Leslie Moonves’ future as chairman and chief executive of CBS Corp. took a precarious turn Monday after the company’s board of directors took the extraordinary step of launching an independent investigation into allegations that he sexually harassed several women more than a decade ago.
The board stopped short of suspending Moonves while the review is ongoing, a move that could pave the way for an eventual settlement with the longtime executive. However, the decision to keep him at the helm was immediately assailed by legal experts.
Even without stepping aside, the ongoing investigation will cast a long shadow over Moonves’ reign and add to the turmoil already gripping the company.
In a terse statement, CBS’ board said it was “in the process of selecting outside counsel to conduct an independent investigation. No other action was taken on this matter at today’s board meeting.”
The 14-member panel also postponed CBS’ annual meeting with shareholders, which had been set for Aug. 10, marking the second time in three months the event was delayed. The first time was in May when a legal fight broke out between the majority of board members and controlling shareholder Shari Redstone, who has become critical of management and pressed for a merger with Viacom Inc., which her family also controls.
And now there are concerns about the conduct of CBS’ leader following an explosive report published Friday in the New Yorker magazine.
Six women accused Moonves of “forcibly kissing” them. Some of the women said they believe their careers were hampered when they spurned Moonves’ advances, according to the article. The incidents were alleged to have occurred in the 1980s, ’90s and 2006.
“CBS has a significant problem with its CEO,” said Debbie Katz, a Washington attorney who specializes in sexual harassment. “It’s crucial that CBS send a strong signal that it is going to conduct a full and thorough investigation — and that can’t happen while he is serving as the CEO.”
CBS’ board was in a bind. Directors have long respected Moonves for turning CBS into a TV juggernaut, but they cannot give short shrift to investigating serious claims against him, particularly in a climate that encourages women to report abuse. Boards are under heavy pressure to act swiftly to deal with allegations of misconduct while also providing due process to the accused.
“This [decision] shows shortsighted cowardice on the part of the board,” said Jeffrey Sonnenfeld, a professor at Yale School of Management. “They might have thought they were showing backbone by circling the wagons, but they are being blinded by their own personal loyalties…. [Moonves] is supposed to stand for the character of the firm and he has lost his legitimacy to lead.”
A majority of CBS board members have served for many years, and the board currently is fractured. Eleven members have been supporting management, but Redstone and her two allies are opposed. Redstone, through a spokesperson, declined to comment Monday.
Columbia Law School professor John C. Coffee said CBS’ board might have muddied the outcome of the investigation because it did not ask Moonves to go on leave. If the investigation ultimately fails to substantiate the issues raised in the New Yorker story, critics probably will speculate that the conclusion was predetermined, he said.
What’s more, some people might be afraid to step forward to talk to investigators if they are concerned that their allegations will not get a fair hearing.
“You have to have a scrupulous investigation,” Coffee said. “What’s under attack here is not just Moonves, but the entire culture at CBS.”
The New Yorker article also raised questions about the leadership of “60 Minutes” and whether the company tolerated inappropriate behavior by top executives.
“We do not know the magnitude of the harassment or whether most [incidents] happened decades ago,” Katz said. “There might be other people out there who have yet to come forward and maybe their experiences are more recent.”
The drama adds to the volatility of CBS’ stock, which is down 12% this year. Shares fell 5%, or $2.73, to $51.28 on Monday. The board made its announcement minutes before trading ended, prompting the stock to rally a bit. Wall Street has long considered Moonves key to the company’s success.
"The market value of CBS is tied closely to its management," Todd Juenger, media analyst with Bernstein Research, wrote in a report earlier Monday. “What would be the value of CBS, without the current management?… If CBS loses its CEO, it increases the probability CBS gets sold.”
The board already had been scheduled to meet via telephone conference call Monday for a briefing on the company’s earnings, which are to be released this week.
For Moonves, the allegations could bring an inglorious end to otherwise spectacular career, which saw the former actor become the most powerful man in television. Over the years, he has helped develop such hits as “Survivor,” “Friends,” “CSI: Crime Scene Investigation” and “The Big Bang Theory.” CBS has been America’s most-watched network for 10 years.
Moonves is one of the highest-paid executives in corporate America, earning a $69.3-million compensation package in 2017, according to a regulatory filing.
One question is how much money CBS would have to pay Moonves if he leaves before his contract expires June 30, 2021.
Under his contract, which was extended last year, Moonves is eligible for a golden parachute should he leave before that date. However, the amount depends on the circumstances of his departure.
On Monday, Bloomberg News estimated that Moonves could lose as much as $300 million in forfeited wages, bonuses and other awards if he is terminated “for cause,” such as a finding that he violated the company’s sexual harassment policies.
It is unclear whether the allegations contained in the New Yorker report rise to the level of "cause" for termination, but if so, CBS would owe him a much smaller severance. There is also the potential for the board to hammer out a settlement with Moonves.
CBS has said there have been no reports of sexual harassment during Moonves’ long tenure. Over the weekend, several prominent female executives at CBS voiced their support for the embattled chief, noting that he has had a strong record of promoting women into high level jobs.
Moonves on Friday offered his own statement: “I recognize that there were times decades ago when I may have made some women uncomfortable by making advances,” he said. “Those were mistakes, and I regret them immensely. But I always understood and respected — and abided by the principle — that ‘no’ means ‘no,’ and I have never misused my position to harm or hinder anyone’s career.”
Bucknell University in Pennsylvania quickly scrubbed its website to remove references to its most famous alumnus, Moonves, who graduated in 1971. “In light of the allegations against Mr. Moonves, we removed certain pages from our website that celebrate his relationship with the university, and we are evaluating any additional actions that may be appropriate," said a university spokesman.
In Los Angeles, the USC Annenberg School for Communication and Journalism did not respond to questions about whether its cutting-edge student newsroom would still be called the Julie Chen/Leslie Moonves and CBS Media Center. Moonves and his wife of more than a decade, Chen, who hosts a popular CBS daytime talk show, made a donation to help USC build the center in 2015.
Staff Writer Ryan Faughnder contributed to this report.
6:15 p.m.: This article was updated with additional comments from analysts.
This article was originally published at 12:55 p.m.