UPDATE 1-CBS to pay Moonves up to $120 million pending probe outcome

(Adds details on settlement, background, shares)

Sept 10 (Reuters) - CBS Corp said on Monday it will pay up to $120 million to former chief executive officer Leslie Moonves if an internal investigation into allegations of harassment fails to provide grounds for his dismissal.

Moonves, who turned CBS from an aging radio and TV broadcaster into a successful provider of shows to digital platforms, had been expected to reap an estimated $100 million in severance.

CBS also said it and Moonves will donate $20 million of Moonves' severance to organizations supporting the #MeToo movement. It was not immediately clear if the $20 million was over the $120 million.

CBS did not return calls seeking clarification on the settlement.

Moonves, the top executive at CBS since 2006 and a major figure at the broadcast network and media company for more than two decades, resigned on Sunday amid a new wave of allegations against him of sexual assault and harassment.

Under terms, CBS said a settlement amount of $120 million would be put in a trust within 30 days and Moonves could end up with nothing if the result of the investigation goes against him. (https://bit.ly/2CCLyui)

The board will decide on the course of action before Jan. 31 and its determination will be subject to binding arbitration.

Separately, CBS and its controlling shareholder National Amusements Inc (NAI) will also end litigation for control of the company.

NAI has agreed to withdraw its proposal to merge CBS and with Viacom for two years unless it gets a vote of two-thirds of directors not affiliated with the controlling shareholder.

Shari Redstone-controlled NAI will also consider in good faith any other deal suggested by those unaffiliated directors.

Chief Operating Officer Joe Ianniello will take over as interim CEO as the board searches for a replacement of Moonves.

"We view Ianniello's elevation to temporary CEO as the best choice for CBS and its shareholders," Cowen analyst Doug Creutz wrote in a client note. "Ianniello has worked for the company since 1997 and thus is very familiar with the assets."

CBS shares were down 0.5 percent at $55.72 in opening trade on Monday. (Reporting by Supantha Mukherjee in Bengaluru; Editing by Bernard Orr)