CBS said on Tuesday it would cut Executive Chairman Sumner Redstone's salary and link his compensation more closely to the media company's stock price, settling shareholder litigation over its compensation practices.
Redstone's annual salary will be reduced to $1 million from $1.75 million and his current $1.3 million deferred compensation will be eliminated. His annual target cash bonus under the CBS short-term incentive plan will be cut to $3.5 million from $6.1 million.
Redstone, 84, will receive an annual award of stock options having a grant-date value of $3 million and an annual award of performance share units with a target value of $3 million.
The litigation settlement is subject to court approval.
"The pay-for-performance model is one I have long championed, as it more closely aligns executive compensation with the returns the company generates for its shareholders," Redstone said in a statement.
Shareholders and lawmakers have increasingly complained about the pay of some corporate executives.
The value of Redstone's performance share units will depend on the total shareholder return of CBS Class B common stock compared with the total shareholder return of companies in the Standard & Poor's 500 Composite index, the company said.
CBS, home to highly rated television shows like "CSI: Crime Scene Investigation," split from Viacom
But its shares rose about 10% in the fourth quarter and the company recently announced a $1.5 billion stock repurchase plan and a 10% dividend increase.
Changes to Redstone's pay package at Viacom