Viacom CEO, board face tough fight against Redstone: experts

Tue May 31, 2016 6:48pm EDT
 
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By Dan Levine

NEW YORK (Reuters) - Viacom Inc's (VIAB.O: Quote) chief executive and independent directors would face an uphill courtroom battle to remain on the board if controlling shareholder Sumner Redstone followed through on a threat to remove them, legal experts said on Tuesday.

Lead Independent Director Fred Salerno on Monday questioned 93-year-old Redstone's mental competence and said any move to oust Viacom's six independent directors would be "legally flawed."

But unlike some companies, Viacom's corporate charter gave Redstone's National Amusements Inc (NAI) the ability to immediately remove Viacom's board at any time under Delaware law, said Lawrence Hamermesh, a corporate law professor at Widener University Delaware Law School.

NAI holds 80 percent of the voting shares in Viacom and CBS Corp (CBS.N: Quote).

The ousted directors could petition a Delaware judge to issue a "status quo" order that keeps them on the board while the case is being litigated. Such orders are somewhat easier to obtain than a formal injunction in other kinds of civil cases, Hamermesh said.

However, status quo orders are meant to last only a few weeks. A Delaware judge would likely be reluctant to delve into questions about Redstone's mental competency when that issue is already being litigated in other courts, said Minor Myers, a corporate law professor at Brooklyn Law School.

"It appears to be an uphill battle," Myers said.

Earlier this month, Redstone removed Viacom CEO Philippe Dauman and Viacom board member George Abrams from NAI's board, as well as the seven-person trust that will control the voting shares after Redstone exits.   Continued...

 
Philippe Dauman, president and CEO of Viacom, speaks at the Reuters Global Media Summit in New York December 2, 2010.   REUTERS/Brendan McDermid/File Photo