Why Les Moonves might still get $120 million From CBS

Just because Leslie Moonves was forced out as CBS's chairman and chief executive doesn't mean he is going to quietly walk away from $120 million.

That CBS would pay Mr. Moonves such a princely sum, after multiple allegations of sexual assault and inappropriate behavior against him, infuriates many people while inducing even more women to come forward with complaints. Some CBS directors insist they won't pay him a dime.

But whether he collects the $120 million severance payment will come down to a seemingly simple question: Was he fired for "cause"?

For most people, the allegations against Mr. Moonves would be more than enough cause. But in the strange world of chief executive contracts, they may not be.

Mr. Moonves's most recent contract, which he signed last year, stipulates that cause for being fired includes a felony conviction, fraud, failing to cooperate fully in a company investigation and violation of any company policies, including those concerning sexual harassment.

Mere allegations of sexual misconduct, which now have been made publicly against Mr. Moonves by 12 women, do not constitute cause. Nor is it likely that behavior that occurred before he joined CBS could be considered a violation of any company policy.

Mr. Moonves has denied any improper behavior. He says that any sexual activity was consensual and, for the most part, occurred before he came to CBS. That and other issues are being investigated by two law firms hired by CBS, and any decision about his severance has been deferred until they complete their inquiries.

Nonetheless, four CBS directors or their representatives told me recently they had no intention of paying Mr. Moonves anything.

CBS clearly recognizes that proving any of the accusations against Mr. Moonves could be difficult and that, if the alleged behavior occurred before he was at the company, they might be of limited relevance. That is why the issue of whether he cooperated fully in the internal investigations into the matter has now assumed critical importance and may well determine whether he collects his severance.

Squarely in the middle of that question is Michael Aiello, who leads the corporate department at the law firm Weil Gotshal & Manges. Mr. Aiello advised CBS's independent directors amid those investigations. And, at the request of two members of the board's nominating and governance committee, questioned Mr. Moonves by telephone in January about whether he, and therefore the company, had a #MeToo problem.

A lawyer for Mr. Moonves and other Weil Gotshal lawyers representing the board members were listening to that interview and taking notes. According to the four people, both sets of notes say Mr. Moonves disclosed that a police complaint had been filed against him last year by a woman who said he had sexually assaulted her. (The police complaint was pending when Mr. Aiello interviewed Mr. Moonves, but it was later dropped because the statute of limitations had expired.)

Mr. Moonves also told Mr. Aiello that an actress's manager had privately contacted Mr. Moonves and had accused him of sexually assaulting the actress, the four people said. They spoke on the condition of anonymity, citing the active legal matter.

Mr. Aiello did not ask Mr. Moonves the names of the woman who filed the complaint or the actress, the people said.

After the interview, Mr. Aiello briefed board members on it. The four directors or their representatives told me that Mr. Aiello assured them that although there had been some "rebuffed advances" toward women by Mr. Moonves in the distant past, CBS and the board had nothing to worry about.

Mr. Aiello did not mention the police complaint or the actress, the directors and their representatives said.

Mr. Aiello's failure to mention either matter to his client — CBS's nominating and governance committee — is perplexing, especially because he continued to advise the independent directors separately about whether to file a contentious lawsuit seeking to dilute Shari Redstone's controlling interest in CBS. The suit was filed in May, and directors told me that, had they known then about the sexual harassment issues involving Mr. Moonves, they would not have gone forward with it.

"Ethical rules in New York and nationally require lawyers to give clients important information about a client's matter," Stephen Gillers, an expert on legal ethics at New York University School of Law, told me. "A criminal complaint filed against Mr. Moonves was directly relevant to the board's decision about his status."

He added: "Mr. Aiello would have been expected to disclose the filing to the two directors who hired him. It doesn't matter that the police later chose not to pursue the complaint because of the statute of limitations. The very fact that a woman went so far as to file a criminal complaint was itself important for the directors to know at the time."

Mindy J. Spector, a partner and general counsel at Weil Gotshal, said that Mr. Aiello could not comment on his or his colleagues' communications with the directors or anyone else at CBS, including Mr. Moonves, because of attorney-client privilege and confidentiality restrictions. She added that the firm stands behind the advice that it and Mr. Aiello gave the CBS directors.

In July, Mr. Moonves later told investigators, the actress's manager had contacted Mr. Moonves seeking a job for her, two of the people said. The manager did not explicitly condition her continued silence on getting a job, but the implication seemed clear. Mr. Moonves spoke to a CBS casting director, who subsequently offered the actress a role, although it was a small one that entailed only a single day's filming. The actress rejected the offer as inadequate, the people said.

Mr. Moonves did not immediately report this development to the board, the directors and their representatives told me.

A few weeks later, The New Yorker published what would be its first exposé about Mr. Moonves, containing the accounts of six women. CBS's independent directors expressed full support for Mr. Moonves, but the board hired the two law firms to investigate.

In an interview with the two firms, in August, Mr. Moonves disclosed that he had sought a job for the actress, and his lawyers provided additional details, according to four of the people. (The actress has not been publicly identified.)

CBS directors were shocked. They began to negotiate Mr. Moonves's departure, and they agreed to postpone any decision about his severance package until the investigation was complete. Along with Mr. Moonves, five board members also announced that they would be leaving their roles.

Mr. Moonves, who collected $650 million during his tenure at CBS, including $69 million last year, believes he was fired without cause and therefore is entitled to the severance payment. At least four CBS board members strongly disagree.

Now that the whole affair has spilled into the open, CBS and its reconfigured board are in a no-win situation. If they refuse to pay Mr. Moonves, they face the prospect of a messy fight with their former leader.

But the alternative is unpleasant at best. If they pay Mr. Moonves anything, they risk setting off a public backlash — not to mention shareholder lawsuits that could air CBS's dirty laundry in a public courtroom.

The board will have to decide: Which option is the least ugly?