Viacom said Monday that it revised chairman Sumner Redstone’s compensation package to one that more accurately reflects its stock performance.
The new agreement is similar to ones given to Viacom’s newest executives -- CEO Philippe Dauman and senior vice president Thomas Dooley, who replaced former CEO Tom Freston earlier this month.
The move comes after Redstone and several other Viacom executives were criticized for their lavish compensation agreements in a year when the company’s stock price fell more than 17%.
In 2005, Redstone received total compensation of about $17.4 million from Viacom, including $5.8 million in salary and a $7.125 million bonus. Redstone also received a $7.125 million bonus from CBS that same year -- Viacom split into two separate companies in January -- pushing his total compensation above $24 million.
According to the new arrangement, Redstone will see his annual salary drop to $1 million per year from its current $1.75 million and $1.3 million in deferred compensation will be eliminated.
Redstone’s target cash bonus under Viacom’s short-term incentive plan will be reduced from $6.1 million to $3.5 million per year. He will receive annual stock-option awards with a grant-date value of $3 million. In addition, Redstone will receive performance-share units with a grant-date target value of $3 million, but the value of those PSUs will depend on the total shareholder return of Viacom stock versus that of the Standard & Poor’s 500 Index.
Redstone also agreed to convert, effective Sept. 27, about $9.4 million in deferred compensation to stock options with a value of about $9.4 million. Those options will have a value equal to Viacom’s closing price on the conversion date and will vest over four years.
“As both a major shareholder and as the executive chairman of the company, I have long been in favor of the pay-for-performance model, which I believe is good for shareholders and good for the company,” Redstone said in a prepared statement.