Fate of CBS CEO wrapped up in #MeToo while majority shareholder pushes merger

By April Hall

CBS CEO Les Moonves will stay in his position during an independent investigation into sexual misconduct allegations.

Moonves, a longtime executive at the network, was accused in a New Yorker article Friday of sexual misconduct. Writer and actress Illeana Douglas accused Moonves of forcibly kissing and touching her, then intimidating her into remaining silent about the alleged assault. About 30 employees told New Yorker reporter Ronan Farrow about similar incidents that allegedly occurred in the 1990s and 2000s.

Moonves released a statement saying he tried to kiss Douglas but didn’t remember the incident the way she recounted it. He also admitted in a statement Monday that he may have made women uncomfortable with his advances, but “I always understood and respected — and abided by the principle — that 'no' means 'no,' and I have never misused my position to harm or hinder anyone's career.”

After a three-hour meeting Monday, the CBS board said it would start its own investigation into the allegations and Moonves’ position is safe for now.

Reports of sexual misconduct by high-powered men continue to surface as the #MeToo movement approaches its one-year anniversary. Is there anything the board can do aside from firing the offender? Has corporate culture changed at all?

The hope that these types of accusations will stop any time soon is unlikely, says Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. He says even when the culture and policies are addressed, deciding an offender’s fate becomes a case of measuring yesterday’s behaviors against today’s standards.

“Thirty years ago, comments that were considered on the border or vaguely offensive are now unacceptable because you had a change in standards,” he says. If no policies were in place prohibiting such behavior at the time it allegedly occurred, the board must take that into account, Elson says.

While the details of the recent allegations are being sussed out, the board had to consider whether the investigation will hinder Moonves’ effectiveness as CEO.

“It’s not about him, it’s about the company’s welfare,” Elson says. He also acknowledges the timing of the accusations as inconvenient for CBS and Moonves in particular.

In May, Shari Redstone — who controls CBS with her father, Sumner, and their family business, National Amusements — made a move to force a merger between CBS and Viacom, another media company controlled by the Redstone family.

In turn, CBS and a special committee of independent directors filed suit in Delaware’s Chancery Court against Shari and Sumner Redstone and National Amusements, citing a provision in the mass-media company’s corporate charter that would allow it to issue a dividend of voting shares to all stockholders. That would have diluted the Redstones’ voting power from about 80% to about 17%.

Shari Redstone responded by filing a suit on May 29, asking the court to rule on whether the board's May 17 vote to dilute her family's voting share was valid. At the time, a New York Times report noted that, according to her suit, the board meeting occurred after Moonves "apparently" threatened to resign if the Redstones' voting stake was not reduced.

A trial date has been set for October in Delaware Chancery Court.

In the meantime, if Moonves were ousted, the most vocal opponent to the CBS/Viacom merger would be removed.

The network’s board of directors released a statement to CBS News calling into question the motivation of the revelations:

 "The timing of this report comes in the midst of the Company's very public legal dispute. While that litigation process continues, the CBS management team has the full support of the independent board members. Along with that team, we will continue to focus on creating value for our shareowners."

A statement by a Redstone representative denies any involvement in the story coming to light:

“The malicious insinuation that Ms. Redstone is somehow behind the allegations of inappropriate personal behavior by Mr. Moonves or today’s reports is false and self-serving.  Ms. Redstone hopes that the investigation of these allegations is thorough, open and transparent.”

The timing, however, cannot affect how the board addresses the allegations.

“The #MeToo movement is an important movement, but while it answers some questions, it raises others,” Elson says. “I don’t think it’s going to be easily resolved by a board, or by anyone for that matter.”