Does CBS still have to pay $120M severance package to Moonves?

Management at CBS is facing a quandary: Must it pay CEO Leslie Moonves -- accused of engaging in multiple acts of nonconsensual sexual misconduct both in and outside the workplace -- a $120 million severance package or can it withhold payment?

It should be a simple decision, but in fact it's complicated. Moonves's employment agreement requires conduct to be "willful" for purposes of establishing "cause" for termination, and willfulness is a high standard to meet. Moonves also has a clause in his separation agreement that gives him the right to challenge investigators' findings and the board's conclusion in arbitration. Should he pursue this option, any final payment he receives could be kept secret. (Although arbitration decisions are typically confidential, because CBS is a public company any amount paid could be subject to disclosure in public filings and may require confirmation in court to be enforceable.)

In November, Google employees worldwide walked off the job in protest over the company's decision to give Andy Rubin, the creator of Android mobile software, a hero's farewell and a reported $90 million exit package despite allegations of similar bad conduct. At least two other Google executives accused of sexual misconduct were reported to have received extremely generous (read: multimillion dollar) payouts when they left the company. It seems to be a great time to be a corporate executive.

According to the New York Times, investigations at both companies concluded the misconduct claims were credible. Stories about Moonves reportedly circulated within CBS for years. When Rubin departed Google, the allegations against him were still a well-kept secret. What message do large payouts send to employees who see companies protecting their star performers no matter the cost?

A lot of big companies seem to be using the same playbook, believing they owe a debt to their stars despite often incontrovertible evidence of wrongdoing. As Google demonstrates, rank-and-file employees are no longer okay with protecting star performers from allegations, or worse, giving payouts to employees who are under investigation for sexual misconduct.

In a June 2016 report of the Equal Employment Opportunity Commission's Select Task Force on the Study of Harassment in the Workplace, Co-Chairs Chai Feldblum and Victoria Lipnic warned that "superstar status can be a breeding ground for harassment." "Superstars are privileged with higher income, better accommodations, and different expectations," the report states. "That privilege can lead to a self-view that they are above the rules, which can foster mistreatment." Companies make a cost-benefit analysis and figure that it's more costly than beneficial to discipline or terminate the harasser.

The EEOC report identified workplaces with "high value" employees as one major risk factor for harassment. It pointed to "[e]mployees with high value (actual or perceived) to the employer, e.g., the 'rainmaking' partner or the prized, grant-winning researcher" and noted that these are risk factors because "[m]anagement is often reluctant to jeopardize high value employee's economic value to the employer" and "[h]igh value employees may perceive themselves as exempt from workplace rules or immune from consequences of their misconduct."

Its recommendation for responding to high-level harassment? "Apply workplace rules uniformly, regardless of rank or value to the employer." The report states as follows: "Employers should ensure that where harassment is found to have occurred, discipline is prompt and proportionate to the behavior(s) at issue and the severity of the infraction. Employers should ensure that discipline is consistent, and does not give (or create the appearance of) undue favor to any particular employee." The report concludes, "If a high-value employee is discharged for misconduct, consider publicizing that fact (unless there is a good reason not to)."

When Google ousted its senior executives, it made a corporate decision to soften the blow by paying them, even though it was under no legal obligation to do so. In other cases, companies have made payments because of contractual commitments. Every contract has a "for cause" escape clause, and executives who engage in criminal acts are owed no severance. Sexual predation is criminal behavior in every state in the nation, and it should be treated no differently than embezzlement or insider trading for purposes of pulling the plug on an executive's contract.

The stumbling block, of course, is proving that the misconduct occurred and that it was willful. Well-heeled executives are lining their pockets with big payouts because corporate boards fear breach of contract lawsuits. There's no downside for high-level harassers, so they keep on behaving badly.

It's time to rethink and redraft executive contracts. Management should not have to wait for a legal verdict in order to do the right thing. Given what we now know about harassment at all organizational levels, every contract requires a strong "out" clause for harassment. "Cause" must be redefined to include a finding of "more likely than not" or "probable" as the result of a thorough and independent investigation of claims of sexual assault or similar misconduct in the workplace.

Corporate boards must insist on executive contracts that allow them to pull the plug without paying ransom when an independent investigation establishes a high probability that the behavior occurred. In doing so, companies will incentivize executives to engage in "good behavior" and not act in a manner that is detrimental to a company's image and internal policies.