Among the many rules a CEO must abide by, maybe the most important—right up there with “Don’t get caught stealing or sleeping with your secretary”—is knowing when to leave your job.
A good time: At the top of the market (especially if it’s about to implode), when earnings are up, shareholders are happy, and the press considers you a demigod. If you leave then, you can write books, give speeches, and hang in the Hamptons without be harassed by Occupy Wall Street types. (Think the post-GE career of Jack Welch.)
A bad time to leave: When all of the above doesn’t come close to applying to you, which is the case of the hapless Philippe Dauman.
The long-time Viacom CEO is under a lot of pressure these days: Viacom’s stock price stinks. Its bottom line is being squeezed by aging media properties like MTV. And even worse, the company’s largest controlling shareholders, the aging, erratic (some would say irrational) Sumner Redstone and his daughter Shari are trying to push Dauman out of the company. In one of the most sordid corporate dramas in recent years, Dauman is fighting back—so far unsuccessfully—suing the Redstones on the grounds that Sumner, once his mentor, isn’t mentally competent to fire him and is being manipulated to do so by Shari, with whom Dauman has feuded.
As his troubles were mounting, guess where Dauman recently decided to hang his hat for a few days?
The Cannes Lions advertising festival
Yes, no joke. Dauman’s people tell me it’s a necessary business trip because a lot of broadcast types are there, including advertisers. That makes a certain amount of sense, I guess. I also understand the optics of such a move: Staying home could be taken as a sign of weakness, particularly among shareholders, who generally like CEOs who look like they’re in charge.
My take: It was a huge mistake. Jet setting is never good optics while your job is on the line and your stock is in the tank.
But it’s also a symptom of a bigger problem of that has plagued not just Dauman but CEOs ever since the first one was created: The problem of knowing when to leave.
It’s hard to recall, given the sordid headlines, that just a couple of years ago Dauman was considered a corporate genius, and Viacom stock was a Wall Street darling. Back then, Sumner was busy questioning his daughter’s competence as she pined to run the family business, and praising Dauman, who was reaping the rewards of their long relationship, including some of the biggest paychecks in corporate America.
And there was a good case to be made that he deserved that praise. Dauman, after all, was Sumner’s right hand when Redstone upended the media establishment through a series of corporate raids that put him in charge of CBS and Viacom and the media properties they control: MTV, Comedy Central, Paramount studios, and the Eye Network itself.
But Dauman overstayed his welcome. In 2014, shares of Viacom hit a historic high of $88, which would have been a good time for him to pack it in. Maybe that sounds naïve given the fact that no one, much less a top corporate executive, ever wants to relinquish power. But consider what Dauman should have known at the time: cord-cutting, where mostly younger viewers drop cable subscriptions altogether because they don’t really watch TV anymore, would soon wreak havoc on all media stocks, including Viacom. It would be (and was) all downhill from there.
Meanwhile, for all her faults (in terms of business savvy, no one will ever get her confused with her old man) Shari Redstone wasn’t going anywhere, and she wanted Dauman out. Her relationship with her old man had always been fraught, but she has the Redstone name and holds more controlling shares of National Amusements (the holding company that owns Viacom and CBS) than anyone but her father.
But Dauman chose to stay put. He thought he had his mentor’s promise of control of the company he helped him build. Why leave when you’re on top? For lots of reasons, including it’s better to go to Cannes and be serenaded by Gwen Stafani as a conquering hero than as a dead man walking. And, anyway, when the world is turning to crap back home, why not recharge the batteries rubbing shoulders with power brokers and being serenaded by Gwen Stefani?
Charles Gasparino is a Senior Correspondent at Fox Business Network and a columnist for Men’s Fitness. Follow him on Twitter.