Viacom and CBS mapped out the compensation structures of several top executives late Monday, with ViacomCBS CEO Bob Bakish in line to receive a 55% boost in total compensation, and his No. 2 -- CBS chairman and CEO Joe Ianniello set to receive $70 million as consolation for being passed over for the top job.
CBS and Viacom agreed to merge in an all-stock deal on Aug. 13 that will value the combined company at about $30 billion. When the deal closes, expected by the end of the year, CBS shareholders will own 61% of the new ViacomCBS, with Viacom shareholders owning the remainder.
This is the third time Viacom and CBS have attempted to combine since splitting in 2006. In the past the companies have cited a failure to agree on valuation as the main reason for scrapping deals in 2016 and 2018. But with the industry continuing to consolidate and other programmers moving to launch their own direct-to-consumer offerings, the pressure to add scale has increased.
According to a Securities and Exchange Commission filing Aug. 19, current Viacom CEO Bob Bakish, who will become CEO of the combined ViacomCBS when the deal closes by the end of the year, could receive as much as $31.5 million in annual compensation, a 55% increase over the $19.9 million he received in fiscal 2018. According to the filing, Bakish’s four-year deal includes a base salary of $3.1 million and he will be eligible for annual equity grants worth up to $16 million and cash bonuses of up to $12.4 million per year.
Ianniello, who has served as acting CEO of CBS since former network chairman and CEO Les Moonves was ousted amid a sexual harassment scandal, will become chairman and CEO of CBS after the deal closes. According to the filing, Ianniello will receive the same compensation he agreed to in April, when the broadcaster extended his employment deal through 2021. As part of that extension, CBS reportedly agreed to pay Ianniello $70 million if he was passed over for the top spot in any “corporate event,” including a merger of CBS with Viacom. Ianniello also will receive 450,000 new restricted stock units in ViacomCBS after the deal closes. That could be worth more than $30 million, if the stock trades in the $68 per share range, as anticipated by some analysts.
Former Showtime chief financial officer Christina Spade will become CFO of the combined entity, with an annual base salary of $1.4 million and a bonus target of up to 200% of that base. She is also eligible to receive annual awards under the company’s long-term incentive plan, with a target of $3.4 million.
CBS and Viacom also have agreed to break-up fees if the deal is not completed. According to the filing, Viacom will have to pony up $373 million to CBS if it terminates the deal before May 13, 2020. CBS would have to pay Viacom $560 million if it cancels the merger before that date.
The combined company’s board of directors will have 13 members -- six from CBS -- Candace K. Beinecke, Barbara M. Byrne, Brian Goldner, Linda M. Griego, Susan Schuman and Frederick O. Terrell -- and four from Viacom -- Judith McHale, Ronald Nelson, Charles E. Phillips, Jr. and Nicole Seligman. Three directors will be designated by the company’s largest shareholder, National Amusements -- ViacomCBS chair Shari Redstone, Robert Klieger and Bakish.