Viacom said Thursday that it has extended by two years Dauman's contract, which previously was scheduled to expire Dec. 31, 2016.
The New York-based media company owns cable channels
Dauman's base pay will remain unchanged, and he will continue to be eligible for bonuses and other performance-based incentives.
During the 2013 fiscal year, Dauman received a compensation package valued at $37 million.
Viacom's shares have dropped more than 20% during the last 12 months amid worries about declining TV ratings at the company's channels and increasingly tough battles with pay-TV distributors.
Dauman, 60, has been chief executive of Viacom since September 2006.
The extension comes amid the deteriorating health of the company's controlling shareholder and executive chairman,
Dauman has long been one of Redstone's most trusted advisors.
"He has been an extraordinary CEO over more than eight years and his strategic vision and creative leadership have delivered consistently outstanding operational and financial results," Redstone said in a statement.
Last month, Redstone's other media company,
Viacom separately on Thursday declared its quarterly cash dividend of 33 cents a share for its Class A and Class B common stock. The company's shares closed Thursday at $66.78 a share.