Ousted CEO’s Pay Won’t Stop at $75 Million If Viacom Outperforms
(Bloomberg) -- Philippe Dauman, the ousted chief executive officer of Viacom Inc., will receive $75 million in exit payments. If the media giant recovers after he leaves, his ultimate payout could well exceed $100 million.
Dauman’s golden parachute comprises a $58 million cash severance, $12.9 million in restricted stock and an estimated $3.45 million in options that vest early, according to a Tuesday regulatory filing. He’ll also get $1.1 million in additional benefits, including the services of secretary Rosemarie Cresswell for three years, and Viacom will pay for an office offsite.
The $75 million figure doesn’t include $17.7 million in pro-rated bonus payments, or $2 million in interest payments on Dauman’s deferred compensation balance to help him avoid a bigger tax bill after a payout. Viacom considers these sums to have been earned by the outgoing CEO, but if you include them, Dauman is getting about $95 million upon his exit.
There’s more. That sum doesn’t include up to 1.1 million stock units tied to Viacom’s share price and earnings that Dauman could receive if the company mounts a turnaround after he leaves. Those would be worth $46.4 million if they had vested at Viacom’s Monday closing price.
Dauman, 62, is leaving Viacom after a months-long legal battle with the controlling Redstone family ended in a settlement last week. Much of his severance package was negotiated long ago, before the boardroom battle erupted. Dauman will remain non-executive chairman until Sept. 13 and has until Sept. 7 to propose a deal to the board to sell a minority stake in the company’s film unit, Paramount Pictures.
The Redstone clan has a history of lavish pay for executives. Former Viacom CEO Tom Freston got an $84.8 million payout when he was dismissed in 2006. Les Moonves, the CEO of the Redstones’ other company, CBS Corp., and Tom Dooley, who is stepping in on an interim basis to replace Dauman, also have pay packages that include tens of millions of dollars in severance.
Dauman will receive a certain number of shares, which were granted to him every January, depending on how Viacom performs against the Standard & Poor’s 500 Index for a series of rolling three-year periods. He will receive the maximum payout only if Viacom is the index’s top performer.
Dauman’s employment agreement allows the exact number of shares he gets under the plan to be increased if the company hits earnings-per-share targets.
The shares were little changed Tuesday at $41.71. They have gained 1.3 percent this year, compared with the 7.2 percent increase of the S&P 500.
Jeremy Zweig, a Viacom spokesman, declined to comment beyond the filing. For comparison’s sake, the options valuation is based on Thursday’s close -- the date when Dauman’s restricted stock award vested. The options don’t actually vest until later this month.