By Austen Hufford 

Viacom Inc. said Friday that it would pay the legal expenses of Chief Executive Philippe Dauman and board member George Abrams in a lawsuit filed against the trust controlling most of its shares, as the public battle with media mogul Sumner Redstone continues.

Last month, Mr. Redstone removed Messrs. Dauman and Abrams from the board of National Amusements Inc., the holding company through which Mr. Redstone controls Viacom, and the seven-member trust that will oversee his controlling stakes in Viacom and CBS Corp. when he dies or is incapacitated.

Messrs. Dauman and Abrams filed suit last month in a Massachusetts court to challenge their dismissals, arguing that Viacom Vice Chairman Shari Redstone, daughter of Sumner Redstone, is engineering the changes by taking advantage of her father, and that Mr. Redstone doesn't have the mental competency to carry out the changes.

The agreements announced Friday with Messrs. Dauman and Abrams have Viacom paying for their lawsuit against National Amusements, including attorney's fees, witness fees and public relations costs.

Under the agreements, Messrs. Dauman and Abrams would have to repay Viacom if either is found to have acted in breach of his fiduciary duties or in a manner not in the best interest of Viacom.

A representative from National Amusements was unavailable for comment.

Viacom said the agreements were approved by a committee of independent members of the board. On Thursday, National Amusements Inc. said it was seeking to oust five Viacom independent directors, including Mr. Dauman and Mr. Abrams. Frederic V. Salerno, Viacom's lead independent director, immediately filed suit in Delaware to invalidate the dismissals.

The next phase of the fight will present corporate-governance questions that legal experts say are rarely considered in the upper echelons of American business -- with a board and its controlling shareholder effectively in a legal war.

The suit from Messrs. Dauman and Abrams describes Mr. Redstone as suffering from a worsening brain disorder and being unable to write, read, walk or "coherently communicate."

The mogul's doctor put out a statement saying Mr. Redstone was alert and in no distress during a recent examination, and that he knows what he's doing. In recent days, Mr. Redstone has met with top CBS and Paramount Pictures executives, though they came to his car and details of the meetings weren't available.

Write to Austen Hufford at austen.hufford@wsj.com

 

(END) Dow Jones Newswires

June 17, 2016 08:56 ET (12:56 GMT)

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