As an M&A event looms on the horizon for Paramount Global, the three execs in the conglomerate’s “Office of the CEO” are now eligible for stepped-up severance payments in the event of a sale or merger — and the company also will award them cash bonuses for the time they serve as co-CEOs.
The move comes as Shari Redstone, Paramount’s controlling shareholder, is evaluating a merger offer from David Ellison’s Skydance Media, which the Paramount Global board’s special committee has recommended. Meanwhile, that protracted sale process has attracted other bidders interested in buying out Redstone’s National Amusements Inc., which owns 77% of the voting shares in Paramount, including Edgar Bronfman Jr. and Bain Capital.
On Monday, Paramount disclosed that the three members of the Office of the CEO — George Cheeks, president and CEO of CBS; Chris McCarthy, president and CEO, Showtime/MTV Entertainment Studios and Paramount Media Networks; and Brian Robbins, president and Chief Executive Officer of Paramount Pictures and Nickelodeon — have been designated as participants in the company’s Executive Change in Control Severance Protection Plan.
That guarantees Cheeks, McCarthy and Robbins will receive severance payments equivalent to two times their annual base salary plus twice their annual target bonus amount, among other benefits, in the event they’re terminated in connection with a sale or merger of Paramount Global (or within two years of such a transaction).
In addition, the board granted each of the three execs an annual target bonus of $2.75 million, prorated to apply only to the portion of the current fiscal year in which they serve in the Office of the CEO, Paramount said in a filing Monday with the SEC.
Cheeks, McCarthy and Robbins took over leadership of Paramount Global in the newly created “Office of the CEO” after Redstone booted former CEO Bob Bakish on April 30, reportedly over Bakish’s clash with Redstone over pursuing the deal with Skydance. The board designated McCarthy as “interim principal executive officer,” effective May 1, “for purposes of the rules and regulations of the SEC.”
At the company’s 2024 meeting of shareholders last week, the troika talked about their strategic “vision” going forward and outlined the plans as if Paramount will not be sold.
At the June 4 meeting, they spoke at a high level about how they plan to cut upwards of $500 million in costs annually through layoffs and other cost-reduction measures, pursue a joint venture with Paramount+ and potentially sell some assets. “To be clear, $500 million in cost savings is just the beginning,” Cheeks said, adding that the three co-CEOs expect to provide more details on the Q2 2024 earnings call in August.
The trio had planned a company town hall of June 5 to answer employee questions about the future of Paramount Global — but, citing “ongoing speculation regarding potential M&A,” they rescheduled it for June 25.
Paramount’s board on Nov. 16, 2023, adopted the Executive Change in Control Severance Protection Plan. That covered Bakish, CFO Naveen Chopra, general counsel Christa D’Alimonte, Doretha Lea, EVP of global public policy and government relations, and Nancy Phillips, EVP and chief people officer.
Separately, Paramount disclosed in another SEC filing Monday that it had extended the employment agreement of Phillips, its head of HR, through June 4, 2027. Under the new agreement, Paramount increased her annual base salary from $925,000 to $1 million effective as of June 4, 2024, and hiked her target annual cash bonus to 120% of her annual base salary (up from 100%). In addition, the company increased the target value of Phillips’ annual grants of equity compensation from $1.2 million to $1.8 million, beginning with the annual grants for the 2025 fiscal year, and awarded her a pro-rated equity award consisting of restricted stock units with a grant-date value of $350,000 (vesting annually through June 2027).
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