CBS will set aside $120 million for severance for Les Moonves, depending on probe findings
CBS said in a regulatory filing Monday that it would contribute $120 million to a trust that could pay a massive severance - or none at all - to its departing chief executive, Leslie Moonves, depending on the results of an investigation into allegations of sexual misconduct. The filing follows the company’s announcement Sunday that its powerful longtime chief executive was resigning amid allegations of a range of misdeeds, including harassment, assault and career retaliation.
The filing says that if the CBS board finds that the company can fire Moonves “for cause” and he does not demand arbitration, he would not be paid the severance money. But if the board finds that the company is not entitled to dismiss Moonves for those reasons, Moonves would receive the $120 million in the trust’s assets. The filing also says Moonves agreed to perform “transition advisory services” for a year (or until the board determines whether he can be fired “for cause”) and that CBS will provide office services and security services for up to two years after his resignation.
In the filing, the company also said it would make contributions worth $20 million to one or more charities “that support the #MeToo movement and equality for women in the workplace.” That figure was subtracted from a $140 million potential severance payment for Moonves that was negotiated down, according to a person briefed on the negotiations; an analysis done in late July by the executive compensation research firm Equilar found that Moonves’s original severance payment, were he to be fired “without cause,” would be valued at an estimated $238 million.
The filing follows a whirlwind few weeks for the company and for Moonves, a media titan who has long been one of the most highly compensated CEOs in America and had worked at CBS for more than two decades. In an article by the New Yorker’s Ronan Farrow earlier in the summer, six women accused Moonves of sexual misconduct. On the New Yorker’s website on Sunday, six additional women made new claims of sexual harassment and assault in incidents they said occurred between the 1980s and the early 2000s.
In a statement made late Sunday reported in The Washington Post, Moonves said, “It has been an incredible privilege to lead CBS’s renaissance and transformation into a leading global media company.” He said that “untrue allegations from decades ago are now being made against me that are not consistent with who I am… . I am deeply saddened to be leaving the company.”
In a statement from Moonves reported by the New Yorker on Sunday, he said, “The appalling accusations in this article are untrue” and that while he did have “consensual relations with three of the women some 25 years ago before I came to CBS,” he had “never used my position to hinder the advancement or careers of women.”
Moonves’ compensation in 2017 was valued at $68.4 million, making him the second-highest-paid chief executive in an Equilar/Associated Press ranking of executive compensation. His 2016 pay was valued at $68.6 million, and his 2015 pay at $56.4 million, both times notching him the second spot in the ranking.
Shares of CBS closed down 1.5 percent on Monday.
At $120 million, the potential severance Moonves could receive — only if he is cleared following the investigation — is high in comparison to many payouts, said compensation experts, even in the rarefied world of executive pay.
Equilar does not actively track executives’ severance packages, but it did a study a couple of years ago of the largest golden parachutes that CEOs have received over the previous 10 years. (Such payments are made to departing executives in the event of a merger and change in control.) A $120 million payment would have ranked third on that list.
Pay experts said it’s not surprising Moonves has such a high possible payout from CBS because he has always been richly compensated, and severance is typically based on a multiple of annual pay. “We’re talking about nonmortal compensation here,” said Andy Restaino, a compensation consultant based in Bellmore, N.Y.
Moonves has placed first or second on the Equilar/Associated Press ranking of reported executive pay each year since 2011, the first year it published the analysis, with 2017 compensation valued at $68.4 million. His 2016 reported pay was valued at $68.6 million, and in 2015 it was $56.4 million.
Media industry CEOs often figure highly on such lists. Equilar estimates that from 2006, when Moonves became CEO of CBS, to 2017, he realized $1.02 billion in compensation, a figure that does not include changes in pension values or deferred compensation.
Pay experts said it was unusual, however, to see a company take a two-step process - one with detailed negotiations at the time of departure and questions to be resolved later - as well as the setup of a trust for a possible severance payment. “I’ve never seen an amount like this put into a grantor trust,” said Rosanna Landis Weaver, an executive compensation expert for the nonprofit As You Sow.
It was also rare to see a company make a charitable donation part of the transaction, pay experts said, and questioned whether it might be a way to deflect complaints of a possible future payment that occurs if the investigation were to clear Moonves. The donation appears to be “for public relations purposes,” said Charles Elson, the director of a corporate governance center at the University of Delaware. “If they give him any severance, they’re going to be criticized. This softens the blow.”
A spokesperson for CBS said the intention of the donation was to do something “meaningful” in contributing to organizations that support the #MeToo movement.
The Post was unable to immediately reach a spokesperson for Moonves.
Moonves’s wife, television host Julie Chen, was absent from the set of the CBS show “The Talk” on Monday. In a statement to Deadline, Chen said: “I am taking a few days off from ‘The Talk’ to be with my family. I will be back soon and will see you Thursday night on ‘Big Brother.’”