Sumner Redstone and Mel Karmazin settled their differences and Karmazin cut a
new contract to remain at Viacom Inc.
The deal ends months of speculation about Karmazin's future at the company,
but it is no sure-fire cure for the friction between the two men.
Karmazin's new deal as president and chief operating officer substantially narrows the latitude
Viacom granted when the then-CEO of CBS agreed to sell the broadcaster and stay
on at Viacom.
Karmazin's new three-year contract leaves all of Viacom's division heads
reporting to him.
But a new clause emphasizes that "full and final decision-making authority
over corporate policy and strategy shall reside in the chairman and CEO."
That's Redstone, whose own new contract gives him much clearer authority over
the company, including acquisitions, shareholder issues and entry into or exit
from new business lines.
Karmazin has "full authority over the operations of Viacom," a more limited
Before, Karmazin could be fired only by three-quarters of the board of
directors. Now, Redstone can fire him without board approval.
However, that's tempered by the conditions under which Karmazin can quit and
still get paid out two years' worth of compensation.
Usually, such a senior executive can quit mainly if his duties are materially
diminished or he's forced to relocate.
But one of the "good reasons" for Karamzin to terminate his three-year
contract are "being overruled by the board or the chairman and CEO on any
decision which is within the authority given to you" or making some major move
"despite your bona fide objection."