Sumner Redstone took his battle with Viacom executive chairman and CEO Philippe Dauman to a new level Thursday, ousting five members of the programmer's board of directors -- including Dauman -- and setting the stage for what could be a major shakeup of company management.
Redstone and Dauman have been at loggerheads since late May, when Viacom's largest shareholder ousted his former lieutenant from the trust that would manage his controlling interest in the programmer upon his death or incapacitation. What followed was a series of lawsuits and accusations that culminated in the most recent action. With Dauman off the board -- as well as George Abrams, Blythe McGarvie, Frederic Salerno and William Schwartz, all thought to be loyal to the CEO -- Redstone has free reign to make sweeping changes.
Investors seemed happy with the latest chapter in the saga -- Viacom's stock was up more than 6% ($2.89 per share) to $45.90 each shortly after the announcement.
Curiously, Dauman confidant and Viacom chief operating officer Tom Dooley keeps his seat. The new Viacom board members include former Discovery Communications president and CEO Judith McHale, Buzzfeed chairman and former Huffington Post chairman Kenneth Lerer; Eversource Energy chairman Thomas May; Avis Budget Group executive chairman Ronald Nelson and former Sony Entertainment president Nicole Seligman.
The five new board members join Redstone, his daughter Shari, Dooley, Cristiana Sorrell, Deborah Norville, and Charles Phillips.
National Amusements (NAI), the vehicle that houses Redstone's Viacom stock, said in a statement that the new directors have “deep experience in corporate governance of public companies and will provide valuable expertise to Viacom in the areas of media, entertainment and technology. None of the new directors is affiliated with National Amusements, Viacom or any Redstone family trust.”
Because of past lawsuits filed by Dauman and Abrams questioning Sumner Redstone’s mental capacity, NAI has filed papers in the Delaware Court of Chancery to affirm the validity of the changes.
The moves could lead to the removal of Dauman as executive chairman and CEO of Viacom. Last night former CEO Tom Freston told CNBC that Dauman should be removed after a series of serious errors. Other analysts have said that investors have lost confidence in the CEO, and that executives like DreamWorks Animation founder Jeffrey Katzenberg, former Disney chief operating officer Tom Staggs and 21st Century Fox vice chairman Chase Carey could be possible candidates for his replacement.
In a statement, Salerno called the moves a "brazen and demonstrably invalid attempt" by Shari Redstone to gain control of the company. He said the boaed was also filing suit in Delaware Chancery Court seeking to find the moves invalid and reinstate the current board members.
“Mr. Redstone established and maintained for decades a clear estate plan for the governance of Viacom upon his death or incapacity – based on independent control and professional management of Viacom going forward," Salerno said in his statement. "He said repeatedly that the Board will be responsible for making decisions about governance, leadership and succession, and he hand-selected a group of trusted advisors and independent directors to fulfill this role. Sadly, it is now clear that Mr. Redstone is being manipulated and used by his daughter in an attempt to accomplish her long-held goal of gaining complete control of Viacom.”
