Viacom, Inc.: Corporate Governance in a Controlled Company

Description

Viacom, Inc., a New York City-based media company, owned Paramount Pictures and popular television channels such as MTV, Comedy Central, and Nickelodeon. Viacom was controlled by Sumner Redstone and run by his hand-picked second in command. In 2016, the 92-year-old Redstone, facing a claim of mental incompetency because of his advanced age, stepped down from his role as executive chair of the board. This led to several issues regarding corporate governance at the company. Viacom’s board of directors faced a lawsuit from a shareholder claiming that a mentally incompetent Redstone was playing a role on the board; an activist investor accused the company of a lack of governance and poor leadership. The newly elected lead independent director needed to address the board of directors’ role in this embattled company.

Learning Objective

This case fits well in an undergraduate or a graduate strategic management course to address key concepts of corporate governance, including the role of a company’s board of directors, executive compensation, and strategic leadership. Since corporate governance is usually featured as one of the last few topics in strategy textbooks, the case is best positioned toward the end of the course. After completion of this case, students will be able to ·identify and evaluate the role of a company’s board of directors; ·critically examine a board of directors’ actions with respect to executive compensation and monitoring of strategic leadership; ·understand the nature of dual-class shares and their implications for corporate governance; and ·analyze the role of activist shareholders.

Keywords

Board of Directors CEO succession Corporate governance entertainment mental incompetence