Vi­a­com's new in­de­pen­dent di­rec­tor pledges close eye on strat­egy

The Pak Banker - - COMPANIES/BOSS -

Vi­a­com Inc's (VIAB.O) new lead in­de­pen­dent di­rec­tor pledged on Wed­nes­day to rep­re­sent all of the me­dia com­pany's share­hold­ers and im­prove board and man­age­ment co­or­di­na­tion, in­clud­ing on po­ten­tial merg­ers and ac­qui­si­tions.

On Wed­nes­day, Vi­a­com, which owns MTV, Com­edy Cen­tral and Paramount, named Fred­eric Salerno, for­mer vice chair­man of Ver­i­zon Com­mu­ni­ca­tions Inc (VZ.N) and a Vi­a­com board mem­ber, as its first lead in­de­pen­dent di­rec­tor as the New York­based com­pany looks to counter in­vestor crit­i­cism of its cor­po­rate gov­er­nance. As first re­ported by Reuters ear­lier on Wed­nes­day, Vi­a­com's board was look­ing to name one of its inde- pen­dent board mem­bers to the new role to as­sure in­de­pen­dence af­ter it voted to make Chief Ex­ec­u­tive Philippe Dau­man ex­ec­u­tive chair last month. He re­placed Sum­ner Red­stone de­spite calls by the 92-year-old me­dia mogul's daugh­ter for an "in­de­pen­dent voice" in that po­si­tion.

Roughly a quar­ter of the in­de­pen­dent shares voted was in op­po­si­tion to Salerno's re­elec­tion to the board on Mon­day, the low­est level of sup­port among board mem­bers. But over­all, in­vestors cheered the move on Wed­nes­day, and Vi­a­com's stock rose 3.7 per­cent.

Salerno told Reuters he wanted to en­sure Vi­a­com's in­de­pen­dent di­rec­tors had a good han­dle on ev­ery as­pect of Vi­a­com's busi­ness, in­clud­ing merg­ers and ac­qui­si­tion ac­tiv­ity. Last month, Dau­man said the com­pany was look­ing to sell a "sig­nif­i­cant stake" in Paramount. "The pri­or­i­ties are that we clearly un­der­stand the strate­gic plan that ex­ists and to make sure it's holis­tic enough for each and ev­ery­one of the di­rec­tors to not only un­der­stand it but to be able to in­put their views as to the doa­bil­ity [and] the ap­pro­pri­ate­ness," he said in an in­ter­view on Wed­nes­day af­ter the an­nounce­ment.

"We will make sure that we rep­re­sent all share­hold­ers, which is im­por­tant in a con­trolled com­pany," he added. Proxy ad­viser In­sti­tu­tional Share­holder Ser­vices rec­om­mended that Vi­a­com in­vestors with­hold sup­port for six of the com­pany's di­rec­tors, in­clud­ing Salerno, who chairs the com­pen­sa­tion com­mit­tee, cit­ing con­cerns about ex­ec­u­tive pay. Vi­a­com awarded Dau­man a $54.2 mil­lion pay pack­age for the last fis­cal year, when the com­pany's shares fell 44 per­cent.

Salerno noted that much of the com­pen­sa­tion was in equity tied to busi­ness per­for­mance, not cash. He dis­puted the per­cep­tion that the board was in some way be­holden to Dau­man.

"It is a high num­ber in com­par­i­son to the in­dus­try. No one de­nies that, but it's a num­ber that is not high in com­par­i­son to the peer group," he said.

About 80 per­cent of Vi­a­com's Class A vot­ing shares are owned by Red­stone's fam­ily, a level of con­trol that Paul Hodg­son, a part­ner at PHJ Part­ners, a Port­land, Maine-based cor­po­rate gov­er­nance con­sul­tancy, said un­der­mined Salerno's in­de­pen­dence.

"His ac­tual level of in­de­pen­dence is prob­a­bly ques­tion­able," Hodg­son said. Salerno, who noted that a ma­jor­ity of in­de­pen­dent share­hold­ers sup­ported him, said he saw his new role as "a mat­ter of re­fine­ment" rather than "rev­o­lu­tion­iz­ing" the board.

The ap­point­ment of an in­de­pen­dent lead di­rec­tor could help quell in­vestor con­cern sur­round­ing Vi­a­com af­ter Red­stone's ex-girl­friend Manuela Herzer filed a law­suit ques­tion­ing his men­tal com­pe­tence when he re­moved her last year as his health care agent in fa­vor of Dau­man.

Sal Muoio, whose in­vest­ment firm is a top owner of vot­ing Vi­a­com shares, ap­plauded the new in­de­pen­dent di­rec­tor role. "They ab­so­lutely should have this," Muoio said. "I al­ways thought that was stan­dard op­er­at­ing pro­ce­dure for com­pa­nies that have the CEO as chair­man."

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