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Viacom president quits { June 2 2004 } Original Source Link: (May no longer be active)
http://www.nypost.com/business/22095.htmhttp://www.nypost.com/business/22095.htm
YOU CAN'T FIRE ME, I QUIT: KARMAZIN
By TIM ARANGO
June 2, 2004 -- Mel jumped before he was pushed.
In recent weeks, Viacom President Mel Karmazin realized he was being cut out of the company's succession plans — and decided to vacate his post rather than wait for the board of directors to formalize a succession plan, according to sources.
"Sumner never intended for Mel to be his successor," said one source close to the company.
Relations between Viacom chief Sumner Redstone and his former top deputy are so frigid that Karmazin never told his boss directly about his decision to resign as president of the media giant, which is home to CBS, MTV, Paramount and Infinity Broadcasting.
Last week, Karmazin sent word to Redstone through an intermediary that he had decided to leave his post, and Redstone never sought to keep him at the company, Redstone said yesterday in a conference call.
"I heard about this indirectly from another executive," Redstone said.
Once Karmazin's exit was a done deal, David McLaughlin, a longtime Viacom director and head of the corporate governance committee, ran interference between the two, sources said.
In a statement yesterday, Karmazin said: "After more than 20 years with the company, for personal and professional reasons, I have decided to leave Viacom and pursue other challenges."
In making the announcement that Karmazin was leaving, Viacom triggered a new political battle at the company — naming CBS chief Les Moonves and MTV honcho Tom Freston as co-chief operating officers.
Redstone said he will leave his post within three years, and either Freston or Moonves will likely replace him.
Asked when he last spoke to Karmazin, Redstone related a story about attending a recent staff meeting in which Mel expressed frustration for Viacom's lagging stock price.
"I said, 'Don't blame yourself,' " Redstone told reporters yesterday.
Despite a long-running feud between Redstone and Karmazin, Redstone said yesterday he never had any major disagreements with his president.
"To my knowledge there were no problems between Mel and me," Redstone said.
Nevertheless, Karmazin is leaving under a clause in his contract that stipulates he be paid out the balance of his deal if Redstone overrules him on matters of strategy.
Karmazin will leave with a boatload of cash — about $25 million in salary, deferred compensation and bonus for the remaining two years of his contract.
In addition, he'll hold on to all his stock options. He holds nearly 11 million shares, including options worth close to $400 million based on current stock prices.
Karmazin signed a new three-year agreement last year.
While negotiations were under way, many had speculated differences between him and Redstone were irreconcilable, but the two ultimately patched things up.
For years, Redstone hesitated to push his deputy out because the company's stock price was soaring and Wall Street was in love with Karmazin.
But lately the stock has floundered — suggesting to some that the time was finally right to show Karmazin the door.
In recent public comments — most recently at the company's annual meeting on May 19 — Redstone failed to back Karmazin when asked about the company's succession plans.
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