CBS Corp. directors agreed to pay $1.25 million to settle investors’ claims that network owner Sumner Redstone received millions of dollars in improper compensation after he became incapacitated in 2014.
The money — coming from insurance covering CBS’ officers and directors — will go back into the network’s coffers and not to individual shareholders, according to a Thursday filing in a Delaware court. Such derivative suits are common against corporate boards.
The settlement resolves what may be the last lawsuit over the corporate fallout from Redstone’s physical decline and jockeying over control of CBS — the most-watched network in the United States — and media company Viacom Inc., both owned by the Redstone family.
CBS spokeswoman Kelli Raftery declined to comment Friday on why the company’s directors decided to settle. CBS had defended the payments to Redstone.
Redstone, 95, controls CBS and Viacom through his family investment vehicle National Amusements Inc., but his involvement has waned as his health has deteriorated. His daughter Shari Redstone has assumed a larger role on the companies’ boards.
Redstone’s health played a central role in a corporate clash over a proposed merger of CBS and Viacom, pitting Shari Redstone against CBS’ then-Chief Executive Les Moonves.
Moonves and his CBS board allies sought to oust the Redstones as CBS’ controlling shareholders, but were thwarted when Moonves was shown the door over sexual harassment allegations. CBS added five new directors to its board after Moonves left.
The CBS investors noted Redstone’s mental competence was called into question when reports surfaced in 2014 that he wasn’t attending the network’s board meetings and was having trouble speaking.
A Delaware Chancery Court judge allowed the lawsuit to proceed, ruling in April that the shareholders raised legitimate questions whether CBS’ board agreed to pay Redstone in exchange for “services it allegedly knew that he could not render.”