Les Moonves’ future as chairman and CEO at CBS, already uncertain after his legal standoff with Shari Redstone and majority shareholder National Amusements Inc., has gotten a lot more precarious since multiple women have accused him of sexual harassment.
What’s more, his ouster under either circumstance could jeopardize a golden parachute worth between $184 million and $315 million, according to company filings with the Securities and Exchange Commission.
The independent counsel hired by the CBS board on Monday to investigate the misconduct accusations from last Friday’s New Yorker exposé could prove to be the bigger threat to Moonves’ payout should he be forced out of the company he’s led for 15 years.
“I would assume that such allegations, if proven or confirmed by a thorough investigation, would generally constitute valid grounds of termination for cause, potentially putting the golden parachute in jeopardy,” CFRA analyst Tuna Amobi told TheWrap via email.
There has been widespread speculation that Moonves’ boardroom and legal maneuvers in May to dilute National Amusements’ 80 percent stake in the company might also lead to his ouster — though NAI has consistently denied any plans to seek his removal or to force a proposed merger with Viacom, in which it also has a majority stake.
Moonves, who is under contract through 2021 and received $69.3 million in compensation last year, would likely receive $184 million if CBS fires him without cause.
That’s the linchpin in determining the size of Moonves’s exit package: Whether he’s let go with, or without, cause. It was unclear if attempting to thwart the power structure at CBS would be just cause, but accusations by six women of decades of sexual harassment that were detailed in a New Yorker article very well could be.
According to CBS’s latest proxy filed with the Securities and Exchange Commission in April, there are six ways Moonves could exit the company, each tied to a different payout amount.
An excerpt from the proxy says: “A termination for ’cause’ for Mr. Moonves would have been willful and material violation of any company policy that is generally applicable to all employees or officers of the company, including, but not limited to, policies concerning insider trading or sexual harassment, the supplemental code of ethics for senior financial officers, and the company’s business conduct statement, provided that such violation has a material adverse effect on the company.”
If CBS deems his termination was for “good reason,” then Moonves misses out on a couple million dollars. But if there’s “cause” for Moonves’ firing, his compensation could be zilch. The same is true if he leaves voluntarily without good reason.
Amobi said it’s unlikely Moonves being forced out the door with nothing. “It would probably be an extreme situation for him to walk away with absolutely nothing since the golden parachute of that size will typically include several components,” Amobi said. “Settlement terms may or may not be open to mutual negotiation depending on the specific circumstances of the breach, but are rarely stipulated in advance within the contractual provisions in the event that termination for cause may be warranted.”
Because of CBS’s stock performance over the last few years, Moonves is promised an additional sum of roughly $131 million, according to CBS. The company’s shares have taken a small hit over the last few trading sessions, but are up nearly 8 percent in the last three months and closed above $52 on Tuesday.
The stock incentives would raise his golden parachute to the neighborhood of $315 million. It’s not clear whether he would still receive that stock-based payout in the event of his involuntary ouster.
Ross Gerber, CEO of investment firm Gerber Kawasaki, told TheWrap that he doesn’t believe the misconduct accusations themselves will force Moonves out.
“They’ve kept him on so far,” Gerber said in an email to TheWrap. “He will fight to the end. He thinks it’s his company.” As a result, Gerber added, Redstone would have to intervene to remove him.