CBS Corp.'s board of directors is meeting today (July 30) and the future of CEO Les Moonves is suddenly at the top of the agenda.
The meeting, being conducted by conference call, was regularly scheduled before a bombshell story about sexual harassment involving Moonves and CBS landed on Friday.
The board is expected to hire an independent law firm to investigate the allegations.
There have also been reports that some directors want Moonves to temporarily step aside while the investigation is conducted.
In a statement Friday, CBS’s independent directors said “all allegations are to be taken seriously” and that they are “committed to investigating claims that violate the company’s clear policies.”
The Moonves revelations come at a time when he and the board are in a battle for control of the company with Shari Redstone, whose family has the majority of voting shares in the company. CBS is attempting to dilute the Redstone’s voting block and the matter is being adjudicated by the courts.
Redstone has also advocated for combining CBS with Viacom, which the Redstone family also controls, but Moonves and CBS’s board have balked at the idea, in part over management issues.
Reports that a negative story about Moonves was about to be published sent CBS stock down 6% on Friday. Shares were down another 4% Monday morning.
On Wall Street, Moonves is regarded as a key to CBS’s recent success and a firewall against a bad merger deal with Viacom.
“Mr. Moonves has a terrific track record; any increased risk of him being fired is a negative for investors. Worse, if he is fired for cause the Redstones ability to merge Viacom with CBS increases,” said Doug Mitchelson of Credit-Suisse on Friday.
“The market value of CBS is tied closely to its management,” said Todd Juenger of Sanford C. Bernstein on Monday.
But Juenger added. “as good as the market believes current CBS management is, it is impossible to believe that there is no other human being on earth who could run CBS with some degree of competency.”
If Moonves leaves, the probability increases that CBS would be sold,” Juenger said. “Therefore, we don't believe the CBS board would reverse their decision regarding the re-merger, even if the CBS CEO were to exit.”