The fight for control of CBS Corp. took a more personal tone Tuesday: The Redstone family is alleging in a new lawsuit that the struggle stems from CBS Chairman and Chief Executive Leslie Moonves' bristling under the power of Shari Redstone.
The Redstone family filed a 66-page lawsuit in Delaware that alleges CBS has no legal right to strip the family of its special voting privileges, which give the family a chokehold over CBS' affairs.
The suit took aim at Moonves, saying he has prospered for more than a decade working for the Redstone regime _ collecting rich compensation packages that, over the years, total more than $700 million. Moonves consistently has been the highest-paid executive in media.
The suit alleges that Moonves now is out of control, and that this year he gave CBS' board an ultimatum: Vote to strip the Redstone family of their voting control, or he would resign. Moonves has leverage in the form of a contract that gives him a $180-million "golden parachute" should he exit the company, the suit says. The Redstones, in a footnote in the lawsuit, also said that they "reserve all rights to contest any payments to Mr. Moonves under his employment agreement."
CBS' independent directors filed suit against the Redstones and their investment vehicle, National Amusements Inc., on May 14, taking the first step to try to dilute the Redstones' voting shares. The family enjoys nearly 80 percent of the vote even though they own just 10.3 percent of CBS.
Independent directors voted May 17 to adopt a dividend that would give rank-and-file shareholders a vote. That move, should it be upheld by the courts, would dilute the Redstones' authority by reducing the family's voting power to 17 percent. The Redstones are challenging the move.
"The only cogent, but manifestly improper, explanation for the (company's) unprecedented action is that Leslie 'Les' Moonves, CBS's long-time CEO, has tired of having to deal with a stockholder with voting control and has taken particular umbrage that the exercise of such stockholder's control has migrated from Sumner Redstone to his daughter, Ms. Redstone," says the suit filed Tuesday by National Amusements.
Sumner Redstone, 95, has been ailing for the last four years. Since 2016, Shari Redstone has been calling the shots.
National Amusements, in its suit, also sought to undermine CBS' argument that Shari Redstone had breached her fiduciary responsibility to shareholders by pushing for CBS to merge with Viacom Inc., the other company that her family controls. CBS stock has lost more than 10 percent of its market value this year due to investor worries that Moonves might leave and that CBS would get saddled with Viacom's cable channels at a time when people are cutting the cable cord.
National Amusements and Shari Redstone "did not, and do not, intend to force a recombination of CBS and Viacom, whether by removing and replacing CBS directors or otherwise," National Amusements said in a statement, adding that Shari Redstone had already told Viacom board members that the family was planning to abandon its support for a merger due to CBS' resistance.
CBS said Tuesday in a statement that its own lawsuit against the family "details the ways in which (National Amusements) misused its power to the detriment of CBS shareholders, and was submitted after careful deliberation by all involved."
CBS' board voted 11-3 to strip the Redstones of their voting control. Only CBS Vice Chair Shari Redstone and her two allies on the board _ who both are family attorneys _ voted against the measure.
"We continue to believe firmly in our position," CBS said.
