MUMBAI: US media conglomerate Viacom's board of directors has announced that it has entered into a revised employment agreement with its Executive Chairman Sumner M Redstone.
The agreement reduces cash salary and bonuses effective 1 January, 2007 and immediately directly links the majority of Redstone’s compensation to superior shareholder returns.
Redstone and the Compensation Committee of the Viacom Board are extending the equity driven approach to compensation and incentives adopted by Viacom in its recently announced agreements with Viacom president and CEO Philippe P Dauman and Viacom’s senior executive VP and chief administrative officer Thomas E Dooley.
Redstone said, “As both a major shareholder and as the executive chairman of the company, I have long been in favour of the pay-for-performance model, which I believe is good for shareholders and good for the company. I want to commend the Compensation Committee for not only listening to our stockholders, but for their leadership, creativity and discipline in creating this new shareholder-friendly compensation structure.”
Under the terms of the new agreement, beginning in 2007, Redstone’s salary will be reduced to $1 million per year (from current $1.75 million), and deferred compensation, presently $1.3 million per year, will be eliminated. His target cash bonus under Viacom’s short-term incentive plan will be reduced from $6.1 million to $3.5 million per year.
Redstone will receive an annual award of stock options having a grant-date value of $3 million. He will also receive an annual award of performance share units (PSU’s) with a grant-date target value of $3 million.
