Viacom Board Accused of ‘Corporate Game of Thrones’

     (CN) — Shareholders joined the fray in the struggle for Viacom, claiming that both incumbent and ousted directors appeased Sumner Redstone to maintain their lucrative positions, even as he descended into dementia and drooled at the table.
     On Thursday, the lead independent director of Viacom’s board, Frederic Salerno, sued Sumner Redstone and his daughter Shari, claiming she’s trying to seize control of the company through undue influence over her 93-year-old father by removing the independent board.
     Sumner Redstone controls Viacom through National Amusements Inc., which owns 80 percent of the voting shares of the company. However, his holdings represent only 10 percent of the company’s equity.
     National Amusements filed its own complaint the same day, seeking to affirm the removal of Salerno and four other board members: George Abrams, Blythe McGarvie, William Schwartz and former CEO Philippe Dauman.
     Salerno portrays Shari Redstone as a “puppet master” who controls her father because of his “debilitating health and isolation.”
     But a shareholder class action filed Friday by lead plaintiff Eric Gilbert says Shari Redstone and Philippe Dauman “are playing a corporate Game of Thrones with Viacom, seeking to outflank each other in controlling Sumner Redstone, the Sumner M. Redstone National Amusements Trust, NAI and ultimately Viacom.”
     He names the Redstones, National Amusements, Viacom and all members of the board of directors, including the dismissed directors, as defendants.
     “Sumner Redstone’s personal issues, including a constant parade of girlfriends half his age and bitter family feuding with his children, have played out in the press for many years,” according to the complaint. “While Sumner Redstone’s physical and mental health have been in serious decline for several years, the board has failed to protect the company or the holders of its non-voting Class B common stock from the chaos that would ensue at Viacom when Sumner Redstone inevitably became incapacitated or passed away.”
     Gilbert says the incumbent directors routinely renominated Redstone to serve on the board each year although he has not attended a meeting since 2014, and at that time “dozed and drooled” through them.
     “In essence, the board continued to appease the declining Sumner Redstone — or whomever was controlling him at the moment, whether it be live-in girlfriends, family members, such as his daughter Shari Redstone, or Viacom officers, such as president and CEO Philippe Dauman — in order to maintain their lucrative positions as directors of the company,” the class-action complaint claims.
     The lawsuit asks the court to invalidate the June 2016 amendments to Viacom’s bylaws, which give Redstone a director-level veto. It also claims that a bylaw that purports to allow directors to remove fellow directors violates Delaware law.
     The shareholders are represented by Elizabeth McGeever with Prickett, Jones & Elliott in Wilmington, Del.

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