Entertainment giant Paramount Global (PARA) is facing fresh boardroom drama amid an already struggling business. Proxy advisory firm ISS has urged shareholders not to reelect key board members during the company’s upcoming annual shareholder meeting. Paramount Global has scheduled its annual meeting for Wednesday, July 2.
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ISS is advising investors not to reelect the directors because it believes that they have not managed the company’s funds and executive packages appropriately. Among those targeted for non-election is Shari Redstone, the company’s controlling shareholder and non-executive chair. The other three directors, Barbara Byrne, Linda Griego, and Susan Schuman, are part of Paramount’s executive compensation committee.
Paramount’s Board Is in Need of a Revamp
ISS strictly favors maintaining a one-share, one-vote capital structure. However, Paramount maintains a multi-class capital structure in which certain classes of stock carry higher voting rights than others. ISS states that these voting rights are “misaligned with the holders’ underlying economic interests.” Nonetheless, ISS’ efforts seem futile, as Redstone is most likely to be re-elected due to her large shareholding and voting rights.
Following the election in July, the refurbished board at Paramount will have only seven members, as two of its current board members have voluntarily decided to step down from their roles. Paramount also nominated three new directors to the board earlier this month. It remains to be seen if shareholders will take heed of ISS’ pleas or continue re-electing the same board members.
All this boardroom drama is unfolding as Paramount faces both company-specific and industry-wide challenges, including cord cutting, falling advertising revenues, and operational inefficiencies. The company’s highly anticipated merger with Skydance is pending approval from the FCC (Federal Communications Commission). The new deadline for the FCC to review the merger is July 7. At the same time, Paramount is facing a looming settlement with U.S. President Donald Trump over the editing of last year’s ‘60 Minutes’ interview with then-Vice President Kamala Harris.
Is PARA Stock a Buy or Sell?
On TipRanks, PARA stock has a Hold consensus rating based on two Buys, six Holds, and five Sell ratings. Also, the average Paramount Global price target of $12.09 implies that shares are almost fully valued at current levels. Year-to-date, PARA stock has gained 17.7%.
