As Viacom’s controlling shareholder Sumner Redstone continues to make moves to oust the company’s board of directors, the lead independent board member, former Verizon vice chairman Fred Salerno, issued a letter to shareholders stressing that they will continue to fight in the best interests of the company.
Redstone has been setting the wheels in motion to remove the board, including his former friend and confidant executive chairman and CEO Philippe Dauman. Dauman has filed suit in Massachusetts probate court to block Redstone's actions, claiming that his daughter Shari Redstone is exerting undue influence on her father.
Related:The Philippe Phactor [subscription required]
Salerno has requested a face-to-face meeting with Sumner Redstone, but has been unable to do so. The letter, Salerno wrote, is being issued to let shareholders know what the board is thinking.
“We know that none of us is ‘entitled’ to his or her Board seat,” Salerno wrote. “But we were elected, until our terms expire or we are properly removed, to look after the interests of all the stockholders of Viacom. That is what Delaware law requires – and that is what Sumner Redstone has always expected.”
Salerno said the board believes that Redstone’s actions are out of character and inconsistent with his prior commitment to ensure that an independent board and professional management remain in place at Viacom after his death or incapacitation.
“More specifically, it would be equally inconsistent with his stated judgment for many years that his daughter, Shari, should not control Viacom or his other companies,” Salerno wrote, adding that the board faces a decision: to either fight a removal attempt or just let it happen.
“Acquiescence is appealing – it would remove some of the antagonism and public controversy, and avoid contentious and time consuming litigation,” Salerno wrote. “But to a person we feel the responsibility to challenge in court what we honestly believe would be legally flawed removals. That is especially so because the flaw we see would be the inexplicable assertion that Sumner was acting of his own free will and with the mental competency to do so.”
Besides Salerno, Viacom’s other independent directors are: senior adviser to the chairman at the World Economic Forum Cristiana Falcone; International Finance LLC president of leadership Blythe McGarvie; Inside Edition anchor Deborah Norville; former Oracle Corp. president and current CEO of Infor Global Solutions Charles Phillips; and counsel to the law firm of Cadwalader, Wickersham & Taft, William Schwartz.
The remaining board members are Sumner Redstone, Shari Redstone, Dauman, attorney George Abrams and Viacom chief operating officer Thomas Dooley. Sumner Redstone controls 80% of Viacom’s vote, and could call a special meeting to remove the board, Given the size of his stake, his wishes would rule the day, save a court order declaring him incompetent.
“We will contest the purported removal if it comes, because we see that as our responsibility to the non-control shareholders of Viacom who own 90% of the equity of the company – and to the legacy of a man we greatly admire and consider a dear friend,” Salerno wrote. “We can do no less than try to make sure that the fates of Viacom, its majority equity holders and Sumner's legacy are ably represented on their behalf and impartially decided by the courts.”
