Viacom CEO Calls Attempt to Remove Him from Redstone Trust 'Illegal' -- Update
May 21 2016 - 9:40AM
Dow Jones News
By Keach Hagey
Viacom Inc. Chief Executive Philippe Dauman is challenging the
validity of a move by Sumner Redstone's lawyers to remove him from
the trust that will eventually control Mr. Redstone's media
empire.
Mr. Dauman and Viacom board member George Abrams were informed
that they have been removed from the trust by a law firm claiming
to represent Mr. Redstone, according to a spokesman for Mr.
Dauman.
"These steps are invalid and illegal," the spokesman said late
Friday. "As court proceedings and other facts have demonstrated,
Sumner Redstone now lacks the capacity to have taken these steps.
Sumner Redstone would never have summarily dismissed Philippe
Dauman and George Abrams, his trusted friends and advisers for
decades."
The two men were also removed from the board of National
Amusements Inc., the holding company that owns the controlling
shares of Viacom and CBS.
On Saturday morning, Michael Tu, an attorney at the Los Angeles
law firm Orrick, Herrington & Sutcliffe representing Mr.
Redstone in the action, called Mr. Dauman's statement "attacking
Mr. Redstone's capacity disappointing and incorrect, as reflected
by Mr. Dauman's own testimony given under oath less than six months
ago that Mr. Redstone is as 'engaged, attentive and as opinionated
as ever.'"
He also confirmed that the move had taken place on Friday, and
shed more light on the reasons behind it.
"Sumner Redstone took decisive and lawful action [Friday] which
he firmly believes is in the best interests of Viacom Inc. and its
stockholders when he removed Philippe Dauman and George Abrams as
trustees of his Trust and directors of National Amusements, Inc."
Mr. Tu said in a statement. "Mr. Redstone acted after he expressed
his concerns regarding Viacom's performance to Messrs. Abrams and
Dauman, both Viacom directors, and received no response from
them."
Viacom's share price has dropped more than 40% over the past
year.
Removing Mr. Dauman would be a big victory for Shari Redstone,
Mr. Redstone's daughter and the vice chairman of Viacom and CBS
Corp., who has clashed in the past with the executive and was the
lone Viacom board member not to vote for his recent promotion to
executive chairman.
A spokeswoman for Shari Redstone had no immediate comment. Mr.
Abrams declined to comment.
Fortune earlier reported the removal of Messrs. Dauman and
Abrams from the trust.
Ms. Redstone, Mr. Dauman and Mr. Abrams were three of the seven
members of the trust that Mr. Redstone set up to take over his
nearly 80% voting stakes in both Viacom and CBS Corp. when he dies
or is incapacitated. Other members include Ms. Redstone's son and
her mother's divorce attorney.
Questions about the 92-year-old Mr. Redstone's condition have
only intensified since a lawsuit challenging his mental competency
was tossed out by a California judge earlier this month. The suit
was filed by his former companion, Manuela Herzer, who said he
lacked mental capacity when he threw her out of his house and
removed her as his health-care agent last October.
During the legal battle, Ms. Herzer characterized Mr. Redstone
as a "living ghost" while Mr. Dauman, who had replaced her as Mr.
Redstone's heathcare agent, said in an affidavit that he had been
"engaged and attentive" during meetings last fall.
Mr. Redstone's profanity-laced deposition in the case was enough
to convince the judge that the former executive didn't want Ms.
Herzer back in charge of his health care. But the transcript
revealed his extreme difficulty communicating and his inability to
answer some basic biographical questions, deepening concerns within
the Viacom board about his role in the company, according to people
familiar with the matter. Earlier this week, the Viacom board voted
to stop paying Mr. Redstone entirely.
Mr. Dauman has been Mr. Redstone's most trusted confidant for
three decades, ever since as a young mergers and acquisitions
lawyer he helped Mr. Redstone take over Viacom in 1987. But in
recent months, their relationship has come under strain, as Mr.
Redstone voiced opposition to Mr. Dauman's plan to sell a minority
stake in Paramount Pictures, according to people familiar with the
matter. Paramount was another of the great corporate trophies the
two men had once won together.
Write to Keach Hagey at keach.hagey@wsj.com
(END) Dow Jones Newswires
May 21, 2016 09:25 ET (13:25 GMT)
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