CBS.WD Cbs Corp.

By Joe Flint 

Former CBS Corp. head Leslie Moonves is challenging the company's decision last month to deny him a severance package of $120 million, CBS said Thursday, a move that will further prolong a monthslong drama at the network.

Mr. Moonves, who was forced to resign as chairman and chief executive amid accusations of sexual harassment in September, was denied his severance after a CBS board investigation concluded that he had violated company policies, breached his employment contract and intentionally failed to fully cooperate with the investigation. The terms of his exit agreement from CBS allow Mr. Moonves to challenge the board's decision in arbitration.

Mr. Moonves's decision, which CBS disclosed in a Securities and Exchange Commission filing, comes as the network is looking to move past months of uncertainty and upheaval following his departure. The company overhauled its board and commissioned an investigation into its culture after allegations against Mr. Moonves surfaced last summer, but it has yet to appoint a permanent successor. The selection process is complicated by the prospect of an eventual merger between CBS and sister media company Viacom Inc., which is championed by controlling shareholder Shari Redstone.

Through a spokesman, Mr. Moonves declined to comment on the filing.

The decision to take CBS to arbitration was expected. A lawyer for Mr. Moonves said at the time of the severance denial that the board's conclusions were without merit. "Mr. Moonves vehemently denies any nonconsensual sexual relations and cooperated extensively and fully with investigators," said Andrew Levander of Dechert LLP.

The next step will be for the two parties to agree on an arbitrator through the American Arbitration Association, where the claim was filed Wednesday. Typically for complex situations, a panel of three arbitrators is retained.

The two sides could still try to hammer out their own settlement. However, the scrutiny CBS is facing regarding its handling of harassment issues at the company from activist groups supporting the #MeToo movement may make any payment for Mr. Moonves a public-relations nightmare.

The $120 million in the severance package has been in escrow since Mr. Moonves left the company.

New CBS board member Strauss Zelnick is serving as interim chairman while longtime Chief Operating Officer Joe Ianniello is acting CEO.

A search for a new chief executive is being conducted by the board, which has retained the executive recruiting firm of Korn Ferry. Former Disney Chief Operating Officer Tom Staggs is among the potential candidates, people familiar with the matter said. Mr. Ianniello is also a candidate.

Mr. Moonves resigned under pressure after allegations of sexual harassment and unwanted physical advances throughout his lengthy career as a Hollywood titan were made in the New Yorker and Vanity Fair.

Mr. Moonves has denied those accusations.

"Untrue allegations from decades ago are now being made against me that are not consistent with who I am," Mr. Moonves said in a statement at the time.

CBS retained the law firms of Debevoise & Plimpton LLP and Covington & Burling LLP to investigate Mr. Moonves and its overall corporate culture. CBS said last month that the probe found the company's "historical policies, practices and structures have not reflected a high institutional priority on preventing harassment and retaliation."

The CBS board was also criticized for being too slow to respond to concerns about Mr. Moonves. Ms. Redstone, who is CBS vice chairman and president of National Amusements Inc., which has nearly 80% voting stakes in CBS and Viacom, had urged the network's board to take seriously rumors that Mr. Moonves had a troubled past regarding sexual harassment.

At the same time, Ms. Redstone and National Amusements were in a legal battle with Mr. Moonves and CBS over control of the company. That was resolved at the same time Mr. Moonves resigned: National Amusements agreed not to push a merger of CBS and Viacom for two years, but a merger can still take place earlier than that if the two companies on their own decide to pursue it.

Write to Joe Flint at joe.flint@wsj.com

(END) Dow Jones Newswires

January 17, 2019 13:49 ET (18:49 GMT)

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