Viacom Chief Executive Philippe Dauman sought to calm investors worried about the ailing health of Executive Chairman Sumner Redstone, as well as the future of the media empire he controls. Redstone is the controlling shareholder of both Viacom and CBS Corp, and his health has been steadily declining in recent months. This issue has caused concern among investors about the future of the two media companies.
Dauman said there were plans in place to determine what happens to Redstone's ownership interests in Viacom and CBS, even though the media mogul hasn't participated in public company events for the last year.
This story is the subject of a recent article in the Los Angeles Times entitled "Viacom CEO explains succession planning for aging media mogul Sumner Redstone."
Last month, Redstone's former girlfriend, Manuela Herzer, filed a lawsuit that seeks to have Redstone declared mentally incompetent. She claims that his health took a turn for the worse in September and that he no longer enjoys his favorite activities. Herzer had been the agent in charge of Redstone's advance healthcare directive until mid-October, when Dauman took over that role.
The Redstone family controls nearly 80% of the voting stock in the two media companies, Viacom and CBS. Sumner Redstone owns 80% of the shares, and his daughter Shari Redstone holds the remaining 20% and is vice chairman of Viacom and CBS.
Dauman announced the succession process that Redstone designed more than two decades ago to ultimately oversee his interests in the media companies. It will ensure that the companies continue to have "professional governance," including a group of independent board members. A trust was established to oversee Redstone's 80% stake after Redstone dies or when there is a legal determination that he is mentally incapacitated, neither of which has happened.
Under the succession plan, seven trustees would oversee Redstone's National Amusements interests, including two family members. Dauman, the Viacom CEO, also is a trustee. The four other trustees are Redstone's estate planning attorney, a Viacom board member and longtime Redstone friend, and two other Boston attorneys. The seven trustees would have a fiduciary responsibility to exercise, Dauman said. No one individual will control the trust; rather, it will operate by a majority vote.
Herzer's lawsuit seeks to have Redstone declared mentally incompetent. She filed the suit after she was removed as Redstone's agent in charge of his advance healthcare directive. She claims that Redstone wasn't in charge of his faculties when the decision was made to remove her. A judge has ruled that Redstone's healthcare situation isn't an emergency. A hearing will be held early next year.
Reference: Los Angeles Times (December 8, 2015) "Viacom CEO explains succession planning for aging media mogul Sumner Redstone"