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CBS is negotiating an exit package with embattled CEO Leslie Moonves

The talks began just weeks after The New Yorker published allegations of sexual misconduct leveled against Moonves.
Image: Les Moonves, president and chief executive officer of CBS Corporation
Les Moonves, president and chief executive officer of CBS Corporation, attends the annual Allen nd Co. conference on July 11, 2018 in Sun Valley, Idaho.Drew Angerer / Getty Images

Leslie Moonves’ days as chief executive of CBS appear to be numbered.

The powerful TV executive has been negotiating an exit package with the CBS board of directors, according to two sources familiar with the talks who spoke on condition of anonymity because they were not authorized to speak publicly.

The talks come as Moonves faces an investigation into sexual misconduct allegations against him, a looming court battle with its controlling shareholder, and investors who are clamoring for clarity about who will be in charge over the next 12 months.

The talks began just weeks after The New Yorker published allegations of sexual misconduct leveled against Moonves, according to both sources.

Moonves acknowledged to the magazine that he made "mistakes" but added, "I always understood and respected — and abided by the principle — that ‘no’ means ‘no,’ and I have never misused my position to harm or hinder anyone’s career."

Moonves has been using a battery of lawyers to negotiate an exit package that is larger than the $180 million severance dictated by his contract, according to one source.

CBS board members are offering a severance package of $100 million of stock, according to CNBC, which also reported that CBS chief operating officer Joe Ianniello could step in as interim CEO.

CBS declined to comment on the talks.

One source familiar with the talks emphasized that the CBS directors are trying to find a way to maximize shareholder value.

Talks with Moonves are happening alongside negotiations between CBS and Shari Redstone’s National Amusements, the controlling shareholder of CBS, over a heated legal battle in which CBS is trying to gain its independence.

That battle along with the misconduct allegations against Moonves have taken a toll on the company’s stock price. Michael Nathanson, an equity analyst with the research firm MoffettNathanson, told investors in August that "CBS is un-investable.”

But investors appeared encouraged by Thursday’s reports of a possible resolution to the legal battle and the exit of Moonves, with CBS stock rising 3 percent in early afternoon trading.

The timing of a resolution is important for CBS. The companies are scheduled to meet in a Delaware courtroom in October and are also coming up against the important bank conference season, in which companies make their case to major investors for the year ahead. Moonves is slated to speak at next week's annual Goldman Sachs media and telecommunications event.

Tuna Amobi, an equity analyst at CFRA, a market research firm, said that Moonves’ negotiation position has been weakened by the misconduct allegations.

"He almost boxed himself into a corner by pushing ahead with the litigation," Amobi said of CBS’ attempt to become an independent company. "I doubt he would have pushed ahead with those steps had he known that the allegations were going to surface. His hand is weakened. His options are limited. My sense is he is now looking for the best possible outcome from an exit package.”

Charles Elson, director at the John L. Weinberg Center for Corporate Governance at the University of Delaware, said that exit negotiations raise questions related to determining cause — a term that refers to whether a company has a good reason for firing an executive.

If a company has cause, it can avoid a major payout. But if it offers a payout and has cause, it can be open to lawsuits. In 1996, Disney's board was sued after it made a sizeable payout to former president Michael Ovitz.

"If they terminate him without cause, it costs them quite a bit,” Elson said. “Is there something there but it's not enough for cause? Then you'll see a dance for minimum exposure to the company and the executive involved.”

Elson added that the Moonves issue is a distraction from the bigger question of who will own CBS.

"It doesn't answer an issue about who controls the company — the investors or the Redstones?” Elson said. “And that's coming to trial in October."