Viacom to allow vote on expanding shareholder rights
BOSTON: Viacom Inc will allow investors to vote in March on a proposal to extend voting rights to all shareholders, though the measure is certain to fail as it is opposed by executive chairman Sumner Redstone’s holding company.
Still, the vote will test how much confidence minority shareholders have in Viacom’s senior management, amid concerns over the health of 92-year-old Redstone.
Redstone controls about 80 percent of Viacom’s Class A voting shares through his holding company, National Amusements Inc. Most outsiders hold Viacom’s Class B shares, which do not have voting rights.
The proposal to extend voting rights to all shareholders came from Seamus Finn, director of socially responsible investing for Missionary Oblates, a Roman Catholic congregation in Washington which owns 4,000 voting Class A shares in Viacom. The proposal called for a share recapitalization plan that would give all Viacom shareholders one vote per share, according to the proposal seen by Reuters.
Viacom spokesman Jeremy Zweig confirmed the plan to hold the vote at the company’s annual shareholders meeting in March. He also reiterated Viacom’s view that its dual-class share structure helps it focus on long-term goals.
Value investor Mario Gabelli, whose firm is the second largest holder of voting shares of Viacom with 10 percent, said he would not support Finn’s proposal unless he was paid for giving up his voting shares.
“It makes no economic sense,” Gabelli said in an interview, noting that it has taken his firm 17 years to accumulate its position in Viacom. “Why would I give up my right without economic compensation?”
Finn said he understood the proposal had little chance of passage but he felt it was important to air out the issue at the annual meeting, in part because of Redstone’s health
“It’s something to be taken into consideration,” Finn said. Because Viacom is a media company, “it’s particularly important that there be a greater level of democracy and a greater level of transparency and participation by the shareholders,” he added.
Questions about Redstone’s health were heightened in November after a former girlfriend filed a lawsuit that raised doubts about the billionaire’ s competence. Redstone also controls CBS Corp. Shares of Viacom, whose properties include the Paramount Pictures film studio and Comedy Central cable network, have fallen 45 percent over the past year, as ratings slipped and more consumers ditched pricey cable television subscriptions.
The stock rose 5.4 percent to close at $40.98 on the Nasdaq on Friday.
Finn has long argued against dual shareholder classes. Last month, leaders of major public pension funds in California and Florida called on Viacom to make a similar change.
In a letter to Finn dated Dec. 22, 2015, Viacom Vice President Heidi Naunton wrote that the dual-class structure “has helped protect our company from short-term pressures and the disruption associated with efforts by activists to challenge control, and the structure has thereby allowed our board and senior management to focus on our long-term success.”
Viacom also noted other public companies have adopted the dual-class structure, including Facebook Inc and Alphabet Inc, the holding company for Google.
Sal Muoio, whose firm is the seventh-largest owner of voting shares of Viacom, said he supported the proposal to expand voting rights.
“It’s hard not to vote for that because you would have to really make an exception for what you think is really exceptional management,” said Muoio. “I think we will certainly vote for it.”