The legal battle between CBS Corp. and its ousted Chairman and CEO Leslie Moonves “may only be beginning,” The New York Times reports, after the company’s board decided the longtime executive was terminated for cause and will not receive his $120 million severance package.
“The issue is ‘far from over,’ Mr. Moonves said Tuesday in an interview with Agenda, a corporate governance newsletter,” The Times reports. “Mr. Moonves has the right to challenge the board’s decision in a confidential arbitration proceeding, and he could also sue for breach of contract. In the interview, Mr. Moonves said he hadn’t yet decided whether to pursue arbitration.”
The report notes that Moonves’ termination agreement, entered into when he exited the company in September, specifies that if Moonves does seek arbitration, CBS itself will pick up the tab.
“The agreement stated explicitly that Mr. Moonves retains all rights of indemnification, ‘including advancement or payments of Executive’s expenses (including his attorneys fees),'” The Times reports. “You read that right: CBS has been footing the bill for Mr. Moonves’s monthslong legal fight against CBS.”
The report quotes Peter Henning, a law professor at Wayne State University who’s an expert on executive compensation and a contributor to The New York Times, saying the Moonves legal team “could easily run up $20 million in fees for an arbitration at this level. I’d say that’s the low end. I could see it getting to the $40-$50 million range.”
Henning adds: “You get this bizarre result where the company essentially pays someone they fired to sue them,” a situation that Henning says gives Moonves “a lot of leverage.”
“That’s because CBS is probably facing substantially more than $50 million in fees for law firms to represent itself, its board and Mr. Moonves,” The Times adds. “Even if CBS prevails in any litigation or arbitration with Mr. Moonves, the lofty fees mean it probably would be cheaper to simply settle.”