BOSTON Media company Viacom Inc will allow investors to vote in March on whether to extend voting rights to all shareholders, according to documents provided to Reuters, as concern grows over the health of the company's 92-year-old executive chairman Sumner Redstone.
The measure is certain to fail because Redstone's holding company with a supermajority stake opposes it, but the vote will test investor sentiment on Redstone's continued stewardship.
The plan and Viacom’s agreement to put it to a vote at its annual meeting in March were provided to Reuters on Thursday by the activist who submitted it.
Seamus Finn, director of socially responsible investing for Missionary Oblates, a Roman Catholic congregation in Washington, D.C., said he understands the proposal has little chance of passage, given the questions around Redstone's condition, but it is important to air out the issue in the public setting of a shareholders meeting.
Considering that Viacom is a media company, "it's particularly important that there be a greater level of democracy and a greater level of transparency and participation by the shareholders," Finn said.
As for Redstone's health, "It's something to be taken into consideration," Finn said.
A Viacom spokesman confirmed the company's plans to hold the vote on the shareholder proposal and reiterated the company's argument that its dual-class share structure helps it focus on long-term goals.
"We will include this proposal in our proxy statement as required by SEC rules, just as many other companies have done with similar proposals," said Viacom spokesman Jeremy Zweig.
Redstone controls about 80 percent of Viacom's Class A voting shares through his holding company, National Amusements Inc. Most outsiders hold Viacom's Class B shares, which do not have voting rights.
Finn, a well-known shareholder activist, and reform-minded allies have long argued against dual shareholder classes. Last month, leaders of major public pension funds in California and Florida called on Viacom to make a similar change.
Questions about Redstone's health have been growing for months, and were heightened in November after a former girlfriend raised doubts in a lawsuit about the billionaire's competence.
On Dec. 21, a California judge granted the former girlfriend's request to depose Viacom Chief Executive Officer Philippe Dauman and two of Redstone's doctors, but not Redstone himself. Redstone also controls CBS Corp.
Viacom's shares have been under pressure, down 45 percent over the past year, as the company, which operates the Nickelodeon and MTV cable channels, faces slipping ratings and more consumers ditching pricey cable television subscriptions.
Technically Finn's group, which owns 4,000 voting shares of Viacom's Class A stock, asked Viacom to include on the ballot for its annual meeting a resolution calling on its board to "take steps to adopt a recapitalization plan as soon as practicable for all outstanding stock to have one-vote per share," according to the proposal.
The change could include negotiating with Redstone family shareholders to give up pre-existing rights, it states.
In a letter dated Dec. 22, 2015, and supplied by Finn, Viacom Vice President Heidi Naunton wrote to Finn that the company plans to include the proposal in its proxy statement for its annual meeting, and that it opposes the proposal.
The Viacom letter also explains its opposition, saying its dual-class structure "has helped protect our company from short-term pressures and the disruption associated with efforts by activists to challenge control, and the structure has thereby allowed our board and senior management to focus on our long-term success."
Viacom also noted other big public companies have adopted the dual-class structure, including Facebook Inc and Alphabet Inc, the holding company for Google.
(Editing by Eric Effron and Jeffrey Benkoe)
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Updated Date: Jan 08, 2016 23:30 PM