NEW YORK (Reuters) - Viacom Inc’s Chief Operating Officer, Thomas Dooley, has not renewed an employment agreement set to expire in 12 months, a situation that compensation consultants say is unusual and raises the question of whether he will stay with the multi-billion dollar media company as it tries to turn its fortunes around.
The uncertainty could further unsettle investors who have already confronted the company about the health of Viacom’s 92-year old controlling investor and Executive Chairman Sumner Redstone.
The fact that the number-two executive has not renewed his employment contract, which is set to expire in December 2016, is notable because of his close association with Viacom Chief Executive Officer Philippe Dauman, whom he has worked with for more than half his life. Dauman renewed his contract in January through 2018.
Dooley said he has no plans to leave the company.
“It’s a pleasure and a privilege to work at Viacom by Philippe’s side,” Dooley told Reuters in an email. “There is no one who loves this company and its people more than me and I have no plans to go anywhere.”
Viacom, for its part, declined to comment on negotiations.
“Mr. Dooley has more than a year remaining under his current contract,” a Viacom spokesman told Reuters in an email. “Tom is a valued leader and, while we can’t comment on specific negotiations about any executive, we will address the extension of his contract in due course.”
Questions about Dooley’s fate could increase uncertainty about Viacom at a time when the Nickelodeon and MTV operator is attempting to recover from a slide in ratings. The changing habits of TV viewers, ditching pricey cable subscriptions in favor of a la carte options, is casting a shadow over the company. Viacom’s stock is down 44 percent this year.
Typically, large publicly traded companies lock in key executives’ contracts at least a year ahead of expiration, said Alan Johnson, a New York-based executive compensation consultant.
“Particularly with the uncertainty around Viacom, if you really want to keep him you would want to get his contract done sooner rather than later,” Johnson said. “It is one more thing to create uncertainty and agita for Viacom,” he added.
Viacom Chief Financial Officer Wade Davis has also renewed his agreement through 2018. Davis’ contract was set to expire in November of this year.
To be sure, Dooley still has time to renew. But media companies generally want to have their top executives’ agreements locked in within 12 to 18 months of their expiration, said Gavin McElroy, an employment and compensation specialist at law firm Frankfurt Kurnit Klein & Selz.
In the absence of a contract renewal, “the concern is that the executive’s lame duck status could adversely affect people reporting to him,” said McElroy. Also, third parties might worry that if he advocated for a deal, “he might not be there to push it through.”
Viacom has already been confronted by investors asking for more information about Redstone’s health following a lawsuit filed in November by Redstone’s former girlfriend, Manuela Herzer, who petitioned the court for an examination of Redstone’s mental competence.
Last week, Viacom’s second-biggest shareholder, Mario Gabelli, called for the company to disclose Redstone’s condition and whether he is fit to run his $45 billion media empire which is made up of Viacom and CBS.
Redstone controls both companies through National Amusements, which holds about 80 percent of the voting stock of each company, but his presence as a hands-on chairman has faded over the years and he has not spoken on a company earnings call this year. Dauman said on Monday he speaks to Redstone several times a week.
Dooley and Dauman have worked closely for over 30 years. They left Viacom together in 2000 when Viacom merged with CBS to run DND Capital Partners, a private equity firm specializing in media and telecommunications.
Six years later, when Viacom spun off CBS, Dauman and Dooley returned to Viacom, with Dauman as CEO and Dooley as chief administrative officer. He was promoted to CFO in 2007, and to COO in 2010.
Over the past four years, Dooley has made more than $124 million, according to company filings.
Reporting By Jessica Toonkel; Additional reporting by Liana Baker in New York and Ross Kerber in Boston; Editing by Peter Henderson and Bill Rigby
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