would release the findings of the investigation now under way was raised on Monday in the fine print in a Securities and Exchange Commission filing regarding the exit agreement that CBS reached with Moonves on Sunday. Moonves’ forced resignation came hours after Ronan Farrow published a second expose in the New Yorker featuring six women alleging they were victims of sexual assault and misconduct from Moonves going back to the 1980s. Moonves has denied some of the claims.
The exit agreement contained a clause under the heading “Confidentiality” that spells out CBS’ obligation to “seek to preserve the confidentiality of all written and oral reports by the investigators in the Internal Investigation and all information and findings developed by the investigators or included in such written or oral reports in relation to Executive (the “Investigator Information”) and not to make public such Investigator Information to the maximum extent possible consistent with fiduciary duties of directors and all applicable laws.”
The language was widely interpreted as a restrictive covenant that would prevent CBS from disclosing details of the investigation. That raised hackles among advocates and activists, and even drew criticism on CBS’ own air Tuesday morning from “CBS This Morning” anchor Gayle King.
But CBS does have the right to release information per the final clause of that long sentence of legal-ese: “to the maximum extent possible consistent with the fiduciary duties of directors and all applicable laws.”
According to a source close to the situation, this language means that if CBS’ board of directors decides that releasing the findings of the investigation is in the best interest of the company and its shareholders, the board has the right to do so.
Given the outrage spurred by the allegations against Moonves, it’s probably a safe bet the board will release at least some details of the investigation now being conducted by two prominent law firms, Covington & Burling and Debevoise & Plimpton. As King observed on “CBS This Morning”: “I don’t know how we move forward if we don’t — we at CBS – don’t have full transparency about what we find…In our own house we must have transparency.”
The probe is looking into Moonves’ behavior during his 24-year tenure at CBS as well as allegations that aspects of CBS’ corporate culture can be hostile for female employees.
The result of the investigation will determine whether Moonves will receive any of the $120 million now set aside in a trust for his severance package. If the probe finds evidence that the former CEO engaged in sexual harassment and assault, he will be terminated for cause and not receive any severance. Under his previous contract, Moonves was in line for a whopping golden parachute of $180 million or more. But that was before his legacy at CBS was severely tarnished by allegations from more than a dozen women.
The prospect of CBS making a big final payout to Moonves has sparked anger in many quarters. Moonves’ exit agreement coincided with the settlement of a separate legal battle between CBS and its controlling shareholder, National Amusements Inc. As part of that settlement, the CBS board has been overhauled with six new members joining the panel of 13 directors. The reconstituted board will be under extreme scrutiny as they grapple with the issue of Moonves’ severance payment.
Moonves’ exit agreement was hammered out by attorneys Daniel Petrocelli of O’Melveny & Myers and Ron Olson of Munger, Tolles & Olson. Petrocelli and a PR rep for Moonves did not immediately return requests for comment.
A representative for CBS’ board of directors also declined to comment.