BOSTON Institutional Shareholder Services on Friday recommended Viacom Inc investors withhold support for six of the media company’s directors, as the largest proxy adviser cited several concerns including their oversight of executive compensation.
ISS, which advises big institutional investors on how to vote their shares in corporate elections, also recommended investors support a shareholder proposal calling on the company to adopt a recapitalization plan to give each share an equal vote.
Viacom has faced criticism about its corporate governance in recent months after the ex-girlfriend of its longtime leader Sumner Redstone raised questions in a lawsuit about the elderly billionaire’s mental competence.
Redstone, now 92 years old, gave up his roles as executive chairman of Viacom and of broadcaster CBS Corp earlier this month.
ISS has urged votes against Viacom directors in past years with little impact, because a majority of its voting shares are controlled by Redstone’s holding company National Amusements.
Still, the votes set to be cast at Viacom’s annual meeting on March 14 will test how much confidence outside investors have in the company’s leaders including Chief Executive Philippe Dauman, now also executive chairman.
In a research paper for clients, ISS recommended investors vote for Dauman, but suggested they vote against directors including the five members of Viacom’s compensation committee. These included committee chair Frederic Salerno and Deborah Norville, the broadcast journalist, because of what ISS called “a continuing misalignment between executive compensation and company performance.”
Among other things, ISS cited how Dauman’s pay rose significantly in 2015 even as it turned in a disappointing financial performance.
In a Jan. 22 filing Viacom said it paid Dauman $54.2 million for the fiscal year ended Sept. 30, 2015, up from $44.3 million in the previous year. During the most recent fiscal year its shares fell 44 percent.
Viacom said in a statement it strongly disagrees with ISS’ analysis and said it contains inaccuracies, which it did not specify.
“The Viacom board pays great attention to its governance and its responsibilities to all stockholders,” Viacom said.
(Reporting by Ross Kerber- Editing by Bill Rigby)
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