The disclosure came Monday in a filing with the Securities and Exchange Commission, six days after Viacom and CBS at long last set an all-stock merger agreement valued at around $30 billion.
The filing reveals that Ianniello’s contract to run CBS-branded assets includes a stipulation that he can only be fired or have his duties modified by the ViacomCBS board of directors, even though he reports to Bakish. Ianniello’s contract runs 15 months from the time the merger closes. The unusual term has led to speculation that his role is envisioned as part of a transitional process as the companies work on integration. But the language in the employment contract makes it clear that Ianniello’s fate will be decided by a majority of the 10 independent members of the board.
“The Surviving Corporation Board, by Requisite Approval, will have exclusive authority to remove Mr. Ianniello from his position or modify his duties, authority or responsibilities, subject to Mr. Ianniello’s rights upon termination,” the filing states.
The filing also reveals that CBS will pay Viacom a breakup fee of $560 million if it decides to call off the merger before May 13, 2020. Viacom would pay CBS a $373 million fee if it does an about-face on the re-marriage of the companies that were together from 2000 to 2005 but split up again in 2006. Such a move is highly unlikely as Viacom and CBS controlling shareholder Shari Redstone is in favor of the deal. The companies have said they expect the deal to close by year’s end.
The ViacomCBS board includes six former CBS directors: Candace K. Beinecke, Barbara M. Byrne, Brian Goldner, Linda M. Griego, Susan Schuman and Frederick O. Terrell. Four former Viacom directors are on the panel: Judith McHale, Ronald Nelson, Charles E. Phillips, Jr. and Nicole Seligman. Redstone will serve as chairman of the board. Redstone attorney Robert Klieger is also on the board representing the interests of the Redstone family’s National Amusements holding company.
Bakish’s new contract runs for four years after the merger closing date. He’ll earn $3.1 million a year with a target cash bonus of $12.4 million. He will also receive annual stock grants with a target value of $16 million.
Ianniello’s deal calls for him to earn $3 million in annual salary, as per the terms of his prior contract. He will receive a one-time stock grant valued at around $19.9 million (based on CBS’ closing price on Monday) in connection with the new contract and merger closing. Ianniello’s new contract does not have a provision for any severance payment because Ianniello is already set to receive as much as $70 million as part of a previous contractual commitment.
Under the previous CBS regime, Ianniello’s contract called for him to receive a severance equal to three times his average salary and bonuses for the previous three years if he was not promoted to the top CEO job after Leslie Moonves left CBS. Moonves was ousted in September 2018 amid allegations of sexual misconduct in his past. Despite the changes at CBS and Viacom merger agreement, Ianniello is still entitled to that money but, in exchange, his new 15-month contract that takes effect once the merger closes does not include a severance package.