Viacom stock surged more than 5% Friday after a Reuters report that said a proposal that would expand shareholders’ voting rights will make it to this year’s annual meeting ballot. While the measure has little chance of success – chairman Sumner Redstone’s National Amusements, which owns 80% of Viacom’s voting rights opposes the proposal – it could give minority shareholders an opportunity to voice their opinion of current management. Redstone’s health has become a concern in recent months and has been the subject of a lawsuit by his former girlfriend and caregiver, Manuela Herzer.
Viacom stock, which fell 45% in 2015 as ratings pressures, a sluggish ad market and talent defections weighed heavily on the business, was up as much as 6.7% Friday on the news. The stock closed at $40.98 each, up 5.4%, or $2.09 per share.
According to Reuters, Missionary Oblates, a Washington, D.C.-based Roman Catholic congregation that owns about 4,000 shares of Viacom stock, is basically proposing that Viacom eliminate its dual stock structure and allow all shares to have one vote each. Currently, Viacom Class A shares, mostly owned by National Amusements, carry all the votes for the company. Most other shareholders own Class B shares, which have no voting rights.
Such dual structures are common in the media industry and are used primarily to protect companies from hostile takeovers.
“We will include this proposal in our proxy statement as required by SEC rules, just as many other companies have done with similar proposals,” Viacom spokesman Jeremy Zweig said in a statement. “When our proxy statement is distributed, it will include a discussion of why we believe our stockholders should vote against the proposal.”
Viacom’s annual shareholders’ meeting is expected to be held sometime in March.
This is the first time Missonary Oblates has made the shareholders’ rights proposals to Viacom, but it has made similar requests with other companies in the past.
According to Reuters, the organization doesn’t expect the Viacom proposal to be approved. In order for the proposal to be approved, Redstone would have to vote in favor of the move, which would strip him of voting control of the company, a highly unlikely scenario.
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