Two people who owned a small amount of Viacom stock got fed up with the compensation received by Viacom's top people in 2004 and decided to sue. They sued the company alleging that the directors did not exercise their fiduciary obligation when they approved what the plaintiffs claim was excessive compensation to the top three executives. The executives were paid $160,000,000 in salary, bonus and options in a year when the company lost $18 billion and the stock price dropped by almost 20%. Sounds excessive to me.
Naturally, Viacom and its high-priced legal help asked the court to dismiss the case. But the judge said no, there was sufficient evidence to support the plaintiff's case. The evidence spoke to the independence of the company's directors. Viacom claimed that seven of twelve directors were independent; the judge thought otherwise. This will be a very interesting case to watch.
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