Media company CBS Corp’s board is in talks with Chief Executive Officer Les Moonves to negotiate his exit, a source familiar with the matter said on Thursday.
These discussions are occurring as the company and its controlling shareholder Shari Redstone and National Amusements Inc are also hammering out a settlement to a legal dispute over the control of CBS.
The two sides would agree to a two-year standstill on any discussions of a CBS and Viacom Inc merger as part of the settlement, sources close to the talks told Reuters.
The board has offered a roughly $100 million exit package, CNBC reported earlier on Thursday, citing people familiar with the negotiations. The number could not be independently verified.
A New Yorker report in late July featured claims against Moonves from six women spanning different time periods over two decades, from 1985 to 2006. The allegations included sexual assault and unwanted advances.
The board has asked for autonomy from its controlling shareholder, the Wall Street Journal reported on Thursday. If granted, CBS could be free to pursue a sale.
CBS shares rose more than 3 percent.
Moonves will be replaced by Chief Operating Officer Joe Ianniello as interim CEO, CNBC reported.
Long viewed as a successor to Moonves, Ianniello was instrumental in CBS’s success following its split from Viacom in 2006. He has overseen the company’s transformation from traditional TV and radio broadcaster to a supplier of shows to digital platforms and the launch of its own streaming TV service.
As of Wednesday’s close, CBS stock had risen by more than 120 percent from a close of $24.04 on Dec. 30, 2005, a day before the company split. Viacom stock has fallen more than 28 percent from $41.15 in the same period. “CBS will be in very good hands with Joe Ianniello running the company and allow for a smooth transition,” analyst Craig Huber of Huber Research Partners said.
CBS declined to comment. Representatives of the board and representatives for the investigations into Moonves declined to comment.
Moonves, who joined CBS in 1995 and became CEO in 2006, has been locked in a legal battle over control of the company with National Amusements, owned by Shari Redstone and her father Sumner who also control media company Viacom.
Viacom shares traded flat on Thursday.
Moonves received total compensation of $69.33 million in 2017, making him one of the highest paid U.S. executives. Under his contract, he is entitled to up to $180 million in severance.
According to the CNBC report, the board wants to reserve the ability to claw back some of the compensation depending on the results of investigations into sexual harassment allegations against Moonves. It was not immediately clear if this could mean Moonves receives less than $100 million or anything at all.
CBS in August said it had retained two law firms and the board had set up a special committee to probe the allegations.
According to a filing from CBS in April, if Moonves is terminated for cause, or in the event of resignation without “good reason,” no incremental payments and benefits would be made.
One of the definitions for “cause” include “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,” according to the filing.
Moonves had earlier said he “may have made some women uncomfortable by making advances,” which he called mistakes he regretted immensely, but that he understood “’no’ means ‘no’” and never used his position to harm anyone’s career.
A big payout could open the company to shareholder litigation, experts said.
“There’s an established legal doctrine that says you can potentially be sued for overpaying your CEO to go away,” said Eric Talley, a Columbia Law School corporate governance professor. “If you authorize payment of a big exit fee, you have to be acting in good faith to further shareholder interests.”
The precedent came out of shareholders suing over Michael Ovitz’s exit compensation from Walt Disney Co as president, claiming the board breached its fiduciary duty, Talley said. Shareholders ultimately lost but the legal battle established the standard boards and companies must meet when dealing with executive departures.
News of discussions with Moonves were first reported by the Los Angeles Times.