In Feuer v. Redstone, (Del. Ch. Apr. 19, 2018), the Delaware Court of Chancery considered a motion to dismiss derivative claims challenging compensation CBS Corp. paid to nonagenarian Sumner Redstone after he allegedly became physically and mentally incapacitated and ceased rendering meaningful services. Based on the “extreme factual scenario” alleged, the court declined to dismiss certain claims stemming from CBS’s board of directors’ alleged failure to consider terminating Redstone’s “at will” employment, resulting in his continued receipt of millions of dollars in salary payments.

Background

Redstone was the longtime chairman and CEO of Viacom Inc., a media conglomerate. In 2006, Viacom split into two companies. One retained the Viacom name; the other was CBS. Redstone continued as CBS’s executive chairman. His employment agreement provided that either party could terminate his employment “at will.” The agreement set a $1 million minimum annual base salary, and contemplated merit increases that, once granted, could not be reduced in subsequent years. Under the compensation committee’s charter, it had exclusive authority to set Redstone’s compensation. Before the pertinent time period, the committee had raised Redstone’s base salary to $1.75 million per year.