Viacom CEO Calls Attempt to Remove Him from Redstone Trust 'Illegal' -- 2nd Update
May 21 2016 - 1:04PM
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
on 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 Corp.
On Saturday morning, Michael Tu, an attorney at the Los Angeles
law firm Orrick, Herrington & Sutcliffe that claims to
represent 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 the removal of the two men from the trust and
the National Amusements board had taken place on Friday, and he
shed more light on the reasons behind it.
"Sumner Redstone took decisive and lawful action [on 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. "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,
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.
Ms. Redstone, Mr. Dauman and Mr. Abrams were three of the seven
members of the trust Mr. Redstone set up to take over his nearly
80% voting stakes in both Viacom and CBS when he dies or is
incapacitated. Other members include Ms. Redstone's son and her
mother's divorce attorney.
On Saturday, a Viacom spokesman accused Ms. Redstone of
manipulating her father to engineer the ouster in order to take
control of National Amusements Inc. and Viacom.
"The actions taken yesterday in Sumner Redstone's name are
completely inconsistent with his long-expressed wishes and intent
and extremely disruptive and damaging to Viacom and all its
shareholders," the spokesman said. "There has been no communication
from Sumner Redstone. In fact, during an in-depth strategy session
of Viacom's Board Tuesday evening and all day Wednesday, not a
sound was heard from Sumner, who was connected by phone. Shari
Redstone, also connected by phone, did not raise a single concern
during the Board session on any topic."
The spokesman said Mr. Tu was "previously unknown until this
week to anyone associated with Sumner other than Shari Redstone"
and had been unable to confirm to the board's independent counsel
that he had even met with Mr. Redstone. Mr. Tu couldn't immediately
be reached for comment on whether he had communication with Mr.
Redstone.
"It is clear that Shari Redstone has isolated her father and put
his residence on lockdown, which provides clear evidence of her
exercise of undue influence," the spokesman continued. "Despite
many attempts by members of Viacom's board, including the lead
independent director, to meet with Sumner they have been denied
access."
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.
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 evicted her from his house and
removed her as his health-care agent this past October.
During the legal battle, Ms. Herzer characterized Mr. Redstone
as a "living ghost" while Mr. Dauman had 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.
(END) Dow Jones Newswires
May 21, 2016 12:49 ET (16:49 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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