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Viacom, CBS set board members for combined company, disclose breakup fees

There will be a steep price to pay if either party terminates the pending recombination of CBS Corp. and Viacom Inc.

In an Aug. 19 SEC filing, Viacom said if it terminates the merger agreement before May 13, 2020, it will have to pay CBS $373.0 million. Conversely, if CBS ends the deal by that date, it would have to shell out $560.0 million to Viacom.

It appears unlikely those provisions will be triggered as Shari Redstone, the head of National Amusements Inc. — which has voting control over both companies — pushed for the deal. Redstone, vice-chair of both CBS and Viacom, will also become chair of the combined company.

The deal is expected to close before year-end.

According to the filing, there is also an "extraordinary transactions" clause in the agreement signed between the companies.

"Pursuant to the Governance Agreement, the NAI Parties have agreed, until the second anniversary of the Closing, to give good faith consideration to any business combination transaction or other strategic alternative involving the Surviving Corporation that the Unaffiliated Independent Directors determine may be in the best interests of the Surviving Corporation and its stockholders," the filing said.

The new ViacomCBS board will have a number of familiar faces with six former CBS directors, including Candace Beinecke, Barbara Byrne, Brian Goldner, Linda Griego, Susan Schuman and Frederick Terrell. There are four former Viacom directors, including Judith McHale, Ronald Nelson, Charles E. Phillips Jr. and Nicole Seligman. Redstone and lawyer Robert Klieger will represent the interests of NAI on the board. Bob Bakish, Viacom's president and CEO, will lead the combined company as CEO and also become a board member.

Bakish's new contract extends for four years after the merger closes and stipulates $3.1 million annually and a target cash bonus of $12.4 million. His compensation package also includes annual stock grants with an aggregate target value of $16 million. After the deal closes, Bakish will also receive a one-time grant of restricted stock units with a value of $5 million, vesting in equal installments of each of the first four anniversaries of the closing.

According to a separate Aug. 19 SEC filing, ViacomCBS will sign CBS President and acting CEO Joe Ianniello to a new contract, covering his role of overseeing the CBS assets of the combined company for 15 months following the close of the transaction, unless terminated earlier. Ianniello will receive a one-time grant of 450,000 restricted stock units in addition to the annual salary specified in his existing contract. Only the combined entity's board has the power to fire or modify Ianniello's duties.

Viacom CFO Wade Davis, who will not be part of the recombined company, will receive $6 million for his work around the merger agreement and the role he will play in the deal closing. Davis, who has been integral in overseeing Viacom’s ad-supported streaming service Pluto TV and developing its Advanced Marketing Solutions business, will have the opportunity to collect $4 million for agreeing to a noncompete clause for two years following the termination of his employment.