Lawsuit: Cablevision is Dolan Family Cookie Jar

WILMINGTON, Del.(CN) - Cablevision's controlling Dolan family have given themselves more than $100 million in undeserved compensation and padded their already exorbitant salaries with $13 million in undeserved stock options, a shareholder claims in a derivative complaint.
     In his lawsuit in Chancery Court, Gary Livingston claims the Dolan family, which controls 72.9 percent of Cablevision stock, treats the cable giant as a "family coffer, routinely entering into transactions with the company that have improperly favored the Dolan family's own interests over the interests of the company and its public stockholders."
     "Since 2010," Livingston continues, "the Dolans and their allies on the board have caused Cablevision to pay various members of the family more than $100 million in compensation, including compensation (i) for virtual no-show board positions, (ii) for an executive position for [family patriarch Charles] Dolan, who had been exiled from the company after committing serious misconduct in connection with an SEC investigation, (iii) substantially higher than that paid by larger, more successful peer companies, and (iv) as a make-up to senior executives for their failure to achieve pre-established performance goals and as a 'retention' incentive for members of the controlling stockholder family."
     Livingston, a shareholder since February 2011, takes aim at several members of the family including Charles Dolan's son James L. Dolan, Cablevision's CEO since 1995 and a director since 1991.
     He claims eight other Dolan family members serve on the board, giving the family a voting majority on the body. Livingston cites several ways he believes the family has abused that power.
     For example, he says, "Charles' three daughters, [defendants] Kathleen M. Dolan, Deborah Dolan-Sweeney, and Marianne Dolan Weber, have been installed as non-employee directors, and each of them collects a generous package despite the fact that they do not fulfill the most basic responsibilities of board members."
     Livingston claims that during fiscal year 2012 Kathleen Dolan did not attend a single board meeting in person "and yet she still collected $171,500 in compensation."
     "The Dolan family has also placed many of its members at high-paying executive positions within Cablevision, giving them impressive titles and lucrative compensation packages whether they are qualified or not," Livingston says in the lawsuit. "Everyone from Charles' brother-in-law to James' mother-in-law is employed by Cablevision.
     "One of the more obvious examples of nepotism run amok is that of Charles' son, Thomas C. Dolan, who was forced to take a leave of absence from Cablevision in 2005 after he violated a number of Cablevision's data retention policies in connection with a government investigation. Despite this serious misconduct, Charles brought Thomas back a few years later, putting him in a high-paying position where he conveniently reports directly to his father.
     "During Cablevision's 2010 through 2012 fiscal years, Thomas was paid more than $3.8 million."
     Livingston claims the most egregious, and expensive, example of how Cablevision is run for the benefit of the Dolans is the compensation paid to James and Charles. During fiscal years 2010 through 2012, he says, the two men were paid $41.18 million and $40.27 million, respectively, amounts "awarded through ... a deficient process ... [that] exceeded what their services were worth."
     "But it does not end there," Livingston says. "In March 2012, James and Charles were awarded a 'special' one-time grant of stock options outside of Cablevision's regular executive compensation program. These 'special' awards to James and Charles were valued at $6.85 million and $7.09 million, respectively.
     "Because these grants rewarded James and Charles for failing to achieve the company's performance goals and purported to 'incentivize' them to remain in positions they had no intention of relinquishing, Cablevision itself received consideration that was so disproportionately small in exchange for the extraordinary awards that it effectively constituted a gift.
     "Finally, in February 2013, James' employment agreement with Cablevision was amended for 2013 and beyond. The new terms provided James with even more compensation on top of what was already an excessive compensation package."
     Livingston seeks disgorgement of ill-gotten gains and damages for breach of fiduciary duties and waste of corporate assets.
     He is represented by Joel Friedlander of Bouchard, Margules & Friedlander, in Wilmington, Delaware. 

Understand the importance of honest news ?

So do we.

The past year has been the most arduous of our lives. The Covid-19 pandemic continues to be catastrophic not only to our health - mental and physical - but also to the stability of millions of people. For all of us independent news organizations, it’s no exception.

We’ve covered everything thrown at us this past year and will continue to do so with your support. We’ve always understood the importance of calling out corruption, regardless of political affiliation.

We need your support in this difficult time. Every reader contribution, no matter the amount, makes a difference in allowing our newsroom to bring you the stories that matter, at a time when being informed is more important than ever. Invest with us.

Make a one-time contribution to Alternet All Access, or click here to become a subscriber. Thank you.

Click to donate by check.

DonateDonate by credit card
Donate by Paypal

Don't Sit on the Sidelines of History. Join Alternet All Access and Go Ad-Free. Support Honest Journalism.