Moonves to Fight for $120M Severance in Arbitration With CBS
CBS said in a filing with the SEC that Moonves had informed the company Wednesday that he intended to use a binding arbitration provision in his contract to try to recover his "golden parachute" after the company determined there were grounds to fire him for cause.
January 17, 2019 at 03:45 PM
4 minute read
CBS Corp. announced Thursday that Les Moonves, who resigned as CEO in September amid allegations of sexual harassment, was challenging the company's decision last month to deny him his $120 million severance package.
CBS said in a filing with the U.S. Securities and Exchange Commission that Moonves had informed the company Wednesday that he intended to use a binding arbitration provision in his contract to try to recover his “golden parachute” after the company determined there were grounds to fire him for cause. The development was first reported Thursday morning by The Wall Street Journal.
CBS said that it did not plan to comment further while the arbitration was pending.
The company announced Dec. 17 that an investigation had concluded Moonves violated company policies, breached his employment agreement and failed to fully cooperate with a probe into allegations that he had forced himself on women and retaliated against those who rebuffed his advances.
New York-based Dechert partner Andrew J. Levander, an attorney for Moonves, last month attacked the decision as “foreordained,” telling media organizations that his client “vehemently denies any non-consensual sexual relations and cooperated extensively and fully with investigators.” Levander did not return a call Thursday seeking comment on the arbitration.
Under the terms of Moonves' contract, the confidential arbitration proceedings will be conducted before the American Arbitration Association in New York, under the laws of the Empire State. CBS and Moonves would each get to select one arbitrator, who in turn would agree on a third to round out the three-member panel.
The arbitrators' decision would be “final and conclusive.” Appeals in arbitration cases are exceedingly rare and typically require a showing of egregious conduct by arbitrators, such as fraud or undisclosed bias on the panel.
Should Moonves prevail on at least one claim, CBS would bear his attorney fees and the costs of arbitration. If Moonves loses, however, the parties would split costs and each pay their own attorney fees, according to the terms of Moonves' contract.
Barry H. Genkin, a partner at Blank Rome in Philadelphia, said the move from Moonves came as no surprise after CBS's decision to deny his severance, and private arbitration presented little downside for the former executive, after months of bruising headlines regarding his personal conduct.
“There's little cost for Moonves,” Genkin said. “From his perspective, I guess he can't end up any worse than he is now.”
The sides could still agree to a settlement. However, CBS has faced pressure over its handling of sexual harassment allegations, and the company has given no indication that it intends to make any payment to Moonves, making arbitration an all-or-nothing venture for the former executive.
“I don't think that this is a situation where there's a likelihood” of a settlement, Genkin said. “I have every reason to believe CBS is going to stick firmly to the position it has taken so far.”
In August, the company tapped Covington & Burling and Debevoise & Plimpton to investigate Moonves' conduct after The New Yorker reported that he had engaged in a pattern of abusive behavior for decades and used his position to threaten women who rejected him. Moonves said that he regretted making women feel uncomfortable, but he has denied allegations of abuse and retaliation.
CBS announced in September that it had reached a settlement with its controlling shareholder, National Amusements Inc., in a Delaware court case to have Moonves leave the company. Moonves and CBS agreed to donate $20 million to organizations that support the #MeToo movement, but the company made Moonves' $120 million severance package dependent on a determination of whether there was reason to fire him with cause.
In December, CBS said the investigation found that Moonves had engaged in “willful and material misfeasance.” Though harassment and retaliation were not pervasive at the company, CBS said it had “begun to take robust steps to improve the working environment for all employees.”
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