Last week, we learned that Viacom's (VIAB) controlling shareholder, Sumner Redstone, was stepping down as Chair of the company and that the board voted 10-1 to replace him in that role with current CEO Philippe Dauman. The one dissenting vote to Dauman's ascension to Chair was Redstone's daughter Shari.
Redstone is an iconic visionary and entrepreneur. We applaud his decision to step down now and let someone else take over this important role. (We also have faith that Les Moonves will do an excellent job in the Chair role at CBS (CBS), which Redstone also vacated.)
Shari Redstone put out a statement before and after the board vote saying that she believed the next Viacom Chair should not be someone connected to Redstone's trust or his health care. This meant it shouldn't be her or Philippe Dauman. After Dauman was elected Chair, she released a statement saying that she will "continue to advocate for what she believes to be in the best interests of Viacom shareholders."
We couldn't agree more with Shari Redstone and applaud her for thinking of her role as a fiduciary first before her self-interests.
We believe the next Chair of Viacom should have been an Executive Chair who was not the CEO, meaning it would be a full-time job with more legal liability attached to it. We think this person should definitely be independent.
Viacom has not been a paragon of corporate governance. The current board has been over-paid just like the CEO and management team. The company's stock has dropped in half over the last year and the CEO got a substantial increase in pay last year.
We believe it was a grave mistake for the Viacom board to elect Philippe Dauman as Chair.
Three weeks ago, we laid out a 99-page case for changes that are needed at Viacom. These included a new Chair, a new CEO, a change in the make-up of the board, and looking to build a new culture that helps produce new hit shows and not just more reruns of Dora and Sponge Bob.
The plan has been viewed over 400,000 times. We believe other shareholders strongly support the ideas.
We also believe that the market has embraced our ideas for change at Viacom and how under-valued the stock is relative to its still valuable assets.
Just prior to Dauman's election as Chair, Viacom's stock price rallied as much as 12% on the hopes that there would be new leadership at the top of the company. Following Dauman election, all the gains disappeared and the stock declined further on Friday. In our view, this is the market saying it expects nothing to change now with Dauman still at the helm.
It's time for change. It's time to finally do what's right for the shareholders and employees of Viacom. Viacom needs a new independent Executive Chair.