GLOBAL - The £28bn Universities Superannuation Scheme in the UK and the $19bn Mississippi Public Employees Retirement System are taking on US media giant Viacom in a class action law suit regarding excessive executive compensation, Global Pensions can exclusively reveal.
The two pension funds are seeking to become named plaintiffs in the action against the Viacom board of directors relating to compensation of its chairman and former CEO Sumner Redstone, and former co-COOs Les Moonves and Tom Freston.
The suit alleges that in fiscal 2004, the three officer defendants presided over a US$17.46bn net loss for Viacom, while receiving approximately $160m collectively in increased compensation “bearing no relation to any real performance criteria”.
Law firm Schiffrin & Barroway is representing the pension funds. The amount of compensation the funds are seeking is yet to be determined.
Commenting on the suit, Darren Check, director of institutional relations at Schiffrin & Barroway, said: “There’s still a sense that when it comes to European companies, there’s an ability for institutional investors to sit down, have a discussion with them and maybe work out the differences. That’s just not the case here in the US.
“The shareholder structure in Viacom is a perfect example of that where the shareholders, especially institutional investors, are locked out in having any voice in what goes on in this company and that’s one of the things we’re trying to change.”
The complaint further alleges that neither the compensation committee nor the board of directors were independent of Redstone’s influence. The effects of that were compounded by the dual stock structure of Viacom Inc, with Redstone being the major shareholder of the A shares (with voting rights), while the public were restricted to B shares (no voting rights), it is alleged.
“Obviously these directors deserve compensation, it’s just a matter of what’s fair and reasonable, and unfortunately that hasn’t been determined yet. What is obvious is that what they were paid was not fair and reasonable,” Check said.
The case can be seen as an example of shareowners seeking to hold companies responsible for their behaviour and the new cross-border cooperation that is emerging among pension funds.
The motion to intervene was filed in the Supreme Court of the State of New York on Friday after Judge Charles Edward Ramos denied the defendants motion to dismiss and allowed the case to proceed.
Industry Voice: Sponsored by Eaton Vance
This week's top stories included Cardano announcing plans to acquire Now Pensions from a Dutch pension fund later this year.
Royal Bank of Scotland (RBS) faces a £102m impact on liabilities as a result of equalising guaranteed minimum pensions (GMPs), according to its annual results.