Les Moonves & Severance Agreements

Severance agreements arise between employers and employees.  Occasionally, if an employee is terminated, he or she may be offered or entitled to a severance payment.  In return for that payment, the employer will usually negotiate for a release of claims, which generally prohibits the employee from suing the employer.  The severance payment may comprise a week’s pay for every year of employment the employee spent with the employer.  Sometimes, severance agreements are negotiated before employment begins and are contained within employment contracts.  These payouts can include huge sums for some executives.  But does the employer always have to pay the severance amount upon termination? 

The case of Les Moonves provides an interesting glimpse into the world of high-stakes severance litigation.

 The case of Les Moonves

 As many people know, Leslie Moonves ran CBS Corporation for approximately 15 years.  During that time, he was the subject of sexual misconduct allegations, allegations of which the company had been made aware.  In 2007, for instance, it is reported that a member of CBS’s Board of Trustees was informed of a sexual misconduct accusation. 

 As far as the public knows, however, CBS never took any action against Moonves.  He continued in his role of CEO, earned hundreds of millions of dollars in salary and bonuses and was offered multiple contract extensions.  It does not appear that, until more recently, CBS took the allegations against Moonves seriously. 

 Then, in the fall of 2017, the hashtag “MeToo” went viral, spurring silenced women everywhere to expose the sexual misconduct of others, including, in particular, high powered executives.  As the #MeToo exploded, and awareness grew of the epidemic of sexual misconduct, many companies and their executives faced a reckoning. 

 Within a year, 12 women had accused Moonves of sexual harassment or assault.  After CBS conducted an independent investigation, that number had grown to 17 women. 

 What changed between CBS’s first knowledge of Moonves’s alleged misconduct – in 2007 – and its decision (nearly a decade later) to publicly investigate Moonves?  Publicity.  #MeToo had publicized the epidemic of sexual misconduct and began a workplace culture that would no longer tolerate sexual predators.  Once that happened, CBS had a publicity problem on its hands.  Articles abounded with the terms “Les Moonves,” “CBS” and “Sexual Harassment” in the same sentence. 

 CBS was now facing, in addition to the sexual harassment problem it had apparently ignored for years, a bad publicity problem.  Only then did it deliberately and publicly act to remove Moonves from his post.  The timing of Moonves’s termination (after years of knowledge on CBS’s part of the misconduct allegations) leads to the inevitable conclusion that it was the bad publicity, not the sexual misconduct allegations, that began the termination of Les Moonves. 

 The next steps would be crucial for Moonves. According to his employment contract, he was entitled to his severance package if he were terminated without cause.  If he were terminated for any of seven delineated reasons,[1] he would lose that severance entitlement.  Bad publicity is not a listed reason.  If he were terminated for bad publicity, he should be entitled to his severance package.[2]

 Moonves should have taken his severance agreement payout and run (and hid under a rock somewhere).  Instead, he got aggressive.  He allegedly interfered with the investigation by destroying evidence and misleading those tasked to investigate.  He was accused of being “evasive and untruthful” and “to have deliberately lied about and minimized the extent of his sexual misconduct.”[3] 

 By doing this, he made it easy for CBS to deny him his severance because a “willful failure to cooperate fully” with a company investigation and a “willful destruction of or knowing and intentional failure to preserve documents or other material” were specifically included in his contract as “for cause” reasons for termination.[4]  

 Had Moonves cooperated with the investigation (perhaps even negotiating for the results to be kept confidential), he would still have been terminated.  But he would not have been terminated for interfering with an investigation and he could have argued that he was terminated for bad publicity only, thereby entitling him to his severance package.  CBS had known of sexual misconduct allegations against him for years; the corporation only took action once #MeToo made it bad publicity to ignore those allegations. 

 Yet now, Moonves finds himself in arbitration over whether or not he is entitled to his contractually obligated severance.  But he made it easy for CBS – because his interference with the investigation is a clear “for cause” reason to terminate his employment.  As is often the case, the cover-up (at least legally) is worse than the underlying crime. 

 Les Moonves won’t be missed.  At least not by the many women he is accused of harassing (and perhaps many more victims that have not come forward).  But I wonder if he will be missed by the CBS Board who stood by him through horrific allegations until the moment when it became inconvenient.  It would be nice to see CBS donate some (or all) of Moonves’s severance to some sort of charity for victims of abuse, but more than likely CBS will deny any culpability and just throw Moonves under the bus, ignoring the climate and culture that allowed him to survive and thrive at the head of the network while he committed these acts without any consequence, until the moment when it started to make the network look bad.

 

 

[1] Pages 22-23 of his 2017 employment contract list the reasons for which CBS could terminate Moonves “for cause.”

[2] While CBS could argue that bad publicity fell into one of the “for cause” reasons, it would be a difficult argument. 

[3] https://www.nytimes.com/2018/12/04/business/media/les-moonves-cbs-report.html

[4] Page 23 of the 2017 contract.