When Viacom reported its second-quarter earnings yesterday, the company also revealed the contract stipulations of its former president. Mel Karmazin was paid $35.4 million in bonuses and salary after he left the entertainment giant in June. The Los Angeles Times reports that the contract was quite unusual, in that Karmazin had guaranteed himself his own payout, and protected him from any interference from Viacom CEO Sumner Redstone or the board of the directors. The contract even let Karmazin decide for himself if his own bosses were interfering with his authority.
Executive compensation expert Graef Crystal told the Times, "This isn't an employment contract, it's a treaty between two sovereign powers. He really wrote himself a sweetheart deal. He wore a sign 'Do Not Provoke,' like they have over a zoo cage."
Karmazin still holds Viacom stocks and options worth approximately $400 million. Also revealed in the earnings report was the payout given to former Viacom entertainment group head Jonathan Dolgen. Dolgen received over $20 million after exiting.
Viacom announced in the report that the two severance payments cut two cents per share from the company's second-quarter earnings. The company announced its profits rose 14% in the second quarter over the previous year, due mostly to ad sales in television. There was still a continued slump in the performance of the Infinity radio division. Overall, Viacom's profits were at $754 million, up from $660 million the year before.
The company also announced new contracts for Redstone and Viacom Co-Presidents Tom Freston and Leslie Moonves.