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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934

  Filed by the Registrant ý

 

Filed by a Party other than the Registrant o

 

Check the appropriate box:

 

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Preliminary Proxy Statement

 

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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

ý

 

Definitive Proxy Statement

 

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Definitive Additional Materials

 

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Soliciting Material under Rule 14a-12

CBS Corporation

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
         
Payment of Filing Fee (Check the appropriate box):

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No fee required.

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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
    (1)   Title of each class of securities to which transaction applies:
        
 
    (2)   Aggregate number of securities to which transaction applies:
        
 
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Fee paid previously with preliminary materials.

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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

(1)

 

Amount Previously Paid:
        
 
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GRAPHIC

April 24, 2009

Dear Stockholder:

              You are cordially invited to attend the 2009 Annual Meeting of Stockholders of CBS Corporation (the "Annual Meeting"), which will be held at the Equitable Center, 787 Seventh Avenue (at 51st Street), New York, New York 10019 at 10:00 a.m., Eastern Daylight Time, on Tuesday, June 9, 2009. Holders of CBS Corporation Class A Common Stock are being asked to vote on the matters listed in the attached Notice of 2009 Annual Meeting of Stockholders.

              If you hold shares of the Company's Class A Common Stock, please cast your vote promptly to ensure that your shares will be voted at the Annual Meeting. You may vote by telephone or through the Internet by following the instructions on the Notice of Internet Availability of Proxy Materials or in the 2009 Proxy Statement. You may also submit your vote by returning a proxy card or voting instruction card, if you received a printed copy of proxy materials by request. If you attend the Annual Meeting, you may vote your shares in person.

              National Amusements, Inc., which as of April 15, 2009 beneficially owned shares of the Company's Class A Common Stock representing approximately 81.2% of the voting power of CBS Corporation's common stock, has advised CBS Corporation that it intends to vote all of its shares of the Company's Class A Common Stock in favor of each of the matters listed in Items 1-5 in the attached notice and against the matter listed in Item 6 in the attached notice. Therefore, such approval or disapproval of those matters, as indicated, is assured.

              If you wish to attend the Annual Meeting in person, you will need to request an admission ticket in advance. If you are a registered holder of the Company's Class A Common Stock, you can request a ticket when you vote by telephone or through the Internet, or by marking the appropriate box on the proxy card (if you requested a printed copy of proxy materials). If you are a registered holder of the Company's Class B Common Stock or you hold shares of the Company's Class A or Class B Common Stock in a brokerage account, you can request a ticket by sending a written request along with proof of ownership, such as your brokerage firm account statement, to Director, Shareholder Relations, CBS Corporation, 51 West 52nd Street, New York, New York 10019.

              If you have elected to receive paper copies of the Company's proxy statements, annual reports and other materials relating to the Annual Meeting and want to elect to receive these documents electronically next year instead of by mail, please go to http://enroll.icsdelivery.com/cbs and follow the instructions to enroll. We highly recommend that you consider electronic delivery of these documents as it helps to lower the Company's costs and reduce the amount of paper mailed to your home.

              We appreciate your interest in and support of CBS Corporation and look forward to seeing you at the Annual Meeting.

GRAPHIC   GRAPHIC
SUMNER M. REDSTONE
Executive Chairman and Founder
  LESLIE MOONVES
President and Chief Executive Officer

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CBS CORPORATION


NOTICE OF 2009 ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT

To CBS Corporation Stockholders:

              The 2009 Annual Meeting of Stockholders (the "Annual Meeting") of CBS Corporation (the "Company") will be held at the Equitable Center, 787 Seventh Avenue (at 51st Street), New York, New York 10019 at 10:00 a.m., Eastern Daylight Time, on Tuesday, June 9, 2009. The principal business of the meeting will be the consideration of the following matters:

      1.
      The election of 14 directors;

      2.
      The ratification of the appointment of PricewaterhouseCoopers LLP to serve as the Company's independent registered public accounting firm for fiscal year 2009;

      3.
      A proposal to approve the Company's 2009 Long-Term Incentive Plan;

      4.
      A proposal to approve amendments to the Company's 2000 Stock Option Plan for Outside Directors;

      5.
      A proposal to approve amendments to the Company's 2005 RSU Plan for Outside Directors;

      6.
      A stockholder proposal set forth in the 2009 Proxy Statement; and

      7.
      Such other business as may properly come before the Annual Meeting or any adjournment thereof.

              The close of business on April 15, 2009 has been fixed as the record date for determining the holders of shares of CBS Corporation Class A Common Stock entitled to notice of and to vote at the Annual Meeting and any adjournment thereof. For a period of at least ten days prior to the Annual Meeting, a complete list of stockholders entitled to vote at the Annual Meeting will be open to the examination of any stockholder during ordinary business hours at the Company's corporate headquarters located at 51 West 52nd Street, New York, New York 10019.

    By order of the Board of Directors,
    GRAPHIC
    ANGELINE C. STRAKA
Secretary

April 24, 2009


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Page

VOTING AND SOLICITATION OF PROXIES

  1

CORPORATE GOVERNANCE

 
4

CBS CORPORATION'S BOARD OF DIRECTORS

 
7
     

Director Independence

 
7
     

Board Committees

 
8

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 
13

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

 
15

RELATED PERSON TRANSACTIONS

 
16

ITEM 1—ELECTION OF DIRECTORS

 
18

DIRECTOR COMPENSATION

 
23
     

Outside Director Compensation During 2008

 
23
     

Description of Outside Director Compensation

 
25

ITEM 2—RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 
28

REPORT OF THE AUDIT COMMITTEE

 
29

FEES FOR SERVICES PROVIDED BY THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 
31

COMPENSATION DISCUSSION AND ANALYSIS

 
32

COMPENSATION COMMITTEE REPORT

 
48

EXECUTIVE COMPENSATION

 
49
     

Summary Compensation Table for Fiscal Year 2008

 
49
     

Grants of Plan-Based Awards During 2008

 
56
     

Outstanding Equity Awards at Fiscal Year-End 2008

 
58
     

Option Exercises and Stock Vested During 2008

 
60
     

Pension Benefits in 2008

 
60
     

Non-qualified Deferred Compensation in 2008

 
65
     

Potential Payments Upon Termination

 
68

ITEM 3—PROPOSAL TO APPROVE THE CBS CORPORATION 2009 LONG-TERM INCENTIVE PLAN

 
75

ITEM 4—PROPOSAL TO APPROVE AMENDED AND RESTATED CBS CORPORATION 2000 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS

 
82

ITEM 5—PROPOSAL TO APPROVE AMENDED AND RESTATED CBS CORPORATION 2005 RSU PLAN FOR OUTSIDE DIRECTORS

 
85

ITEM 6—STOCKHOLDER PROPOSAL

 
89

EQUITY COMPENSATION PLAN INFORMATION

 
91

OTHER MATTERS

 
93

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Page

2010 ANNUAL MEETING OF STOCKHOLDERS

  93

Annex A—CBS Corporation 2009 Long-Term Incentive Plan

 
A-1

Annex B—CBS Corporation 2000 Stock Option Plan for Outside Directors

 
B-1

Annex C—CBS Corporation 2005 RSU Plan for Outside Directors

 
C-1

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CBS CORPORATION
2009 PROXY STATEMENT




VOTING AND SOLICITATION OF PROXIES

Solicitation of Proxies

              A proxy is being solicited by the Board of Directors of CBS Corporation, a Delaware corporation ("CBS Corporation" or the "Company"), for use at the 2009 Annual Meeting of Stockholders (the "Annual Meeting") to be held on Tuesday, June 9, 2009 at 10:00 a.m., Eastern Daylight Time. The close of business on April 15, 2009 is the record date for determining the record holders of the Company's Class A Common Stock, par value $0.001 per share, entitled to notice of and to vote at the Annual Meeting and any adjournment thereof. Holders of the Company's non-voting Class B Common Stock, par value $0.001 per share, are not entitled to vote at the Annual Meeting or any adjournment thereof.

              As of April 15, 2009, the Company had outstanding 57,706,637 shares of its Class A Common Stock, each of such shares being entitled to one vote, and 621,769,434 non-voting shares of its Class B Common Stock (together with the Company's Class A Common Stock, the "Common Stock").

Internet Availability of Proxy Materials

              In accordance with Securities and Exchange Commission ("SEC") rules, instead of mailing to stockholders a printed copy of the Company's proxy statement, annual report and other materials relating to the Annual Meeting ("proxy materials"), the Company may now provide proxy materials to the Company's stockholders on the Internet by mailing to them a Notice of Internet Availability of Proxy Materials (the "Notice of Internet Availability") to inform stockholders that the proxy materials are available on the Internet. The Company intends to commence its distribution of the Notice of Internet Availability on or about April 27, 2009. Stockholders receiving a Notice of Internet Availability by mail will not receive a printed copy of proxy materials, unless they so request. Instead, the Notice of Internet Availability will instruct stockholders as to how they may access and review proxy materials on the Internet. Stockholders who receive a Notice of Internet Availability by mail who would like to receive a printed copy of the Company's proxy materials, including a proxy card or voting instruction card, should follow the instructions for requesting these materials included in the Notice of Internet Availability. Stockholders who currently receive printed copies of proxy materials who would like to receive copies of these documents electronically instead of by mail should follow the instructions for requesting electronic delivery set forth in the "Other Matters" section below.

Submission of Proxies

              The persons named in the proxy card and on the Company's voting website at www.proxyvote.com (the "proxy holders") have been designated by the Company's Board of Directors to vote the shares represented by proxy at the Annual Meeting. The proxy holders are officers of the Company. They will vote the shares represented by each valid and timely received proxy in accordance with the stockholder's instructions, or if no instructions are specified, the shares represented by the proxy will be voted in accordance with the recommendations of the Board of Directors as described in this proxy statement. If any other matter properly comes before the Annual Meeting, the proxy holders will vote on that matter in their discretion.

              Holders of the Company's Class A Common Stock may submit a proxy in the following ways:

    Through the Internet by accessing www.proxyvote.com and following the instructions or by telephone, for holders living in the United States or Canada, by using any touch-tone telephone to call 1-800-690-6903 and following the recorded instructions. Holders submitting a proxy in either of these two ways should have in hand when they access the website or call,

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      as applicable, the Notice of Internet Availability or, for holders who received a printed copy of proxy materials by request, the proxy card or voting instruction card. The Internet or telephone proxy must be received no later than 11:59 p.m., Eastern Daylight Time, on June 8, 2009; or

    For holders who received a printed copy of proxy materials by request, by completing, signing and dating the proxy card or voting instruction card and returning it in the envelope provided, so that it is received prior to the Annual Meeting.

              Shares Held in the Company's 401(k) Plan.    Voting instructions relating to shares of the Company's Class A Common Stock held in the Company's 401(k) plan must be received no later than 11:59 p.m., Eastern Daylight Time, on June 7, 2009, so that the trustee of the plan (who votes the shares on behalf of plan participants) has adequate time to tabulate the voting instructions. Shares held in the 401(k) plan that are not voted or for which the trustee does not receive timely voting instructions will be voted by the trustee in the same proportion as the shares held in the respective plan that are timely voted.

              Voting Other than by Proxy.    While the Company encourages holders of its Class A Common Stock to vote by proxy, holders of the Company's Class A Common Stock (other than shares held in the 401(k) plan) also have the option of voting their shares in person at the Annual Meeting. Some holders of the Company's Class A Common Stock hold their shares in "street name" through a broker or other nominee and are therefore known as "beneficial holders." If shares of Class A Common Stock are held for a beneficial holder in a brokerage, bank or other institutional account, then the beneficial holder must obtain a proxy from that entity and bring it to the Annual Meeting in order to vote the shares at the Annual Meeting.

Revocation of Proxies

              A proxy may be revoked before the voting deadline by sending written notice to Angeline C. Straka, Secretary, CBS Corporation, 51 West 52nd Street, New York, NY 10019, or by submission (including telephonic or Internet submission) of a proxy bearing a later date than the proxy being revoked to Broadridge Proxy Services, P.O. Box 9112, Farmingdale, NY 11735. Revocations made by telephone or through the Internet must be received by 11:59 p.m., Eastern Daylight Time, on June 8, 2009. A holder may also revoke a proxy by voting in person at the Annual Meeting.

              Shares Held in the Company's 401(k) Plan.    Voting instructions relating to shares of the Company's Class A Common Stock held in the Company's 401(k) plan may be revoked prior to 11:59 p.m., Eastern Daylight Time, on June 7, 2009 by sending written notice to Angeline C. Straka, Secretary, CBS Corporation, 51 West 52nd Street, New York, NY 10019, or by timely submission (including telephonic or Internet submission) of voting instructions bearing a later date than the voting instructions being revoked to Broadridge Proxy Services, P.O. Box 9112, Farmingdale, NY 11735.

Quorum

              Under the Company's Amended and Restated Bylaws, the holders of a majority of the aggregate voting power of the Company's Class A Common Stock outstanding on the record date, present in person or represented by proxy at the Annual Meeting, shall constitute a quorum. Abstentions and broker non-votes will be treated as present for purposes of determining the presence of a quorum.

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Matters to Be Considered at the Annual Meeting

              The Board of Directors recommends a vote FOR each of the following matters:

      1.
      The election of each of the 14 nominated directors;

      2.
      The ratification of the appointment of PricewaterhouseCoopers LLP to serve as the Company's independent registered public accounting firm ("independent auditor") for fiscal year 2009;

      3.
      A proposal to approve the Company's 2009 Long-Term Incentive Plan;

      4.
      A proposal to approve amendments to the Company's 2000 Stock Option Plan for Outside Directors; and

      5.
      A proposal to approve amendments to the Company's 2005 RSU Plan for Outside Directors.

              The Board of Directors recommends a vote AGAINST the following matter:

      6.
      A stockholder proposal presented on page 89.

              The affirmative vote of the holders of a majority of the aggregate voting power of the Company's Class A Common Stock present in person or represented by proxy at the Annual Meeting is required to elect each of the 14 nominated directors and to approve each of the remaining matters set forth above. An abstention with respect to any matter will have the effect of a vote against such matter.

              Under the rules of the New York Stock Exchange ("NYSE"), a broker or other nominee holding shares of the Company's Class A Common Stock on behalf of a beneficial holder may not be permitted to exercise voting discretion with respect to some matters to be acted upon at stockholders' meetings. Therefore, if a beneficial holder does not give the broker or nominee specific voting instructions, the holder's shares may not be voted on those matters and a broker non-vote will occur. Under the rules of the NYSE, brokers or nominees may vote on the matters listed as Items 1 and 2 above, but not on matters listed as Items 3-6 above, if they do not receive instructions from the beneficial holder of the shares held in street name. A broker non-vote will not have the effect of a vote against Items 3-6 above.

              As of April 15, 2009, National Amusements, Inc. ("National Amusements") beneficially owned through its wholly owned subsidiary, NAIRI, Inc. ("NAIRI"), approximately 81.2% of the Company's outstanding Class A Common Stock and approximately 10.2% of the Company's outstanding Class A Common Stock and Class B Common Stock on a combined basis. Sumner M. Redstone, the controlling stockholder of National Amusements, is Executive Chairman and Founder of the Company. National Amusements has advised the Company that it intends to vote all of its shares of the Company's Class A Common Stock in favor of each of Items 1-5 above and against Item 6 above. Such action by National Amusements will be sufficient to constitute a quorum and to approve or disapprove, as indicated, each of the matters.

Cost of Proxy Solicitation and Inspector of Election

              The Company will pay the cost of the solicitation of proxies, including the preparation, printing and mailing of the Notice of Internet Availability and, as applicable, this proxy statement and the related materials. The Company will furnish copies of the Notice of Internet Availability and, if requested, the proxy statement and related materials to banks, brokers, fiduciaries and custodians that hold shares on behalf of beneficial holders so that they may forward the materials to the beneficial holders. The Company has retained IVS Associates, Inc. to serve as the independent inspector of election for the Annual Meeting.

Mailing Address

              The Company's mailing address is 51 West 52nd Street, New York, NY 10019.

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CORPORATE GOVERNANCE

              CBS Corporation's corporate governance practices are established and monitored by its Board of Directors (the "Board"). The Board, with assistance from its Nominating and Governance Committee, regularly assesses CBS Corporation's governance practices in light of legal requirements and governance best practices. In several areas, CBS Corporation's practices go beyond the requirements of the NYSE corporate governance listing standards (the "NYSE listing standards"). For example, despite being a "controlled company" (which is a company of which more than 50% of the voting power is held by an individual or another company), CBS Corporation has a majority of independent directors on its Board and has an independent Compensation Committee and an independent Nominating and Governance Committee, none of which is required for controlled companies under the NYSE listing standards.

              CBS Corporation's principal governance documents are as follows:

    Corporate Governance Guidelines

    Board Committee Charters:

      Audit Committee Charter

      Compensation Committee Charter

      Nominating and Governance Committee Charter

    Business Conduct Statement

    Supplemental Code of Ethics for Senior Financial Officers

              These documents are available on the Company's public website at www.cbscorporation.com, and copies of these documents may also be requested by writing to Investor Relations, CBS Corporation, 51 West 52nd Street, New York, NY 10019. The Company encourages its stockholders to read these documents, as we believe they illustrate CBS Corporation's commitment to good governance practices. Certain key provisions of these documents are summarized below.

Corporate Governance Guidelines

              CBS Corporation's Corporate Governance Guidelines (the "Guidelines") set forth the Company's corporate governance principles and practices on a variety of topics, including the responsibilities, composition and functioning of the Board, director qualifications, and the roles of the Board Committees. The Guidelines are periodically reviewed and updated as needed. The Guidelines provide, among other things, that:

    A majority of the members of the Board of Directors must be independent as determined under the NYSE listing standards and the standards set forth in the Guidelines;

    All of the members of the Audit, Compensation, and Nominating and Governance Committees must be independent;

    Separate executive sessions of the non-management directors and independent directors must be held a minimum number of times each year;

    The Board, acting on the recommendation of the Nominating and Governance Committee, shall determine whether a director candidate's service on more than three other public company boards of directors is consistent with service on the Board;

    Director compensation will be established in light of the policies set forth in the Guidelines;

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    Within three years of joining the Board, directors are expected to own shares of Common Stock having a market value of at least three times the cash annual retainer fee paid to them;

    The non-management directors play an active role in succession planning; and

    The Board will hold an annual self-evaluation to assess its effectiveness.

Board Committee Charters

              Each Board Committee operates under a written charter that has been adopted by the Board. The Company has three standing Committees: the Audit Committee, the Compensation Committee and the Nominating and Governance Committee. The Committee charters set forth the purpose, objectives and responsibilities of each Committee and discuss matters such as Committee membership requirements, number of meetings and the setting of meeting agendas. The charters are assessed at least every other year, or more frequently as the applicable Committee may determine, and are updated as needed. More information on the Committees, their respective roles and responsibilities and their charters can be found under "CBS Corporation's Board of Directors—Board Committees."

Business Conduct Statement

              The Company's Business Conduct Statement ("BCS") sets forth the Company's standards for ethical conduct that are expected of all directors and employees of the Company. The BCS is available on the Company's website at www.cbscorporation.com and on the Company's intranet sites and also has been distributed both electronically and in printed copy to the Company's employees and in printed copy to the Company's directors. As part of the Company's compliance and ethics program, directors and full-time employees are required to certify, either electronically or in hard copy, as to their compliance with the BCS and, on an ongoing basis, must disclose any potential conflicts of interest. The Company has also implemented an online BCS training program. The BCS addresses, among other things, topics such as:

    Compliance with laws, rules and regulations, including the Foreign Corrupt Practices Act;

    Conflicts of interest, including the disclosure of potential conflicts to the Company;

    Confidentiality, insider information and trading, and fair disclosure;

    Financial accounting and improper payments;

    The Company's commitment to providing equal employment opportunities and a bias-free and harassment-free workplace environment;

    Fair dealing and relations with competitors, customers and suppliers;

    Health, safety and the environment; and

    Political contributions and payments.

              The BCS provides numerous avenues for employees to report violations of the BCS or matters of concern, whether anonymously or with attribution, to the appropriate officers of the Company and/or the Audit Committee. These avenues include a telephone hotline, email contacts or direct communication with the Company's compliance officers. The BCS delineates that the Company will protect anyone who makes a good faith report of a violation of the BCS and retaliation against an employee who makes a good faith report will not be tolerated.

              Waivers of the BCS for the Company's executive officers or directors will be disclosed on the Company's website at www.cbscorporation.com or by Form 8-K filed with the SEC.

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Supplemental Code of Ethics for Senior Financial Officers

              The Supplemental Code of Ethics is applicable to the Company's Executive Chairman, President and Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer. The Supplemental Code of Ethics, which is available on the Company's website at www.cbscorporation.com, addresses matters specific to those senior financial positions in the Company, including responsibility for the disclosures made in CBS Corporation's filings with the SEC, reporting obligations with respect to certain matters and a general obligation to promote honest and ethical conduct within the Company. The senior financial officers are also required to comply with the BCS. Amendments to or waivers of the Supplemental Code of Ethics for these officers will be disclosed on the Company's website at www.cbscorporation.com or by Form 8-K filed with the SEC. Other than the waiver of conflict of interest in connection with the Company's agreement with National Amusements and NAIRI under which they may participate in the Company's $8.0 billion stock purchase program, which former Viacom Inc. ("Former Viacom") announced in October 2004 (see "Related Person Transactions" for more information), no waivers of the BCS or Supplemental Code of Ethics for Senior Financial Officers have been granted. The National Amusements/NAIRI waiver is posted on the Company's website.

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CBS CORPORATION'S BOARD OF DIRECTORS

              The Company's Board of Directors is currently comprised of 14 members: David R. Andelman, Joseph A. Califano, Jr., William S. Cohen, Gary L. Countryman, Charles K. Gifford, Leonard Goldberg, Bruce S. Gordon, Linda M. Griego, Arnold Kopelson, Leslie Moonves, Doug Morris, Shari Redstone, Sumner M. Redstone and Frederic V. Salerno. All of the current members of the Board were elected at the Company's 2008 Annual Meeting of Stockholders.

              During 2008, the Board of Directors held 9 meetings and acted by unanimous written consent. Each incumbent director attended at least 75% of the meetings of the Board and Committees on which such director served during 2008. In addition to Board and Committee meetings, directors are expected to attend the Annual Meeting, and all of the directors standing for election in 2008 were present at the Company's 2008 Annual Meeting of Stockholders.

              In accordance with the Guidelines and the NYSE listing standards, the non-management directors meet separately, without directors who are Company employees, at regularly scheduled sessions a number of times each year equal to at least 50% of the number of regularly scheduled Board meetings, and at such other times as they deem appropriate. The independent directors meet separately, without those directors who are not independent as determined by the Board, at least 2 times each year, and at such other times as they deem appropriate. The members of the Nominating and Governance Committee preside at meetings of the non-management directors and independent directors on a rotating basis. During 2008, the non-management directors met 5 times, and the independent directors met 5 times.


Director Independence

              The Company's Guidelines provide that a majority of the Company's directors must be independent of the Company, as "independence" is defined in the NYSE listing standards and in the Guidelines. The NYSE listing standards set forth five "bright-line" tests that require a finding that a director is not independent if the director fails any of the tests. In addition, the NYSE listing standards provide that a director is not independent unless the Board affirmatively determines that the director has no "material relationship" with the Company. The Guidelines set forth categorical standards to assist the Board in determining what constitutes a "material relationship" with the Company. Generally under these categorical standards, the following relationships are deemed not to be material:

    The types of relationships identified by the NYSE listing standards' bright-line tests, if they occurred more than five years ago (the Board will review any such relationship if it occurred more than three but less than five years ago);

    A relationship whereby the director has received, or an immediate family member of the director has received for service as an executive officer, less than $120,000 in direct compensation from the Company during any twelve-month period within the last three years; and

    A relationship where the director is an executive officer or employee, or an immediate family member of the director is an executive officer, of the following:

      a company that made payments to, or received payments from, the Company for property or services in an amount that, in any of the last three fiscal years, is less than 1% of such company's annual consolidated gross revenues;

      a company which is either indebted to or a creditor of the Company in an amount that is less than 1% of such indebted company's total consolidated assets; and

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        a tax-exempt organization that received contributions from the Company in the prior fiscal year in an amount less than the greater of $500,000 or 1% of that organization's consolidated gross revenues.

              For relationships that exceed the thresholds described above, the determination of whether the relationship is material or not, and therefore whether the director would be independent or not, is made by the directors who are independent. In addition, the Guidelines state that, generally, the types of relationships not addressed by the NYSE listing standards or described in the Guidelines will not cause an otherwise independent director to be considered not independent. However, the Board may determine that a director is not independent for any reason it deems appropriate.

              The full text of the Guidelines is available on the Company's website at www.cbscorporation.com.

              In February 2009, the Nominating and Governance Committee reviewed the independence of the 14 director nominees standing for election at the Annual Meeting to determine its recommendation regarding which nominees meet the independence standards outlined above. Based on its review, and the recommendations of the Nominating and Governance Committee, the Board determined that 10 of the 14 nominees are independent. The independent director nominees are Messrs. Califano, Cohen, Countryman, Gifford, Goldberg, Gordon, Kopelson, Morris and Salerno and Ms. Griego.

              During its review, in determining that the director nominees named above are independent, the Board considered the transactions disclosed under "Related Person Transactions," all of which the Board determined were immaterial to, and would not impair, each such director's independence. The Board also considered that the Company and its subsidiaries in the ordinary course of business have, during the past three years, sold products and services to, made contributions to and/or purchased products and services from, companies and tax-exempt organizations of which certain directors were executive officers during 2008, and determined that all of these transactions were below the threshold for relationships deemed to be immaterial under the Guidelines.


Board Committees

              The following chart sets forth the current membership of each Board Committee. The Board reviews and determines the membership of the Committees at least annually.

 

  Committee       Members    

 

 

Audit Committee

      Gary L. Countryman, Chair
Joseph A. Califano, Jr.
Linda M. Griego
Doug Morris
Frederic V. Salerno
   

 

 

Compensation Committee

      Charles K. Gifford, Chair
William S. Cohen
Leonard Goldberg
Bruce S. Gordon
   

 

 

Nominating and Governance Committee

      Joseph A. Califano, Jr., Chair
Gary L. Countryman
Charles K. Gifford
   

              During 2008, the Audit Committee held 5 meetings, the Compensation Committee held 8 meetings and the Nominating and Governance Committee held 12 meetings. Information about the Committees, including their respective roles and responsibilities and charters, is set forth below.

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Audit Committee

              The Audit Committee Charter provides that the Audit Committee will be comprised of at least three members and that all of the members on the Committee must be independent directors. Also, the Committee must have at least one "audit committee financial expert" (as described below) and all Committee members must be financially literate. The Committee holds at least five regular meetings each year, and it regularly meets separately at these meetings with the independent auditor, the Company's General Counsel, its Senior Vice President of Internal Audit and other members of the Company's senior management. The Committee is responsible for the following, among other things:

    The appointment, retention, termination, compensation and oversight of the Company's independent auditor, including reviewing with the independent auditor the scope of the audit plan and audit fees;

    Reviewing the Company's financial statements and related disclosures, including with respect to internal control over financial reporting;

    Oversight of the Company's internal audit function; and

    Oversight of the Company's compliance with legal and regulatory requirements.

              For additional information on the Committee's role and its oversight of the independent auditor during 2008, see "Report of the Audit Committee."

              Audit Committee Financial Experts.    The Board of Directors has determined that all of the members of the Audit Committee are "financially literate," as that term is interpreted by the Board in its business judgment. In addition, the Board has determined that a number of members of the Audit Committee, including Mr. Countryman (Chair), qualify as "audit committee financial experts," as that term is defined in the regulations promulgated under the Securities Act of 1933, as amended (the "Securities Act").

              Service on the Audit Committees of Other Public Companies.    The Company does not restrict the number of other audit committees on which members of its Audit Committee may serve. Messrs. Countryman (Chair), Califano and Morris do not serve on any other public company audit committee. Ms. Griego currently serves on one other public company audit committee, and Mr. Salerno currently serves on four other public company audit committees. In accordance with the NYSE listing standards, the Board has determined that Mr. Salerno's service on these other public company audit committees would not impair his ability to serve effectively on the Company's Audit Committee, particularly given his experience as the former chief financial officer of a major public company and the fact that he is retired from full-time employment.

Compensation Committee

              The Compensation Committee Charter provides that the Compensation Committee will be comprised of at least three members, except that the Committee is deemed to be properly constituted with at least two members in the event of a vacancy until the Board fills the vacancy. The Charter also provides that all of the members on the Committee must be independent directors and must be "outside directors" as defined by Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). The Committee holds at least four regular meetings each year and is responsible for the following, among other things:

    Adopting and periodically reviewing the Company's compensation philosophy, strategy and principles regarding the design and administration of the Company's compensation programs;

    Reviewing and approving the total compensation packages for the Executive Chairman, the President and Chief Executive Officer, the Company's other executive officers, all operating unit heads who report directly to the President and Chief Executive Officer, and, in certain instances, other persons among the Company's most highly compensated executives

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      (excluding "Talent," as such term is currently used in the media or entertainment industries) (the "senior executives"); and

    Overseeing the administration of the Company's incentive compensation plans (including the bonus plan for executives subject to Section 162(m) under the Code) and its equity-based compensation plans.

              Consideration and Determination of Executive Compensation.    The Compensation Committee reviews all components of senior executives' compensation, including base salary, annual and long-term incentives and severance arrangements. In approving compensation for the senior executives (other than Messrs. Redstone and Moonves), the Committee considers the input and recommendations of the Chief Executive Officer with respect to the senior executives' performances, Mr. Briskman with respect to those senior executives who report directly to him and Mr. Reynolds with respect to those senior executives who report directly to him. With respect to Messrs. Redstone and Moonves, the Committee reviews and approves goals and objectives relevant to their compensation and, together with the Nominating and Governance Committee, annually evaluates the performances of the Executive Chairman and the Chief Executive Officer in light of those goals and objectives. The results of these evaluations are then reported to the non-management directors. The Compensation Committee sets compensation for the Executive Chairman and the Chief Executive Officer taking these evaluations into account. The Committee then reports to the Board on the process for setting compensation for the Executive Chairman and Chief Executive Officer.

              The Company's processes and procedures for the consideration of executive compensation and the role of the Company's executive officers in determining or recommending the amount or form of executive compensation are more fully described in the "Compensation Discussion and Analysis" section below. Director compensation is approved by the Board, based on recommendations from the Nominating and Governance Committee, as more fully described in the "Nominating and Governance Committee" section below.

              The Committee has the power to delegate its authority and duties to subcommittees or individuals as it deems appropriate and in accordance with applicable laws and regulations. The Committee has delegated to the President and Chief Executive Officer limited authority (with respect to executives who are not senior executives) to grant long-term incentive awards under the Company's long-term management incentive program to such executives in connection with their hiring, promotion or contract renewal and to modify the terms of outstanding equity grants in certain post-termination scenarios, as discussed in the "Compensation Discussion and Analysis" section below. The Committee delegated this authority in order for the Company to have the ability to (i) act in a timely manner in a competitive environment in connection with the hiring of new executives or the compensating of an existing executive being given a significant increase in responsibility and (ii) maintain flexibility to manage compensation in post-termination scenarios when mutually beneficial to the Company and to the executive.

              The Compensation Committee is empowered to retain compensation consultants having special competence to assist the Committee in evaluating executive officer and employee compensation. The Committee has the sole authority to retain and terminate such consultants and to review and approve such consultants' fees and other retention terms. The Committee retains an independent compensation consulting firm, currently Towers Perrin, to advise the Committee in its review of senior executive compensation. The Compensation Committee adopted a policy in 2008 providing that the independent compensation consulting firm will not be considered as a provider of services to the Company, other than for services provided to the Compensation Committee. Accordingly, other than these services provided to the Committee, Towers Perrin does not perform any administrative or consulting services for the Company. In furtherance of the Committee's review of senior executive compensation, the independent consultant examines the compensation practices at companies with which the Company competes for senior executive talent, including those companies engaged in similar business activities

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and other publicly traded U.S. companies, and provides other analysis, as more fully described in the "Compensation Discussion and Analysis" section below.

Nominating and Governance Committee

              The Nominating and Governance Committee's Charter provides that the Nominating and Governance Committee will be comprised of at least three members, except that the Committee is deemed to be properly constituted with at least two members in the event of a vacancy until the Board fills the vacancy. The Charter also provides that all of the members on the Committee must be independent directors. The Committee holds at least three regular meetings each year and is responsible for the following, among other things:

    Identifying and recommending to the Board nominees for election to the Board and reviewing the composition of the Board as part of this process;

    Overseeing all aspects of the Company's corporate governance initiatives, including regular assessments of its principal governance documents;

    Establishing criteria for the annual self-evaluations of the Board and its Committees;

    Making recommendations to the Board on director compensation matters;

    Monitoring developments in the law and practice of corporate governance;

    Developing and recommending items for Board meeting agendas; and

    Reviewing transactions between the Company and related persons.

              The members of the Nominating and Governance Committee also chair the executive sessions of non-management and independent directors on a rotating basis.

              Consideration and Determination of Director Compensation.    The Committee annually reviews and recommends for the Board's consideration the form and amount of compensation for Outside Directors. "Outside Directors" are directors of the Company who are not employees of the Company or any of its subsidiaries. Only Outside Directors are eligible to receive compensation for serving on the Board, as more fully described in the "Director Compensation" section below.

              In accordance with the Guidelines and its Charter, the Committee is guided by three principles in its review of Outside Director compensation and benefits: Outside Directors should be fairly compensated for the services they provide to the Company, taking into account, among other things, the size and complexity of the Company's business and compensation and benefits paid to directors of comparable companies; Outside Directors' interests should be aligned with the interests of stockholders; and Outside Directors' compensation should be easy for stockholders to understand.

              The recommendations of the Committee with respect to director compensation are subject to approval by the Board.

              2009 Director Nomination Process.    In connection with the 2009 director nomination process, the Committee reviewed the current composition of the Board in light of the considerations set forth in its Charter and the Company's Guidelines. The Committee also considered input received from directors on Board member qualifications and Board composition. After taking these considerations into account, the Committee determined to recommend to the Board that each of the current members of the Board be nominated to stand for election at the Annual Meeting.

              Stockholder Recommendations for Director.    The Committee will consider candidates for director recommended by the stockholders of the Company. All recommendations by stockholders for potential director candidates, which shall include written materials with respect to the potential candidate, should be sent to Angeline C. Straka, Secretary, CBS Corporation, 51 West 52nd Street, New York, NY 10019. The Company's Guidelines and Nominating and Governance Committee Charter set forth certain criteria for director qualifications and Board composition that stockholders should

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consider when making a recommendation. These criteria include an expectation that directors have substantial accomplishments in their professional backgrounds, are able to make independent, analytical inquiries, and exhibit practical wisdom and mature judgment. Directors of CBS Corporation should also possess the highest personal and professional ethics, integrity and values and be committed to promoting the long-term interests of CBS Corporation's stockholders. Director candidates recommended by stockholders who meet the director qualifications, which are described more fully in the Company's Guidelines and Nominating and Governance Committee Charter, will be considered by the Chair of the Committee, who will present the information on the candidate to the entire Committee. All director candidates recommended by stockholders will be considered by the Committee in the same manner as any other candidate.

Communications with Directors

              Stockholders and other parties interested in contacting CBS Corporation's non-management directors may send an email to: nonmanagementdirectors@cbs.com or write to Non-Management Directors, CBS Corporation, 51 West 52nd Street, 35th Floor, New York, NY 10019. The non-management directors' contact information is also available on CBS Corporation's website at www.cbscorporation.com. Non-management directors have approved the process for handling communications received in this manner.

              Stockholders should also use the email and mailing address for the non-management directors to send communications to the Board. The process for handling stockholder communications to the Board received in this manner has been approved by the independent directors of the Board. Correspondence relating to accounting or auditing matters will be handled in accordance with procedures established by the Audit Committee for such matters.

Compensation Committee Interlocks and Insider Participation

              None of the members of the Compensation Committee during fiscal year 2008 was, or has ever been, an officer or employee of the Company, and, during fiscal year 2008, no executive officer of the Company served on the board and/or compensation committee of any company that employed as an executive officer any member of the Company's Board and/or Compensation Committee.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

              The table below sets forth as of February 28, 2009, unless otherwise indicated, information concerning the beneficial ownership of the Company's Class A and Class B Common Stock by (i) each current director and director nominee, (ii) each named executive officer and (iii) the current directors and executive officers of the Company as a group. The information below does not reflect ownership of stock options, restricted share units ("RSUs") or performance share units ("PSUs") if such stock options do not become exercisable, such RSUs do not vest or the number of shares to be delivered under the PSUs is not determinable within 60 days from February 28, 2009. Each person has sole voting and investment power over the shares reported, except as noted. Also set forth below is information concerning the beneficial ownership by each person, or group of affiliated persons, who is known by the Company to beneficially own 5% or more of the Company's Class A Common Stock. As of February 28, 2009, there were 57,706,637 shares of the Company's Class A Common Stock outstanding and 621,902,743 shares of the Company's Class B Common Stock outstanding.

 
  Beneficial Ownership of Equity Securities
Name
  Title of Security   Number of Shares   Percent of Class
David R. Andelman   Class A Common     8,949   (1)   *
    Class B Common     64,034   (1)(2)   *

Louis J. Briskman

 

Class A Common

 

 

0

 

 

 

*
    Class B Common     317,852   (2)(3)(4)   *

Joseph A. Califano, Jr.

 

Class A Common

 

 

2,446

 

(1)

 

*
    Class B Common     49,006   (1)(2)(3)   *

William S. Cohen

 

Class A Common

 

 

8,917

 

(1)

 

*
    Class B Common     52,532   (1)(2)   *

Gary L. Countryman

 

Class A Common

 

 

5,444

 

(1)

 

*
    Class B Common     25,119   (1)(2)   *

Charles K. Gifford

 

Class A Common

 

 

0

 

 

 

*
    Class B Common     35,269   (1)(2)   *

Leonard Goldberg

 

Class A Common

 

 

0

 

 

 

*
    Class B Common     28,296   (2)(3)   *

Bruce S. Gordon

 

Class A Common

 

 

0

 

 

 

*
    Class B Common     34,426   (1)(2)   *

Linda M. Griego

 

Class A Common

 

 

0

 

 

 

*
    Class B Common     25,684   (1)(2)(3)   *

Joseph R. Ianniello

 

Class A Common

 

 

0

 

(4)

 

*
    Class B Common     157,560   (2)(4)   *

Arnold Kopelson

 

Class A Common

 

 

3,088

 

(1)

 

*
    Class B Common     22,763   (1)(2)   *

Leslie Moonves

 

Class A Common

 

 

0

 

 

 

*
    Class B Common     2,274,024   (2)(3)(4)   *

Doug Morris

 

Class A Common

 

 

4,263

 

(1)

 

*
    Class B Common     23,942   (1)(2)   *

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  Beneficial Ownership of Equity Securities
Name
  Title of Security   Number of Shares   Percent of Class

Shari Redstone

 

Class A Common

 

 

2,492

 

(1)(5)

 

*
    Class B Common     27,417   (1)(2)(3)(5)   *

Sumner M. Redstone

 

Class A Common

 

 

46,829,454

 

(6)

 

81.2%
    Class B Common     23,976,286   (2)(4)(6)   3.9%

Fredric G. Reynolds

 

Class A Common

 

 

0

 

 

 

*
    Class B Common     605,745   (2)(3)(4)   *

Frederic V. Salerno

 

Class A Common

 

 

10,900

 

(1)

 

*
    Class B Common     35,443   (1)(2)   *

Current directors and executive officers

 

Class A Common

 

 

46,887

 

(1)(4)

 

*
  as a group, other than the interests of   Class B Common     4,878,482   (1)(2)(3)(4)(7)   *
  Mr. Redstone (23 persons)                  

NAIRI, Inc./National Amusements, Inc.

 

Class A Common

 

 

46,829,414

 

(8)

 

81.2%
  200 Elm Street   Class B Common     22,809,527   (8)   3.7%
  Dedham, MA 02026                  

Mario J. Gabelli (9)

 

Class A Common

 

 

4,476,586

 

 

 

7.8%
  Gabelli Asset Management Inc.                  
  One Corporate Center                  
  Rye, NY 10580-1435                  

*
Represents less than 1% of the outstanding shares of the class.

(1)
Includes (a) the following Company Class A Common Stock phantom units and Class B Common Stock phantom units credited pursuant to the Company's deferred compensation plans for Outside Directors: Andelman, 8,949 Class A and 8,968 Class B; Califano, 2,446 Class A and 2,461 Class B; Cohen, 8,917 Class A and 8,926 Class B; Countryman, 5,444 Class A and 5,435 Class B; Kopelson, 3,088 Class A and 3,079 Class B; Morris, 4,263 Class A and 4,258 Class B; Shari Redstone, 2,492 Class A and 2,496 Class B; and Salerno, 10,900 Class A and 10,916 Class B (including 7,918 Class A and 7,946 Class B, which amounts were deferred prior to the Separation (as defined in "Related Person Transactions") and are held in an account in Mr. Salerno's name at Viacom Inc.); and (b) the following shares of the Company's Class B Common Stock underlying vested RSUs on which settlement has been deferred: Andelman, 10,501; Califano, 10,501; Cohen, 10,501; Countryman, 3,529; Gifford, 8,350; Gordon, 5,699; Griego, 3,529; Kopelson, 3,529; Morris, 3,529; Shari Redstone, 4,821; and Salerno, 3,529. Pursuant to the governing plans, the phantom common stock units are payable in cash and the RSUs are payable in shares of the Company's Class B Common Stock following termination of service as a director.

(2)
Includes the following shares of the Company's Class B Common Stock (a) which the indicated executive officer or director had the right to acquire within 60 days from February 28, 2009, through the exercise of stock options: Andelman, 44,565; Briskman, 234,383; Califano, 33,105; Cohen, 33,105; Countryman, 14,431; Gifford, 22,919; Goldberg, 17,826; Gordon, 26,412; Griego, 14,431; Ianniello, 117,908; Kopelson, 14,431; Moonves, 1,250,000; Morris, 14,431; Shari Redstone, 15,071; Sumner Redstone, 485,535; Reynolds, 410,170; and Salerno, 14,431; and (b) underlying RSUs which will vest within 60 days from February 28, 2009 held by the indicated executive officer: Briskman, 8,081; Ianniello, 4,040; Moonves, 557 (represents RSUs held by a family member as to which he disclaims beneficial ownership); and Reynolds, 14,141.

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(3)
Includes the following number of shares of the Company's Class B Common Stock (a) owned by family members but as to which, except in the case of Ms. Griego, the indicated director or executive officer disclaims beneficial ownership: Califano, 927; Griego, 6,000; Moonves, 2,412; and Reynolds, 982; (b) held in a family partnership: Briskman, 2,784, as to which he disclaims beneficial ownership to the extent that he has no pecuniary interest; (c) held by trusts, as to which the indicated director has shared voting and investment power: Goldberg, 5,000 and Shari Redstone, 1,500; and (d) held in a Grantor Retained Annuity Trust, as to which the indicated officer has shared voting and investment power: Moonves: 600,283.

(4)
Includes shares held through the CBS 401(k) Plan.

(5)
Ms. Redstone is a stockholder of National Amusements and has a significant indirect beneficial interest in the Company shares owned by National Amusements.

(6)
Except for 40 shares of the Company's Class A Common Stock, 681,056 shares of the Company's Class B Common Stock and 485,535 stock options to purchase shares of the Company's Class B Common Stock (also described in footnote (2) above) owned directly by Mr. Redstone, 68 shares of the Company's Class B Common Stock held by Mr. Redstone through the CBS 401(k) Plan, and 100 shares of the Company's Class B Common Stock held by a family member, all shares of the Company's Class A and Class B Common Stock are owned beneficially by National Amusements. Mr. Redstone can be reached at the address set forth on the above table for National Amusements.

(7)
Includes 3,146,346 shares of the Company's Class B Common Stock which the current directors and executive officers as a group, other than Mr. Redstone, had the right to acquire within 60 days from February 28, 2009, through the exercise of stock options or through the vesting of RSUs.

(8)
Mr. Redstone is the beneficial owner of the controlling interest in National Amusements and, accordingly, beneficially owns all such shares. NAIRI is a wholly owned subsidiary of National Amusements. Based on information received from National Amusements, the Company expects that all or substantially all of the Company shares owned by NAIRI will be pledged to National Amusement's lenders in connection with the agreement to restructure National Amusement's indebtedness.

(9)
The number of shares identified is based on a Schedule 13D dated March 9, 2009 and filed with the SEC by Gamco Investors, Inc. et al. on March 9, 2009. The Schedule 13D reported that the Gabelli entities have investment discretion and/or voting power with respect to substantially all of such shares.


SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

              Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires the Company's executive officers and directors, and persons who own more than 10% of a registered class of the Company's equity securities, to file reports of ownership and changes in ownership with the SEC and the NYSE and to furnish the Company with copies of all Section 16(a) forms they file. Based upon the Company's compliance program, a review of the forms furnished to the Company and written representations, the Company believes that during 2008 its executive officers, directors and greater than 10% beneficial owners complied with all applicable Section 16(a) filing requirements.

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RELATED PERSON TRANSACTIONS

Review, Approval or Ratification of Transactions with Related Persons

              The Board of Directors adopted a written policy whereby the Nominating and Governance Committee reviews and approves, ratifies or takes other actions it deems appropriate with respect to a related person transaction that, under the rules of the SEC, is required to be disclosed in the Company's proxy statement. In its review, the Committee considers the related person's interest in the transaction; the material terms of the transaction, including the dollar amount involved; the importance of the transaction to the related person and the Company; whether the transaction would impair the judgment of the related person; and any other information the Committee deems appropriate.

              Any member of the Committee who is a related person with respect to a transaction under review may not participate in the review or vote respecting the transaction; however, that person may be counted in determining the presence of a quorum at a meeting of the Committee that considers the transaction.

              Under the policy, the Company's legal staff is primarily responsible for determining whether a related person has a direct or indirect material interest in a transaction with the Company that is required to be disclosed. The determination will be made after a review of information obtained from the related person and information available from the Company's records. The staff is responsible for establishing and maintaining policies and procedures to obtain relevant information to allow it to make the determination.

Agreements Related to Viacom Inc.

              The separation of former Viacom Inc. ("Former Viacom") into two publicly traded companies, CBS Corporation and new Viacom Inc. ("Viacom"), was completed on December 31, 2005 (the "Separation"). National Amusements, the Company's controlling stockholder, is also the controlling stockholder of Viacom. Mr. Sumner M. Redstone, the controlling stockholder, chairman of the board of directors and chief executive officer of National Amusements, serves as the Executive Chairman of the Board of Directors for both the Company and Viacom. For purposes of governing certain ongoing relationships between the Company and Viacom after the Separation, the Company and Viacom entered into various agreements, including a separation agreement, tax matters agreement and transition services agreement.

              During 2008, the Company, as part of its normal course of business, entered into transactions with Viacom and its subsidiaries. The Company, through its Television segment, licenses its television products to Viacom, primarily MTV Networks and Black Entertainment Television. In addition, the Company recognizes advertising revenues for media spending placed by various subsidiaries of Viacom, primarily Paramount Pictures. Paramount Pictures also distributes certain of the Company's television products in the home entertainment market. Simon & Schuster, a subsidiary of the Company, is also involved in certain nonmaterial transactions with Viacom. The Company's total revenues from these transactions were $448.8 million for the year ended December 31, 2008. In addition, during 2008, the Company, through Showtime Networks, paid license fees to Viacom, through Paramount Pictures, for motion picture programming under an exclusive output agreement covering feature films initially theatrically released in the United States through 2007. The Company also places advertisements with, and leases production facilities from, various subsidiaries of Viacom. The total amounts from these transactions were $93.4 million for the year ended December 31, 2008. As of December 31, 2008, Viacom owed the Company approximately $432.3 million, and the Company owed Viacom approximately $81.2 million in connection with the Company's various normal course of business transactions with Viacom.

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              The Company believes that the terms of all such transactions were no more or less favorable to the Company and its businesses than they would have obtained from unrelated parties. The Company expects for the foreseeable future to continue to have transactions with Viacom.

Other Related Person Transactions

              On October 28, 2004, Former Viacom entered into an agreement (the "NAIRI Agreement") with National Amusements and NAIRI pursuant to which Former Viacom agreed to buy, and National Amusements and NAIRI agreed to sell, a number of shares of Class B Common Stock each month such that the ownership percentage of Class A Common Stock and Class B Common Stock (considered as a single class) held by National Amusements and/or NAIRI would not increase as a result of purchases by the Company of its shares under its $8.0 billion stock purchase program announced in October 2004. In 2008, the Company did not make any purchases under this program, and the Company has made no purchases under this program in 2009 to date. A copy of the NAIRI Agreement was filed with the SEC as Exhibit 10(a) to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2004.

              Prior to November 28, 2008, Mr. Redstone was the beneficial owner of approximately 87% of the common stock of Midway Games Inc. ("Midway"), all of which interest in Midway was sold on that date, according to a Schedule 13D filed with the SEC on December 1, 2008. Midway placed advertisements from time to time with various subsidiaries of the Company, which amounted to approximately $761,286 in payments to the Company in 2008. The Company believes that the terms of these transactions were no more or less favorable to its subsidiaries than they would have obtained from unrelated parties.

              The National Center on Alcohol and Substance Abuse at Columbia University ("CASA"), of which Mr. Califano is Chairman and President, sponsors an annual "Family Day" event, the purpose of which is to encourage families to eat dinner together. In 2008, certain divisions of the Company and its subsidiaries supported the cause by airing public service announcements (PSAs) that promote Family Day. It is anticipated that divisions of the Company and its subsidiaries will from time to time promote Family Day. In addition, in 2008, the Company made a contribution of $50,000 to CASA in connection with its $250,000 commitment in 2005 to CASA, payable in equal installments over five years, which commenced in 2006.

              Julie Chen, the wife of Mr. Moonves, is an anchor on CBS Network's The Early Show and the host of the CBS Network show Big Brother. Ms. Chen's compensation is comparable to talent in similar positions at the CBS Network, and the Company believes it is comparable to entertainment talent in such positions generally.

              Amy Salerno, a daughter of Mr. Salerno, is an employee in the Business Development department of Showtime Networks Inc., a subsidiary of the Company. Ms. Salerno has been an employee of Showtime Networks for approximately 8 years. She is not an executive officer of the Company or of Showtime. Her compensation was increased from the $131,000 reported in the 2007 proxy statement, which increase reflects merit increases in 2007 and 2008, resulting in compensation consistent with other employees at her level.

              In November 1995, the Company entered into an agreement with Gabelli Asset Management Company ("GAMCO") pursuant to which GAMCO manages certain assets for qualified U.S. pension plans sponsored by the Company. In 2008, the Company paid GAMCO approximately $236,280 for such investment management services. The Company believes that the terms of the agreement with GAMCO are no more or less favorable to the Company than it could have obtained from unrelated parties. Entities that are affiliated with GAMCO collectively own 4,476,586 shares of the Company's Class A Common Stock, according to a Schedule 13D filed with the SEC on March 9, 2009 by such entities, which, as of February 28, 2009, represented approximately 7.8% of the outstanding shares of the class.

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ITEM 1—ELECTION OF DIRECTORS

              The election of 14 directors is proposed by the Board of Directors, each director to hold office, in accordance with the Company's Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, until the next annual meeting or until his or her successor is duly elected and qualified. The Company's Board of Directors proposes for election: David R. Andelman, Joseph A. Califano, Jr., William S. Cohen, Gary L. Countryman, Charles K. Gifford, Leonard Goldberg, Bruce S. Gordon, Linda M. Griego, Arnold Kopelson, Leslie Moonves, Doug Morris, Shari Redstone, Sumner M. Redstone and Frederic V. Salerno. All of the nominees are current members of the Company's Board of Directors who were elected at the Company's 2008 Annual Meeting of Stockholders.

              In accordance with the Board's recommendation, the proxy holders will vote the shares of the Company's Class A Common Stock covered by the respective proxies for the election of each of the 14 director nominees set forth below, unless the stockholder gives instructions to the contrary. If, for any reason, any of the director nominees become unavailable for election, the proxy holders may exercise discretion to vote for substitute nominees proposed by the Board. Each of the director nominees has indicated that he or she will be able to serve if elected and has agreed to do so.

              Information about each director nominee is set forth below, including the director's business experience, tenure on the Company's Board and service on the boards of directors of other publicly traded companies and investment companies.

    David R. Andelman            
    Age 69
Director since 2000
      Mr. Andelman is an attorney associated with the law firm of Lourie & Cutler, P.C. in Boston, Massachusetts since 1964. Mr. Andelman also serves as a director and treasurer of Lourie & Cutler. He is also a director of National Amusements.    
    Joseph A. Califano, Jr.            
    Age 77
Director since 2003
      Mr. Califano is Chairman of the Board and President of The National Center on Addiction and Substance Abuse at Columbia University, a position he has held since 1992. Mr. Califano has served as Adjunct Professor of Public Health at Columbia University's Medical School and School of Public Health since 1992 and is a member of the Institute of Medicine of the National Academy of Sciences. He was senior partner of the Washington, D.C. office of the law firm Dewey Ballantine from 1983 to 1992. Mr. Califano served as the United States Secretary of Health, Education and Welfare from 1977 to 1979, and he served as President Lyndon B. Johnson's Assistant for Domestic Affairs from 1965 to 1969. He is the author of 11 books. Mr. Califano is also a director of Midway Games Inc. and Willis Group Holdings Limited.    
    William S. Cohen            
    Age 68
Director since 2003
      Mr. Cohen has been Chairman and Chief Executive Officer of The Cohen Group, a business consulting firm, since January 2001. Prior to founding The Cohen Group, Mr. Cohen served as the United States Secretary of Defense from January 1997 to 2001. He also served as a United States Senator from 1979 to 1997, and as a member of the United States House of Representatives from 1973 to 1979.    
                 

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    Gary L. Countryman            
    Age 69
Director since 2007
      Mr. Countryman has been Chairman Emeritus of the Liberty Mutual Group since 2000. He served as Chairman of Liberty Mutual Group from 1986 to 2000 and as Chief Executive Officer from 1986 to 1998. Mr. Countryman is also Chairman of the Dana Farber Cancer Institute and President of the United Ways of New England. Mr. Countryman is also a director of Bank of America Corporation, the Liberty Mutual Group and NSTAR.    
    Charles K. Gifford            
    Age 66
Director since 2006
      Mr. Gifford has been Chairman Emeritus of Bank of America Corporation since February 2005. He was Chairman and Chief Executive Officer of BankBoston prior to its 1999 merger with Fleet Financial Group and became President and Chief Operating Officer of the combined companies. Mr. Gifford became Chief Executive Officer of FleetBoston Financial in 2001 and Chairman in 2002. Mr. Gifford is also a director of Bank of America Corporation and NSTAR.    
    Leonard Goldberg            
    Age 75
Director since 2007
      Mr. Goldberg has been President of Mandy Films, Inc. and Panda Productions, Inc., both television and film production companies, since 1984. He was President of Twentieth Century Fox from 1987 to 1989. In addition, from 1972 to 1984, he partnered with producer Aaron Spelling to launch various television series and made-for-television movies. Prior to that, Mr. Goldberg served as Vice President of Production at Screen Gems (now Columbia Pictures Television) from 1969 to 1972. During the years 1961 to 1969, he served in various positions with the ABC Network, advancing to Head of Programming.    
    Bruce S. Gordon            
    Age 63
Director since 2006
      Mr. Gordon served as President and Chief Executive Officer of the National Association for the Advancement of Colored People (NAACP) from June 2005 to March 2007. In December 2003, Mr. Gordon retired from Verizon Communications where he had served as President, Retail Markets Group since June 2000. Prior to that, Mr. Gordon served as Group President, Enterprise Business with Bell Atlantic Corporation (Verizon's predecessor) since December 1998. He served as Group President, Consumer and Small Business Services of Bell Atlantic from 1993 to August 1997, and as Group President, Retail, from August 1997 to December 1998. Mr. Gordon is also a director of Northrup Grumman Corporation and Tyco International Ltd.    
                 

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    Linda M. Griego            
    Age 61
Director since 2007
      Ms. Griego has served, since 1986, as President and Chief Executive Officer of Griego Enterprises, Inc., a business management company. She oversees the operations of Engine Co. No. 28, a prominent restaurant in downtown Los Angeles that Ms. Griego founded in 1988. From 1990 to 2000, Ms. Griego held a number of government related appointments, including Deputy Mayor of the city of Los Angeles, President and Chief Executive Officer of the Los Angeles Community Development Bank, and President and Chief Executive Officer of Rebuild LA, the agency created to jump-start inner-city economic development following the 1992 Los Angeles riots. Over the past two decades, she has also served on a number of government commissions and boards of directors of non-profit organizations, including current service on the boards of the Packard Foundation, Los Angeles World Affairs Council and YMCA of Los Angeles. Ms. Griego has served as a director of publicly traded and private corporations, including presently serving as director of City National Corporation, Southwest Water Company and AECOM Technology Corporation.    
    Arnold Kopelson            
    Age 74
Director since 2007
      Mr. Kopelson has been Co-Chairman and President of Kopelson Entertainment, through which he produces films and finances the acquisition and development of screenplays, since 1979. Prior to that, he practiced entertainment and banking law, specializing in motion picture financing. He has been honored with a Best Picture Academy Award, a Golden Globe, and an Independent Spirit Award, and his films have generated 17 Academy Award nominations. Mr. Kopelson serves on the Executive Committee of the Producers Branch of the Academy of Motion Picture Arts and Sciences.    
    Leslie Moonves            
    Age 59
Director since 2006
      Mr. Moonves has been President and Chief Executive Officer of the Company since January 2006. Previously, Mr. Moonves served as Co-President and Co-Chief Operating Officer of Former Viacom from June 2004 through December 2005. Prior to that, he served as Chairman and Chief Executive Officer of CBS Broadcasting since 2003 and as its President and Chief Executive Officer since 1998. Mr. Moonves joined former CBS Corporation in 1995 as President, CBS Entertainment. Prior to that, Mr. Moonves was President of Warner Bros. Television since July 1993. Mr. Moonves is also a director of KB Home.    
                 

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    Doug Morris            
    Age 70
Director since 2007
      Mr. Morris has been the Chairman and Chief Executive Officer of Universal Music Group since November 1995. In July 1995, he formed a joint venture with Universal Music Group for a full-service record label. Prior to that, Mr. Morris served as President and Chief Operating Officer of Warner Music U.S. commencing in 1994 and was soon after appointed Chairman. He served as President of Atlantic Records and Co-Chief Executive Officer of the Atlantic Recording Group from 1980 to 1994. Mr. Morris began his career as a songwriter, producer, and the founder of his own record label, which was acquired by Atlantic Records in 1978. Mr. Morris is also a director of Activision Blizzard,  Inc.    
    Shari Redstone1            
    Age 55
Director since 1994
      Ms. Redstone has been Vice Chair of the Board of the Company since June 2005, and President of National Amusements since January 2000. Prior to that, Ms. Redstone served as Executive Vice President of National Amusements since 1994. Ms. Redstone practiced law from 1978 to 1993, with her practice including corporate law, estate planning and criminal law. Ms. Redstone is a member of the Board of Directors and Executive Committee for the National Association of Theatre Owners, Co-Chairman and Co-President of MovieTickets.com, Inc., and Chairman and Chief Executive Officer of CineBridge Ventures, Inc. Ms. Redstone is a board member of several charitable organizations, including the Board of Trustees at Dana Farber Cancer Institute, the Board of Directors at Combined Jewish Philanthropies and the Board of Directors of the John F. Kennedy Library Foundation. Ms. Redstone is also a director of National Amusements and Viacom (Vice Chair).    
                 

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    Sumner M. Redstone1            
    Age 85
Director since 1986
      Mr. Redstone is the Company's Founder and has been Executive Chairman of the Board since January 2006. He was Chairman of the Board of Former Viacom from 1987 through 2005 and served as Chief Executive Officer of Former Viacom from 1996 through 2005. Mr. Redstone has also served as Chairman of the Board of National Amusements since 1986 and Chief Executive Officer of National Amusements since 1967. He served as President of National Amusements from 1967 through 1999. Mr. Redstone served as the first Chairman of the Board of the National Association of Theatre Owners and is currently a member of its Executive Committee. Mr. Redstone has lectured at a variety of universities, including Harvard Law School and Brandeis University, and in 1982 joined the faculty of the Boston University School of Law. Mr. Redstone graduated from Harvard University in 1944 and received a LL.B. from Harvard University School of Law in 1947. Upon graduation, Mr. Redstone served as Law Secretary with the United States Court of Appeals and then as a Special Assistant to the United States Attorney General. Mr. Redstone served in the Military Intelligence Division during World War II. While a student at Harvard, he was selected to join a special intelligence group whose mission was to break Japan's high-level military and diplomatic codes. Mr. Redstone received, among other honors, two commendations from the Military Intelligence Division in recognition of his service, contribution and devotion to duty. He is also a recipient of the Army Commendation Award. Mr. Redstone is also Chairman of the Board of National Amusements and serves as Executive Chairman of the board of directors and Founder of Viacom.    
    Frederic V. Salerno            
    Age 65
Director since 2007
      Mr. Salerno is a retired Vice Chairman and Chief Financial Officer of Verizon Communications Inc., a position he held from June 2000 to October 2002. Prior to that, Mr. Salerno served as Vice Chairman and Chief Financial Officer of Bell Atlantic Corporation (Verizon's predecessor) from August 1997. Prior to the merger of Bell Atlantic and NYNEX Corporation, Mr. Salerno served as Vice Chairman, Finance and Business Development of NYNEX from 1994 to 1997. Mr. Salerno was Vice Chairman of the Board of NYNEX and President of the NYNEX Worldwide Services Group from 1991 to 1994. Prior to the Separation, Mr. Salerno served as a director of Former Viacom from 1994 through 2005. Mr. Salerno is also a director of Akamai Technologies, Inc., IntercontinentalExchange, Inc., National Fuel Gas Company, Popular Inc. and Viacom.    
                 

1            Ms. Redstone is Sumner Redstone's daughter. None of the other director nominees is related to any other director or executive officer by blood, marriage or adoption.


RECOMMENDATION OF THE BOARD OF DIRECTORS

              The Board of Directors recommends a vote "FOR" the election of each of the director nominees named above.

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DIRECTOR COMPENSATION

Outside Director Compensation During 2008

              The following table sets forth information concerning the compensation of the Company's Outside Directors for 2008.


 
 
Name
(a)

  Fees Earned or
Paid in Cash
($)
(b) (1)

  Stock
Awards
($)
(c) (2)

  Option
Awards
($)
(d) (3)

  Change in
Pension
Value and
Non-qualified
Deferred
Compensation
Earnings
(e) (4)

  All Other
Compensation
($)
(f) (5)

  Total
($)
(g)

 

 
 

Andelman, David R.

  $ 78,000   $ 73,353   $ 31,057   $ 26   $ 7,500   $ 189,936  

Califano, Jr., Joseph A.

    132,000     73,353     31,057     1,252     7,500     245,162  

Cohen, William S.

    92,000     73,353     31,057     39     7,500     203,949  

Countryman, Gary L.

    128,000     84,048     23,108     119     7,500     242,775  

Gifford, Charles K.

    136,000     73,353     29,686     1,377     7,500     247,916  

Goldberg, Leonard

    94,000     73,353     24,109     N/A     7,500     198,962  

Gordon, Bruce S.

    94,000     73,353     29,686     N/A     0     197,039  

Griego, Linda M.

    88,000     84,048     23,108     N/A     3,900     199,056  

Kopelson, Arnold

    76,000     84,048     23,108     17     0     183,173  

Morris, Doug

    86,000     84,048     23,108     21     0     193,177  

Redstone, Shari

    78,000     73,353     29,686     4     7,500     188,543  

Salerno, Frederic V.

    84,000     80,996     39,444     8     7,500     211,948  

(1)
Reflects cash amounts earned in 2008 for the annual board retainer, committee chair retainers, and meeting fees for board and committee meetings. These amounts include cash deferred by Messrs. Andelman, Califano, Cohen, Countryman, Gifford, Kopelson, Morris and Salerno under the CBS Corporation Deferred Compensation Plan for Outside Directors.

(2)
Amounts reflect the Company's 2008 compensation expense, calculated in accordance with SFAS No. 123 (revised 2004) "Share-Based Payment" ("SFAS 123R"), associated with stock-based awards (RSUs) granted in 2008 and in prior years. In accordance with SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions, which would otherwise be taken into account under SFAS 123R. Except for estimated forfeitures, these amounts reflect the Company's accounting expense for these awards and may not correspond to the actual value recognized by the director. Differences in the amounts shown among Outside Directors largely reflect expense associated with 2007 prorated grants. See "RSUs, PSUs and Restricted Shares" in Note 11 to the audited 2008 consolidated financial statements on page II-62 in the Company's Form 10-K for the fiscal year ended December 31, 2008 for a discussion of the assumptions made in calculating these amounts.

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The fair value on the date of grant of stock awards granted during 2008, and the outstanding stock awards held by each of the Outside Directors named in the table as of the end of fiscal year 2008, are as follows:

 
 
Name
  Fair Value
of Annual
RSU Grants
in 2008
(a)

  Aggregate
Number of
Unvested RSUs
Outstanding at
FYE 2008

 

 
 

Andelman, David R.

  $ 75,020     2,977  

Califano, Jr., Joseph A.

    75,020     2,977  

Cohen, William S.

    75,020     2,977  

Countryman, Gary L.

    75,020     2,977  

Gifford, Charles K.

    75,020     2,977  

Goldberg, Leonard

    75,020     2,977  

Gordon, Bruce S.

    75,020     2,977  

Griego, Linda M.

    75,020     2,977  

Kopelson, Arnold

    75,020     2,977  

Morris, Doug

    75,020     2,977  

Redstone, Shari

    75,020     2,977  

Salerno, Frederic V.

    75,020     2,977  

      (a)
      Amounts reflect the fair value on the date of grant, January 31, 2008, of 2,977 RSUs, in accordance with SFAS 123R.

(3)
Amounts reflect the Company's 2008 compensation expense, calculated in accordance with SFAS 123R, associated with stock option awards made in 2008 and in prior years. In accordance with SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions, which would otherwise be taken into account under SFAS 123R. Except for estimated forfeitures, these amounts reflect the Company's accounting expense for these awards and may not correspond to the actual value recognized by the Outside Director. Differences in the amounts shown among Outside Directors largely reflect expense associated with initial option grants upon joining the Board. See "Stock Options and Equivalents" in Note 11 to the audited 2008 consolidated financial statements on pages II-63 – II-65 in the Company's Form 10-K for the fiscal year ended December 31, 2008 for a discussion of the assumptions made in calculating these amounts.

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    The fair value on the date of grant of option awards granted during 2008, calculated using the Black-Scholes option-pricing model, and the outstanding option awards held by each of the Outside Directors named in the table as of the end of fiscal year 2008, are as follows:


 
 
Name
  Fair Value of
Annual Option
Grants in
2008
(a)

  Aggregate
Number of
Option Awards
Outstanding
at FYE 2008

 

 
 

Andelman, David R.

  $ 23,316     49,659  

Califano, Jr., Joseph A.

    23,316     38,199  

Cohen, William S.

    23,316     38,199  

Countryman, Gary L.

    23,316     17,827  

Gifford, Charles K.

    23,316     28,013  

Goldberg, Leonard

    23,316     22,920  

Gordon, Bruce S.

    23,316     31,506  

Griego, Linda M.

    23,316     17,827  

Kopelson, Arnold

    23,316     17,827  

Morris, Doug

    23,316     17,827  

Redstone, Shari

    23,316     20,165  

Salerno, Frederic V.

    23,316     17,827  

      (a)
      Amounts reflect the fair value, in accordance with SFAS 123R, of options to purchase 5,093 shares of the Company's Class B Common Stock granted pursuant to annual grants awarded to Outside Directors on January 31, 2008.

(4)
Interest accrues on amounts deferred under the CBS Corporation Deferred Compensation Plan for Outside Directors at the prime rate in effect at Citibank, N.A. at the beginning of each calendar quarter. The prime rate generally represents an interest rate that is more than 120% higher than the applicable Federal Reserve Board's long-term interest rate and therefore is deemed to be preferential for purposes of this table. Accordingly, we have indicated in the table the difference in the amount of interest accrued for each Outside Director in 2008 compared to the interest that would have been accrued at 120% of the applicable Federal Reserve Board's long-term interest rate.

(5)
Amounts reflect the aggregate value of all matching charitable contributions made by the Company on behalf of the director for 2008 under the CBS Corporation Matching Gifts Program for Directors. Under the program, the Company matches donations made by a director to eligible tax-exempt organizations at the rate of one dollar for each dollar donated up to $7,500 for each fiscal year.


Description of Outside Director Compensation

              Directors of the Company who are not employees of the Company or any of its subsidiaries are "Outside Directors" as defined in the director plans described below. Outside Directors receive compensation for their service on the Board and are eligible to participate in these director plans. Messrs. Andelman, Califano, Cohen, Countryman, Gifford, Goldberg, Gordon, Kopelson, Morris and Salerno and Mses. Griego and Redstone are currently deemed Outside Directors. Messrs. Redstone and Moonves are not compensated for serving on the Board and are not eligible to participate in any director plans.

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Cash Compensation

              The Company pays the following cash compensation to Outside Directors:

    A $60,000 annual retainer, payable in equal installments quarterly in advance;

    A per meeting attendance fee of $2,000 for each Board meeting;

    A per meeting attendance fee of $2,000 to Committee members for each meeting of the Audit Committee, the Compensation Committee, and the Nominating and Governance Committee; and

    A $20,000 annual retainer for the chair of each of the Audit Committee, the Compensation Committee, and the Nominating and Governance Committee, payable in equal installments quarterly in advance.

Deferred Compensation Plan

              The Company maintains deferred compensation plans for Outside Directors (the "Director Deferred Compensation Plans"). Under the Director Deferred Compensation Plans, Outside Directors may elect to defer their Board and committee retainer and meeting fees. Deferred amounts are credited during a calendar quarter to an interest-bearing income account or a stock unit account in accordance with the director's prior election. Amounts credited to an income account bear interest at the prime rate in effect at the beginning of each calendar quarter. Amounts credited to a stock unit account are deemed invested in phantom units for shares of the Company's Class A Common Stock and Class B Common Stock on the first day of the calendar quarter following the quarter in which the amounts are credited, with the number of shares calculated based on the closing market prices on that first day. Until the amounts credited to the stock unit account are converted into phantom units, these credited amounts bear interest at the prime rate in effect at the beginning of the relevant calendar quarter.

              Upon a director's leaving the Board, the amounts deferred under the Director Deferred Compensation Plans are paid in cash in a lump sum or in three or five annual installments, based on the director's prior election, with the lump sum or initial annual installment becoming payable on the later of six months after the director leaves the Board (90 days after the director leaves the Board in the case of amounts deferred before January 1, 2005) or January 15th of the following year. The value of a stock unit account is determined by reference to the average of the respective closing market prices of the Company's Class A Common Stock and Class B Common Stock on the NYSE on each trading date during the four-week period ending five business days prior to the initial payment date. Amounts paid in installments accrue interest until the final installment is paid.

Equity Compensation

              The Company maintains the amended and restated CBS Corporation 2005 RSU Plan for Outside Directors (the "Director RSU Plan") and the amended and restated CBS Corporation 2000 Stock Option Plan for Outside Directors (the "Director Option Plan").

Stock Awards

              Outside Directors receive the following awards under the Director RSU Plan:

    An annual grant of RSUs on January 31st of each year equal to $75,000 in value based on the closing price of the Company's Class B Common Stock on the NYSE on the date of grant, which RSUs vest one year from the date of grant; and

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    Prorated RSU grants for Outside Directors who join the Board following the date of the annual RSU grant, but during the calendar year of the grant. Such grants are made five business days following the date an Outside Director joins the Board. The number of RSUs underlying each grant will be determined by dividing (i) the product of $6,250 ($75,000 divided by 12) and the number of months remaining in the calendar year from the date the Outside Director joins the Board (counting the month of joining as a full month), by (ii) the closing price of the Company's Class B Common Stock on the NYSE on the date of grant. Prorated RSU grants vest on the first anniversary of the date of grant of the annual RSU grant that was awarded during the calendar year in which the Outside Director received such prorated RSU grant.

RSUs are payable to Outside Directors in shares of the Company's Class B Common Stock upon vesting unless the Outside Director elects to defer the settlement of the RSUs to a future date. Outside Directors are entitled to receive dividend equivalents on the RSUs in the event the Company pays a regular cash dividend on its Class B Common Stock. Dividend equivalents will accrue on the RSUs (including RSUs for which settlement has been deferred) in accordance with the Director RSU Plan until the RSUs are settled.

Option Awards

              Outside Directors receive the following awards under the Director Option Plan:

    An initial grant of 12,734 stock options to purchase shares of the Company's Class B Common Stock on the date the director joins the Board as, or otherwise becomes, an Outside Director, which options will vest one year from the date of grant; and

    An annual grant of 5,093 stock options to purchase shares of the Company's Class B Common Stock on January 31st of each year, which options will vest in three equal annual installments, on the first, second and third anniversaries of the date of grant.

              The exercise price for the stock option grants made under the Director Option Plan is the closing price of the Company's Class B Common Stock on the NYSE on the date of grant, or if such day is not a business day, on the business day immediately preceding the date of grant.

Matching Gifts Program for Directors

              Beginning in December 2008, all directors are eligible to participate in the Company's Matching Gifts Program for Directors. Under the program, the Company matches donations made by a director to eligible tax-exempt organizations at the rate of one dollar for each dollar donated up to $7,500 for each fiscal year. The purpose of the program is to recognize the interest of the Company and its directors in supporting eligible organizations.

Other

Expenses:    Directors are reimbursed for expenses incurred in attending Board, committee and stockholder meetings (including travel and lodging) in accordance with the Company's normal travel policies.

Director Attendance at Certain Other Events:    CBS Corporation believes it is in its best interest for directors to participate in certain Company events and other events to meet with management, customers, talent and others important to the Company's business. The Board has established a policy on director attendance at these events. Under the policy, tickets to events that are designated as having a business purpose are allocated to directors. In addition, the Company reimburses directors for travel expenses in accordance with the Company's normal travel policies.

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ITEM 2—RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

              The Audit Committee has appointed PricewaterhouseCoopers LLP ("PwC") as the Company's independent registered public accounting firm for the year ending December 31, 2009, subject to stockholder ratification. The Audit Committee has reviewed PwC's independence from the Company as described in the "Report of the Audit Committee." In appointing PwC as the Company's independent registered public accounting firm for the year ending December 31, 2009, and in recommending that the Company's stockholders ratify the appointment, the Audit Committee has considered whether the non-audit services provided by PwC were compatible with maintaining PwC's independence from the Company and has determined that such services do not impair PwC's independence.

              Representatives of PwC are expected to be present at the Annual Meeting and will be given an opportunity to make a statement if they desire to do so. They will also be available to respond to questions at the Annual Meeting.


RECOMMENDATION OF THE BOARD OF DIRECTORS

              The Board of Directors recommends a vote "FOR" the ratification of the appointment of PricewaterhouseCoopers LLP to serve as the Company's independent registered public accounting firm for fiscal year 2009.

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REPORT OF THE AUDIT COMMITTEE

              The following Report of the Audit Committee does not constitute soliciting material and shall not be deemed filed or incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent the Company specifically incorporates such information by reference.

              The Audit Committee Charter states that the purpose of the Audit Committee is to oversee the accounting and financial reporting processes of the Company and the audit of the consolidated financial statements of the Company. The Audit Committee also assists the Board of Directors' oversight of:

    The quality and integrity of the Company's consolidated financial statements and related disclosures;

    Evaluation of the effectiveness of the Company's internal control over financial reporting and risk management;

    The Company's compliance with legal and regulatory requirements;

    The independent auditor's qualifications and independence; and

    The performance of the Company's internal audit function and independent auditor.

              Under the Audit Committee Charter, the Audit Committee's authorities and duties include, among other things:

    Direct responsibility for the appointment, retention, termination, compensation and oversight of the work of the independent auditor, which reports directly to the Audit Committee, and the sole authority to pre-approve all services provided by the independent auditor;

    Reviewing and discussing the Company's annual audited financial statements, quarterly financial statements and earnings releases with the Company's management and its independent auditor;

    Reviewing the organization, responsibilities, audit plan and results of the internal audit function;

    Reviewing with management, the internal auditor and the independent auditor the effectiveness of the Company's internal control over financial reporting and disclosure controls and procedures; and

    Reviewing with management material legal matters and the effectiveness of the Company's procedures to ensure compliance with legal and regulatory requirements.

              The Audit Committee also discusses certain matters with the independent auditor on a regular basis, including the Company's critical accounting policies, certain communications between the independent auditor and management, and the qualifications of the independent auditor.

              The full text of the Audit Committee Charter is available on CBS Corporation's website at www.cbscorporation.com. The Audit Committee assesses the adequacy of its Charter at least every other year, or more frequently as the Committee may determine.

              The Company's management is responsible for the preparation of the Company's consolidated financial statements, the financial reporting processes and maintaining effective internal control over financial reporting. The independent auditor is responsible for performing an audit of the consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board ("PCAOB") and expressing an opinion on the conformity of the audited consolidated financial statements to U.S. generally accepted accounting principles. The independent auditor also expresses an

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opinion on the effectiveness of the Company's internal control over financial reporting. The Audit Committee monitors and oversees these processes.

              As part of its oversight role, the Audit Committee has reviewed and discussed with management and the Company's independent auditor, PricewaterhouseCoopers LLP ("PwC"), the Company's audited consolidated financial statements for the year ended December 31, 2008, the Company's disclosures under "Management's Discussion and Analysis of Results of Operations and Financial Condition" in the Company's 2008 Annual Report on Form 10-K and matters relating to the effectiveness of the Company's internal control over financial reporting as of December 31, 2008.

              The Audit Committee has also discussed with PwC all required communications, including the matters required to be discussed pursuant to Statement on Auditing Standards No. 61 (Communication with Audit Committees), as amended by Statement on Auditing Standards No. 90 (Audit Committee Communications). In addition, the Audit Committee has received the written disclosures and the letter from PwC required by applicable requirements of the PCAOB regarding the independent accountant's communications with the Audit Committee concerning independence and has discussed with PwC the firm's independence from the Company.

              Based on the Audit Committee's review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Company's Annual Report on Form 10-K for the year ended December 31, 2008.

Members of the Audit Committee

Gary L. Countryman, Chair
Joseph A. Califano, Jr.
Linda M. Griego
Doug Morris
Frederic V. Salerno

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FEES FOR SERVICES PROVIDED BY THE INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

              The following table sets forth fees for professional services rendered by PwC to the Company and its subsidiaries for each of the years ended December 31, 2008 and 2007.

 
  2008   2007  

Audit Fees

  $ 8,646,000   $ 8,934,000  

Audit-Related Fees(1)

    831,000     534,000  

Tax Fees(2)

    543,000     509,000  

All Other Fees(3)

    14,000     27,000  
           
 

Total

  $ 10,034,000   $ 10,004,000  
           

(1)
Audit-related fees for 2008 and 2007 principally related to employee benefit plan audits, due diligence services in connection with mergers and acquisitions, and certain attestation services (primarily audits required by contract).

(2)
Tax fees for 2008 and 2007 principally related to tax compliance, tax advice and tax planning services for domestic and international subsidiaries.

(3)
All other fees for 2008 and 2007 principally related to PwC reference materials and publications purchased by the Company.

Audit Committee Pre-Approval of Services Provided by PwC

              All audit and non-audit services provided to the Company by PwC for 2008 were pre-approved by the Audit Committee. Under the Audit Committee's pre-approval policies and procedures in effect during 2008, the Chair of the Audit Committee was authorized to pre-approve the engagement of PwC to provide certain specified audit and non-audit services, and the engagement of any accounting firm to provide certain specified audit services, up to a maximum amount of $200,000 per engagement, with the total amount of such authorizations outstanding that have not been reported to the Audit Committee not to exceed an aggregate of $1,000,000. The Audit Committee receives regular reports on the engagements approved by the Chair pursuant to this delegation. For 2009, the Audit Committee adopted pre-approval policies and procedures that permit the Chair to pre-approve the specified audit and non-audit services up to a maximum amount of $200,000 per engagement, with the total amount of such authorizations outstanding that have not been reported to the Audit Committee not to exceed an aggregate of $1,000,000.

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COMPENSATION DISCUSSION AND ANALYSIS

Overview of Compensation Objectives

              CBS Corporation's compensation programs are designed to motivate and reward business success and to increase stockholder value. The Company's compensation programs are based on the following core objectives:

    Stockholder Value Focused:   Align executives' interests with stockholders' interests, with particular emphasis on creating incentives that reward consistently increasing value.

    Market-based:  Take into account the profile of compensation and benefits programs found in peer companies in order to attract and retain the talent needed to drive sustainable competitive advantage and deliver value to stockholders.

    Performance-based:  Ensure plans provide reward levels that reflect variances between actual and desired performance results.

    Flexible:  Enable management and the Board to make decisions based on the needs of the business and to recognize different levels of individual contribution and value creation.

Evaluating Senior Executive Compensation

              The Compensation Committee reviews and approves the Company's compensation arrangements with each of the executive officers whose compensation is individually disclosed in the tables that appear on subsequent pages (the "named executive officers") and certain other senior executives (together with the named executive officers, the "senior executives"). The Committee reviews all components of the senior executives' compensation, including base salary, annual and long-term incentives and severance arrangements to ensure that they adhere to the core objectives of the Company's compensation programs. The Committee utilizes a rolling twelve-month calendar based on regularly scheduled meeting dates that identifies the meeting date at which each senior executive requires Committee consideration regarding compensation and the type of action to be considered (i.e., salary increase, annual bonus payout, long-term incentive award determination, and other compensation actions). All final determinations relating to the compensation of the Executive Chairman and the President and Chief Executive Officer are made by the Committee in executive session, with advice from its independent compensation consulting firm (currently Towers Perrin). In assessing the compensation of the senior executives, the Committee considers many factors, including the performance of the Company's operations (with respect to corporate executives, the overall performance of the Company; with respect to operational executives, performance of the operations for which the executive is responsible), individual performance, experience, tenure and historical compensation, comparisons to other appropriate senior executives at identified peer companies and the advice of the independent consultant. In considering any individual element of a senior executive's compensation, the Committee considers that element in relation to the individual executive's total compensation (i.e., base, bonus and long-term incentives).

              The Compensation Committee retains the independent compensation consulting firm to advise the Committee in its review of senior executive compensation. The Committee has the sole authority to retain and terminate the independent compensation consulting firm and to review and approve the firm's fees and other retention terms. The Committee adopted a policy in 2008 providing that the independent compensation consulting firm will not be considered as a provider of services to the Company, other than for services provided to the Compensation Committee. Accordingly, other than these services provided to the Committee, Towers Perrin does not perform any administrative or consulting services for the Company. In furtherance of the Committee's review of senior executive compensation, the independent consultant examines the compensation practices at companies with which the Company competes for senior executive talent, including those companies engaged in similar

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business activities (e.g., diversified media companies) and other publicly traded U.S. companies (general industry), as described below. Not all of the companies included in these groups may be used as a point of comparison when reviewing a senior executive's total compensation. In determining which companies are appropriate comparisons for each senior executive, the consultant considers the scope of the executive's responsibility and the nature of the business for which he or she is responsible. As a result, the companies appropriate for comparison may differ from one senior executive to the next. The compensation assessment includes an evaluation of base salary, target annual incentive opportunities (as such data is available), actual annual incentive earned, annualized expected value of long-term incentives, benefits, and the resulting total actual and target compensation, in each case at the 65th percentile of reliable market data. Although the Committee does not target total compensation amounts for each senior executive to a specific benchmark, the Committee does consider the compensation levels from the compensation assessment as one factor in determining these total compensation amounts for each senior executive.

              In 2008, for purposes of its competitive assessment, the consultant primarily referenced an industry-specific group which included other diversified media companies (i.e., NBC Universal, News Corporation, Sony Corporation of America, Time Warner Inc., Viacom Inc. and The Walt Disney Company). The consultant also studied a general industry group, which included publicly traded companies from which the Company may source, or to which the Company may lose, executive talent (i.e., Altria Group (pre-split), AT&T Inc., Cablevision Systems Corporation, Cisco Systems, Inc., Clear Channel Communications, Inc. (now a non-public subsidiary of CC Media Holdings, Inc., a public company), The Coca-Cola Company, Comcast Corporation, Dell Inc., Electronic Data Systems Corporation, Gannett Co. Inc., General Electric Company, Hewlett-Packard Company, International Business Machines Corporation, News Corporation, PepsiCo, Inc., The Procter & Gamble Company, Qwest Communications International Inc., Sprint Nextel Corporation, Time Warner Inc., Verizon Communications Inc., Viacom Inc., The Walt Disney Company and Yahoo! Inc.). For Mr. Redstone, the Committee considered the compensation arrangements for similar executive chairman roles at peer media companies. Mr. Moonves waived his right for consideration of any increase to his salary and target bonus as provided under his employment agreement.

Changes in Named Executive Officers' Compensation Arrangements in 2008

              With the expiration of Mr. Briskman's employment agreement on September 6, 2008, the Compensation Committee determined that it would be in the Company's best interest to enter into a new employment agreement with him, effective September 7, 2008, which provides that he will continue to serve in his role as Executive Vice President and General Counsel. In determining the compensation terms, the Committee considered the compensation arrangements for similar executives at peer media companies, as well as the core objectives set forth in the "Overview of Compensation Objectives" section above. To that end, the Committee focused on the performance-based compensation elements, particularly long-term incentives. As a result, the Committee determined to keep Mr. Briskman's base salary the same as the salary provided for under his expiring agreement and to increase his annual bonus target from 100% to 115% of base salary and his annual target long-term incentive award value from $2 million to $3 million. Consistent with competitive practice at diversified media peer companies, Mr. Briskman was granted a one-time equity award with an aggregate value of $1.7 million delivered in a mix of stock options and performance-based restricted stock units ("PRSUs"), the terms of which are more fully described in the narrative section following the Summary Compensation Table for Fiscal Year 2008.

              In connection with a significant promotion, the Compensation Committee determined that it would be in the Company's best interest to enter into a new employment agreement with Mr. Ianniello, effective November 17, 2008, reflecting his promotion from Senior Vice President, Chief Development Officer and Treasurer to Deputy Chief Financial Officer. In determining the compensation terms, the

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Committee considered the compensation arrangements for executives with similar scopes of responsibility at general industry and peer media companies, as well as the core objectives set forth in the "Overview of Compensation Objectives" section above. As a result, the Committee determined to increase his base salary to $800,000 and his annual target long-term incentive award value to $1.2 million and to keep his annual bonus target at 100% base salary.

              There were no other changes in 2008 to the named executive officers' compensation arrangements as set forth in their employment agreements. As reported in the 2008 Proxy Statement, Messrs. Redstone and Moonves entered into new employment agreements effective March 13, 2007 and October 1, 2007, respectively. Under these arrangements, Messrs. Redstone's and Moonves' base salaries were reduced significantly (67% and 41%, respectively), as were their target bonus amounts (43% and 11%, respectively). The equity component of their total compensation was increased to further align their interests with stockholders' interests, with Mr. Moonves receiving an award of 5 million stock options in connection with the commencement of the agreement. In 2008, for Mr. Redstone, in connection with the Committee's annual review of cash compensation (base salary and target bonus) under his employment agreement, the Committee determined, after review and approval by the Company's independent directors, to keep his base salary the same and award him a one-time stock option grant to purchase shares of the Company's Class B Common Stock. (See the Grants of Plan-Based Awards During 2008 table.) Also in 2008, Mr. Moonves waived his right for consideration of any increase, as set forth in his employment agreement, to his salary and target bonus. Mr. Reynolds' compensation arrangement continues to be governed by the terms and conditions set forth in his existing employment agreement dated August 15, 2005, the terms of which are set to expire on August 14, 2009.

Elements of Executive Compensation

              The Company's compensation arrangements with each of the senior executives, including the named executive officers, consist of the following elements:

    Base Salary

    Performance-Based Compensation Programs

      Annual Bonus Awards

      Long-Term Incentives

    Retirement and Deferred Compensation Plans

    Other Compensation (Perquisites and Other Personal Benefits)

              The Compensation Committee considers these elements in determining a senior executive's compensation package in order to reward for both the long- and short-term performance of the executive and the Company. The Committee does not use rigid guidelines in determining the mix of compensation elements (i.e., long-term versus currently paid out compensation and cash versus non-cash compensation) for each senior executive. However, the Committee does consider the level of base salary of each named executive officer as it relates to the allocation of guaranteed versus performance-based compensation. Variable, at-risk compensation, both short- and long-term, makes up the majority of each senior executive's total compensation.

              The Compensation Committee believes that its consideration of these compensation elements effectively achieves the objective of aligning compensation with performance measures that are directly related to the Company's financial goals and creation of stockholder value, without encouraging senior executives to take unnecessary and excessive risks that threaten the value of the Company. The Committee selects the financial performance metrics, goals and criteria for the performance-based compensation programs each year and also approves adjustments to the calculation of those goals and

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criteria, including pre-approved adjustments for awards intended to satisfy Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), in order to avoid distorted performance goals and criteria. The Committee believes this process results in performance goals and criteria that are challenging, yet realistic, that will not encourage senior executives to engage in risky business activities in order to achieve unattainable goals or overcome lower results caused by unforeseen events.

Base Salary

              The Company provides the senior executives with base salary that is sufficiently competitive to attract and retain talented individuals and provides a secure base of guaranteed cash to compensate them for services rendered during the fiscal year. In order to ensure that the majority of compensation is variable, at-risk and tied to performance, the Compensation Committee generally sets base salary levels for senior executives between 10% and 40% of targeted total compensation. When reviewing proposals for changes to base salary for the named executive officers, the Committee considers the following:

    Appropriate competitive compensation data for the position;

    Individual performance;

    Base salary level for the executive in relation to that executive's total compensation package;

    Input and recommendations of Mr. Moonves as President, Chief Executive Officer (for executives other than Mr. Redstone) and of Mr. Reynolds (for Mr. Ianniello);

    The level of the annual merit increase budget across the Company as a whole; and

    Existing contractual obligations, if any.

              For 2008, Mr. Moonves waived his right for consideration of any increase, as provided under his employment agreement, to his salary, as well as target bonus. Mr. Reynolds' employment agreement provides for his salary to remain flat over the term of the agreement. In reviewing base salary during 2008 for Messrs. Redstone, Briskman and Ianniello, the Compensation Committee continued to consider their level of base salary as it relates to the allocation of guaranteed versus variable, at-risk compensation and also took into account the unprecedented national and global economic conditions during 2008, as well as the factors listed above. As a result, Messrs. Redstone and Briskman did not receive base salary increases during 2008. Mr. Ianniello received an increase in base salary in connection with his promotion and related increase in the scope of his responsibilities.

Performance-Based Compensation Programs

              CBS's performance-based compensation programs provide for the opportunity to reward senior executives for contributing to annual financial and operational performance (through annual bonus programs) and for realizing stock price appreciation (through long-term equity incentives). Bonus awards are based on the Compensation Committee's review of the Company's financial results and assessment of individual performance and are not directly linked to the Company's stock price performance. A high percentage of the named executive officers' total compensation is performance-based (targeted at 70%-90%), with a significant portion of total compensation in the form of equity awards (targeted at 43%-57%).

Bonus Awards

              The Company provides an opportunity for annual bonus awards under its short-term incentive plans. The purpose of the plans is to benefit and advance the interests of the Company by granting annual bonus awards to the named executive officers and other senior executives as "pay for performance"—a reward for their individual contributions to the Company's annual financial and

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operational success. Annual bonus compensation for Messrs. Redstone, Moonves, Reynolds, Briskman and Ianniello and certain of the other senior executives is provided under the Company's Senior Executive Short-Term Incentive Plan (the "Senior Executive STIP"), which is designed to comply with the exception for performance-based compensation to the deduction limitation under Section 162(m) of the Code. Annual bonus compensation for other senior executives is provided under the Company's Short-Term Incentive Plan ("STIP").

              At the beginning of each fiscal year, the Compensation Committee sets a performance criterion as a first step toward qualifying bonus awards made under the Senior Executive STIP as "qualified performance-based compensation" eligible for deductibility under Section 162(m) of the Code. Assuming that the Compensation Committee determines that the criterion is met, the terms of the Senior Executive STIP establish for each of the named executive officers a maximum bonus, with the amount of bonus, if any, actually awarded being subject to the Committee's negative discretion ("downward discretion"). See the "Compensation Deductibility Policy" section below for a discussion on the Section 162(m) performance criterion set for 2008.

              In exercising its downward discretion and determining the individual awards, the Compensation Committee does not utilize a pre-determined formula by which financial performance results in a specific amount or type of compensation for individuals. The Committee's determination regarding the amount of the annual bonus awards to be paid to the named executive officers is a subjective one that enables the Committee to take into account all of the factors it deems appropriate, with no pre-determined weighting as to any individual item, and to utilize its discretion to award an appropriate bonus not in excess of the maximum bonus amount. Under the Senior Executive STIP, awards may be paid, in whole or in part, in cash, in the form of stock-based awards issued under the Company's long-term management incentive program ("LTMIP") or in any other form prescribed by the Committee.

              The Compensation Committee examines the following individual performance factors: the individual contributions to the achievement of financial goals and non-financial objectives, such as positioning the Company for long-term success, promoting the development of management, succession planning, legal compliance, fostering diversity in the workplace, leadership and ethical behavior. In this regard, the Committee also considers the input and recommendations of Mr. Moonves as President, Chief Executive Officer (for executives other than Mr. Redstone) and of Mr. Reynolds (for Mr. Ianniello). Also, with respect to Messrs. Redstone and Moonves, the Committee takes into account the performance evaluation of each of them conducted by the Committee, along with the Nominating and Governance Committee, based on the goals and objectives for each of them approved by the Compensation Committee at the beginning of each year.

              In addition, the Compensation Committee considers funding levels available under the Company's short-term incentive plans in the aggregate. These funding levels are approved by the Committee at the beginning of each fiscal year, which are based on budget determinations for the relevant year that take into account expected performance of the Company's industry peers for that year. After the end of the fiscal year, the Committee evaluates the Company's actual performance relative to the funding levels in order to determine the aggregate amount available for payouts under the Company's short-term incentive plans. The aggregate amount of awards provided to the named executive officers, as well as to the other participants in the short-term incentive plans, is limited by the funding pool resulting from the Committee's evaluation.

              The Compensation Committee also considers target bonus amounts, expressed as a multiple of salary, set forth in the respective employment agreements of each of the named executive officers, which amounts are based on competitive practice and provide a guideline for appropriate payouts. See "Summary Compensation Table for Fiscal Year 2008—Employment Agreements" for a discussion of the named executive officers' bonus target amounts. The differences in the target bonus amounts set forth

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in the named executive officers' agreements reflect the level of relative impact of each of their positions on Company performance.

              For 2008, in determining the amounts of the bonuses set forth in the Summary Compensation Table for Fiscal Year 2008 for the named executive officers, the Compensation Committee took into account the factors discussed above within the context of the challenging operating conditions facing the media industry as a result of the unprecedented national and global economic conditions during 2008 and the named executive officers' ability to proactively and aggressively develop and execute strategies to weather these economic conditions. In particular, the Committee recognized the accomplishments resulting from senior executives' focus on operations that were in their control, including, but not limited to: (i) exceeding the Company's free cash flow budget despite the liquidity conditions facing the Company's key customers; (ii) continuing delivery of premium content and maintaining CBS Network's standing as the #1 network in certain key categories (according to Nielsen Ratings); and (iii) transforming the Company into a leading Internet provider and capitalizing on the emerging platform delivery of the Company's premium content. Furthermore, the Committee took into account historical bonus payouts and the relative performance of the Company in determining appropriate payout levels. The Committee noted the following accomplishments within this context, with no particular weighting assigned to any individual item:

    The Level of Achievement of the Company's Financial Performance for 2008.  The Company achieved the performance criterion for the Senior Executive STIP. In particular, the Company exceeded its financial budget for free cash flow (i.e., operating income before depreciation and amortization, less cash interest, taxes paid, working capital requirements and capital expenditures), even in the face of challenging operating and liquidity conditions facing our key customers (i.e., automotive, retail, real estate and financial services companies). Although the performance criterion for the Senior Executive STIP was achieved, the level of achievement was not as significant as in the prior year due to the economic conditions. Thus, the Compensation Committee determined to provide lower cash bonus payouts than those earned for 2007 and 2006 for Messrs. Moonves, Reynolds and Briskman (for example, compared against 2007 cash bonus amounts, 2008 cash bonuses represent a 49% reduction for Mr. Moonves and a 20% reduction for Messrs. Reynolds and Briskman; for Mr. Ianniello, who was promoted during the year, his bonus payout remained flat).

    Continued Focus on Enhancing the Company's Presence on the Internet and on New Technologies.  Senior management continued to aggressively and effectively position the Company as a leading Internet provider through the 2008 acquisition of CNET Networks, Inc. ("CNET"). The acquisition of CNET and integration into the new CBS Interactive reporting segment resulted in a premier online content network for entertainment, news, sports, music, and other information, and advanced the Company to a Top 10 Internet company (according to comScore.com, measured by total unique visitors). During 2008, the Company continued to build and leverage online communities around its world-class content, entering into several distribution partnerships, including with Yahoo!, YouTube and AOL.

    Expansion of Revenue Opportunities from Continued Delivery of Premium Content.  The Company continued to deliver premium content and expand revenue opportunities across the entire portfolio of CBS businesses, resulting in, among other successful outcomes, the CBS Network remaining the #1 network in certain key categories for year 2008 (according to Nielsen Ratings), successful original programming at Showtime that helped to increase subscribers and revenues, streaming and high definition transmission at nearly all CBS Radio stations, 166 titles on the New York Times bestseller list for 2008 from Simon & Schuster, and the launch of CBS Films. In addition, in each of its key businesses, the Company continued to attract and retain executive and creative talent that drives the development of compelling media content.

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    Execution of Key Strategies for Transforming the Company for High Growth.  Senior management recognized early the pressures stemming from the 2008 economic downturn and proactively continued to reshape the Company's businesses for increased profitability and productivity by (i) shifting from slower to higher growth assets through the acquisition of CNET and International Outdoor Advertising Group ("IOA") and the dispositions of certain mid-sized radio market stations and certain television stations and (ii) evaluating the Company's cost base, including a disciplined approach to investment in capital projects, resulting in, among other actions, restructuring and cost-saving initiatives in Television, Radio and Outdoor and reduced operating costs throughout the Company.

              With respect to the performance of each named executive officer, the Compensation Committee also determined (in the case of Messrs. Redstone and Moonves) and concurred in the recommendations made by Mr. Moonves (in the case of the other named executive officers) and by Mr. Reynolds (for Mr. Ianniello) that:

    Mr. Redstone provided leadership as Executive Chairman of the Board of Directors. He also continued as an instrumental advisor to the Company with his efforts in investor communications and provided oversight with respect to the Company's financial objectives.

    Mr. Moonves was able to deliver well above the Company's free cash flow budget despite the 2008 economic conditions, in addition to making significant strides in enhancing the Company's presence on the Internet and demonstrating continued, consistent leadership in driving decades-high ratings successes and the other accomplishments noted above. Also, with his senior management team, Mr. Moonves prudently evaluated the Company's cost base and led a very disciplined approach to capital investment. In businesses significantly impacted by the decline in local advertising revenue, Mr. Moonves moved early and decisively in taking steps to restructure and reduce operating costs. In addition, Mr. Moonves continued to focus on ensuring a continuous flow of high quality content that drives the Company's core businesses and to maintain the Company's reputation as a highly desirable workplace for top talent. He also has advanced strategic plans across the business segments to continue, among other things, divesting non-strategic assets, enhancing the Company's presence on the Internet and in digital businesses and developing opportunities to monetize content (including, among other opportunities, payments under retransmission agreements). He effectively represented the Company to investors and the financial community and continued to play a leadership role in the media industry. The Committee also acknowledged Mr. Moonves' successes in management development and human resources, including his involvement in acquiring key executive and creative talent and in developing effective succession programs.

    Mr. Reynolds successfully managed the Company's financial operations, while recognizing the pressures from the 2008 economic downturn, to deliver performance that exceeded the Company's financial budget for free cash flow and maintained a strong balance sheet. Savings were also achieved through tax planning and risk management strategies. He also continued to implement successful strategies in mergers and acquisitions and in treasury and tax operations, resulting in, among other things, the generation of stockholder value through the realization of reduced capital and operating costs. In addition to his role as Chief Financial Officer of the Company, Mr. Reynolds provided significant operational support to the Company's business units.

    Mr. Briskman provided leadership with respect to the Company's legal affairs by serving in a prominent role in successfully managing significant corporate litigation and arbitration matters and was instrumental in securing recoveries for the Company for certain matters in which the Company was the plaintiff; addressing regulatory and legal issues, including

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      leading the legal team with respect to Company-wide compliance matters; and negotiating key contracts for the Company, including with respect to significant acquisitions and divestitures. He also continued to improve the efficiency of the legal departments of the Company, resulting in savings of legal fees.

    Mr. Ianniello executed significant deals for the Company, including the acquisitions of CNET and IOA, and provided leadership in the integration of those acquisitions, including the integration of CNET into domestic and international banking systems and the strategic and financial reporting integration of IOA and other acquired companies; successfully managed the transition of the Company's 401(k) plan assets to new managers; conducted debt repurchases resulting in positive net present value and book gain; achieved savings by executing numerous foreign exchange trades internally; and provided leadership with respect to overseeing the management of the Company's pension investments, during an extraordinary period in the equity and credit markets, achieving all cash needs.

Long-Term Management Incentive Program

              The LTMIP is designed as a "pay for performance" vehicle to encourage executives to make decisions which will result in sustained long-term stockholder value-creation. It is also a vehicle used to retain talent and build executive ownership. Through the Company's total compensation design, a significant portion of the named executive officers' total compensation opportunity is directly linked to stock price performance (targeted at 43% to 57% of total compensation) with the intention of creating alignment with the stockholders. For 2008, the LTMIP consisted of stock options, time-based and performance-based restricted stock awards, and performance share units (together with time-based and performance-based restricted stock awards, the "stock awards"). The target value to be delivered through these equity vehicles is reviewed with reference to competitive market data, the Company's retention needs, potential stockholder dilution, and the expense to be incurred by the Company. Eligibility to participate in the LTMIP is generally limited to executives who have management responsibility.

              The type and mix of equity-based vehicles used to deliver value varies primarily by an executive's level in the organization. The Committee considers the following objectives in determining the appropriate type and mix of equity-based vehicles:

    Increased alignment with stockholder interests—Stock Options:  Stock options provide the opportunity to acquire an equity interest in the Company and share in the appreciation of the value of the stock.

    Increased accountability for senior executives—PRSUs:  Performance-based restricted share units ("PRSUs") focus senior executives on the achievement of set financial goals with respect to the Company's operations.

    Increased focus on relative performance—PSUs:  Performance share units ("PSUs") motivate senior executives to focus on the Company's providing attractive returns for stockholders relative to returns from investments at other S&P 500 companies over a designated period. The relative performance achieved, and under certain circumstances described below, a pre-determined performance threshold achieved, will determine the number of shares ultimately delivered.

    Retention of talent in both up and down markets—Time-Based RSUs:  Restricted share units ("RSUs") that are time-based only (where vesting is conditioned exclusively on continued service) provide real value and are earned over a specified vesting period.

              The values, mix, and type of annual grants for each senior executive are discussed by management and the Compensation Committee and ultimately approved by the Committee, unless the

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terms are set forth in an employment agreement. In addition to the objectives and approach to allocating award types noted above, the Committee takes into consideration the competitive total compensation assessments provided by the independent compensation consultant in determining the value, mix and type of each senior executive's award. In determining the appropriate type and mix of annual equity awards for eligible executives for 2008, the Compensation Committee reviewed the LTMIP with its independent compensation consultant and senior management. For 2008, Messrs. Reynolds, Briskman and Ianniello received LTMIP awards based on then-current contractual target values that took into account the compensation assessment and the relative impact of the executive's position on Company performance, with the exception of Mr. Ianniello. The Compensation Committee determined to provide Mr. Ianniello with an LTMIP award slightly greater than his then-current contractual target value to recognize, and provide incentives with respect to, his future contributions to the Company in light of his increasing scope of responsibilities, as more formally recognized at a later date with his promotion to Deputy Chief Financial Officer. For Messrs. Redstone and Moonves, the values, mix and type of their annual grants are set forth in their respective employment agreements. See "Summary Compensation Table for Fiscal Year 2008Employment Agreements." The 2008 awards to the named executive officers were delivered as follows:

 
   
  2008 Annualized Award Mix under Long-Term Management Incentive Program(a)
   
 
  Named Executive Officer
   
  Options
   
  PRSUs/PSUs
   

 

 

Sumner Redstone

        50%         50%    

 

 

Leslie Moonves(b)

        48%         52%    

 

 

Fredric Reynolds

        50%         50%    

 

 

Louis Briskman

        50%         50%    

 

 

Joseph Ianniello

        50%         50%    

      (a)
      This chart does not take into account grants that are not part of the named executive officers' annual grants, except for Mr. Moonves' stock option grant noted in footnote (b). In 2008, Mr. Redstone received a grant of stock options in connection with the Committee's annual review of certain elements of his compensation under his employment agreement, and Mr. Briskman received a grant of stock options and of PRSUs in connection with the execution of his new employment agreement. (See the Grants of Plan-Based Awards During 2008 table.)

      (b)
      In connection with his current employment agreement effective October 1, 2007, the Compensation Committee awarded to Mr. Moonves a grant on October 19, 2007 of 5,000,000 stock options, valued based on the fair market value on the date of grant, and a grant of PRSUs on October 1, 2008, for performance year 2009, valued at $7,600,000. The annualized expected value of this stock option grant over the term of his employment agreement, as well as the value of the PRSU grant, are taken into consideration in determining the mix of stock options and stock-based awards in the chart above.

              As more fully discussed under "Terms of LTMIP Awards—Performance Goals (PRSUs)" below, on January 25, 2009, the Compensation Committee determined and certified that the performance goals were achieved with respect to (i) PRSUs granted in February 2008 to Messrs. Reynolds, Briskman and Ianniello and (ii) PRSUs granted to Mr. Moonves in October 2007 for performance year 2008, and therefore, the PRSUs in each case will vest according to schedule.

              The unprecedented economic conditions that accelerated during the fourth quarter of 2008 and the challenges currently facing the media industry have contributed to the drop in the Company's stock

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price. The pay-for-performance elements of the Company's executive compensation programs have been designed to closely link the interests of senior executives with those of the stockholders and create stockholder value. While the Compensation Committee believes that the Company's senior executives have effectively navigated the "economic storm" in 2008 commensurate with their bonus awards, because the stock price has declined, the named executive officers have realized significant loss in potential compensation opportunity, particularly given the Committee's emphasis on ensuring that equity-based compensation represents a significant portion of total compensation for these executives (targeted at 43%-57%). Since 2006 (the first year following the separation of former Viacom Inc. into CBS Corporation and new Viacom Inc.), the named executive officers have a December 31, 2008 value on a combined basis of 16% of their targeted equity-based pay opportunity. The following table shows how the targeted equity value of certain equity awards (not including PSUs, the measurement periods for which have not yet concluded) granted to the named executive officers, as reported annually in the Grants of Plan-Based Awards table, varies with changes in the Company's stock price by showing the value, as of December 31, 2008, of these LTMIP awards made in the last three fiscal years.

 
   
 
   
 Named Executive Officers' December 31, 2008 Value of Equity Awards as a Percentage of Targeted Equity Value
   
 
   
   
  Grants Made
in 2008

   
  Grants Made
in 2007

   
  Grants Made
in 2006

   
  Total
   
    Targeted Equity Value at Grant Date for all Named Executive Officers Combined       $ 18,514,400       $ 51,607,724 (a)     $ 9,899,827       $ 80,021,951    
    Economic Value as of 12/31/08 for all Named Executive Officers Combined         5,662,378         4,891,649         2,186,976         12,741,003    
    Economic Value as of 12/31/08 as % of Targeted Equity Value at Grant Date for all Named Executive Officers Combined         31%         9%         22%         16%    

(a)
In 2007, Mr. Moonves was awarded 5 million stock options in connection with the execution of his new employment agreement. The fair market value of this award, as reported in the Grants of Plan-Based Awards During 2007 table in last year's proxy statement, was $27.3 million and thus makes up a majority of the "Targeted Equity Value at Grant Date" for 2007 in the table above. With an exercise price of $28.70 for this award, the Company's stock price would require an appreciation of 540% for the award to achieve the intended value based on the stock price as of April 15, 2009 ($5.34).

              With respect to the grants awarded in 2009, the Compensation Committee determined not to include PSUs in the annual equity awards granted to certain senior executives, including the named executive officers (with the exception of Mr. Redstone, whose employment agreement expressly provides for PSU grants) because the Committee determined to focus these senior executives on appreciation of the Company's stock, which the Committee determined would be better served through stock option and PRSU grants. During 2009, as part of Mr. Moonves' bonus for 2008, the Committee awarded to Mr. Moonves 867,052 stock options having a value of $1.5 million to purchase shares of the Company's Class B Common Stock, under the Company's 2009 Long-Term Incentive Plan, which plan is subject to shareholder approval at the Annual Meeting. The stock option award has an exercise price of $5.20, vests in equal installments over four years and has an eight-year term. This award will be reportable in the Company's 2010 proxy statement in accordance with SEC rules.

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Terms of LTMIP Awards

              For a description of certain material terms of the RSU grants (including PRSUs and time-based RSUs) and stock option grants, see "Grants of Plan-Based Awards During 2008—Description of Plan-Based Awards."

              PSUs—PSUs are notional units of measurement and represent the right to receive a number of shares of the Company's Class B Common Stock determined on the basis of the total stockholder return ("TSR") of the Company's Class B Common Stock relative to the TSR of the common stock of companies comprising the Standard & Poor's 500 Composite Index (with limited exceptions) (the "reference group") over one or more defined measurement periods and, under certain circumstances described below, determined on the basis of achievement of a pre-determined performance threshold.

              The following terms apply to PSU grants made in 2008 to Messrs. Reynolds, Briskman and Ianniello: The number of target shares is determined on the basis of the closing price of a share of the Company's Class B Common Stock on the NYSE on the date of grant (for 2008 awards, February 28, 2008). Payouts under the PSUs range from zero to a maximum of 200% of the target number of shares of the Company's Class B Common Stock for the award. Grants of PSUs made in 2008 are subject to two separate measurement periods. The measurement period for 50% of the award runs from January 1, 2008 through December 31, 2010, and the measurement period for the remaining 50% of the award runs from January 1, 2009 through December 31, 2011. The number of shares to be delivered for each measurement period is determined in accordance with the following schedule:

    if the Company achieves less than the 25th percentile TSR, the award of PSUs will be forfeited;

    if the Company achieves the 25th percentile TSR, the number of shares to be delivered under the award will be 25% of the target number of shares;

    if the Company achieves the 50th percentile TSR, the number of shares to be delivered under the award will be 100% of the target number of shares; and

    if the Company achieves the 100th percentile TSR (that is, if it is the first ranked company in the reference group for TSR), the number of shares to be delivered under the award will be 200% of the target number of shares.

              For Company achievement at intermediate points between the 25th and 50th percentile, or between the 50th percentile and the 100th percentile, the number of shares of Class B Common Stock to be delivered will be interpolated between the respective number of shares delivered at such percentiles. Notwithstanding the schedule set forth above, in the event the Company achieves less than the 50th percentile TSR for any measurement period but either of the performance thresholds set forth below are met, the number of shares to be awarded will be determined in accordance with the following:

    if the Company's TSR for such measurement period does not meet the 50th percentile, but the Company's three-year average budgeted free cash flow is met or exceeded by the three-year average actual free cash flow during such measurement period, then the number of shares to be awarded will be the average of the target award and the number of shares that would be awarded based on the resulting TSR relative performance for such measurement period in accordance with the schedule above; or

    for PSU awards made in FY 2007, if the Company's TSR in the last year of such measurement period is at or above the 50th percentile, then the number of shares to be awarded will be the target award for such measurement period; for PSU awards made in FY 2008, if the Company's TSR in the last year of such measurement period is at or above the 50th percentile, then the number of shares to be awarded will be equal to the greater of

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      one-third (1/3) of the target award for such measurement period or the number of shares to be awarded in accordance with the above schedule.

              If neither of these performance thresholds are met, then the number of shares to be awarded will be in accordance with the schedule above.

              Mr. Redstone's PSU grants made in 2008 are made on substantially the same terms as the grants to our other named executive officers, but with the following differences:

    Mr. Redstone's PSU grant is set at January 1 of each year and the target shares are determined on the basis of the average closing price of a share of the Company's Class B Common Stock on the NYSE for the ten trading days prior to the date of grant;

    The maximum number of shares that may be earned under Mr. Redstone's award is 300% of target;

    Mr. Redstone's entire PSU grant is subject to a single measurement period, which, for his 2008 PSU grant, runs from January 1, 2008 through December 31, 2010; and

    The only performance threshold applicable to Mr. Redstone's award in the event that the Company achieves less than the 50th percentile TSR for a measurement period is based on the Company's three-year average budgeted OIBDA.

              Certain terms of Mr. Redstone's PSU awards differ from the terms of PSU awards to other named executive officers because of the relative impact of his position on Company performance.

              Performance Goals (PRSUs)—The vesting of the PRSUs is subject to the achievement of a certain pre-determined performance goal set by the Compensation Committee in the first quarter of the fiscal year. Dividend equivalents accrue on the PRSUs and equal the value of regular cash dividends paid on the shares of the Company's Class B Common Stock. Dividend equivalents are paid in cash, less applicable withholdings, when the PRSUs vest. If the PRSUs do not vest, then the dividend equivalents accrued on those PRSUs are forfeited.

              The performance goal is set based on financial and operational goals for the relevant fiscal year which take into account expected performance of the Company's industry peers for that year as determined by media industry analysts. At the beginning of each year, the Compensation Committee reviews the performance goal and considers which metrics offer the best measure of Company performance.

              In setting the 2008 performance goal, the Compensation Committee selected two metrics: (i) OIBDA without inter-company eliminations (i.e., operating income before depreciation, amortization and inter-company eliminations) (the "OIBDA metric") and (ii) free cash flow (i.e., operating income before depreciation and amortization, less cash interest, taxes paid, working capital requirements and capital expenditures) (the "FCF metric"). The "OIBDA Metric Target" is calculated by starting with the Company's budget for 2008 for the OIBDA metric and then taking into account items pre-approved by the Compensation Committee that may otherwise distort the calculation of the performance goal. The "FCF Metric Target" is calculated by starting with the Company's budget for 2008 for the FCF metric and then taking into account the same items. The items that were pre-approved by the Committee and taken into account in the calculation of the OIBDA Metric Target and the FCF Metric Target were with respect to restructuring charges, impairment charges, the disposition of the Company's investment in the Sundance Channel, the acquisitions of IOA and CNET and the Company's voluntary contribution to the qualified pension plan. The OIBDA metric was selected because it is an important indicator of the Company's operational strength and performance of its businesses, as it provides a link between profitability and operating cash flow. The FCF metric was also selected because it gives a clear view of the Company's ability to generate cash (and thus profits) and allows the Company to pursue opportunities that enhance stockholder value.

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              For 2008, the performance goal for the most senior levels of management, including the named executive officers (except for Mr. Redstone who does not receive PRSUs and except for PRSUs granted to Mr. Moonves under his employment agreement), was the achievement during 2008 of a 90% or greater level of the weighted average performance of (i) the percentage of an OIBDA Metric Target of $3.075 billion actually achieved (75% weighting) and (ii) the percentage of an FCF Metric Target of $1.295 billion actually achieved (25% weighting). The performance goal for Mr. Moonves was the achievement during 2008 of an FCF Metric Target of $1.295 billion.

              At its first meeting after the 2008 fiscal year end, the Compensation Committee reviewed and discussed the Company's performance versus the 2008 performance goals. Actual performance with respect to the OIBDA metric was $2.554 billion and with respect to the FCF metric was $1.672 billion. The Committee then certified that the 2008 performance goal had been achieved, noting that, in particular, such achievement reflected the solid underlying performance of operations within management's control in the face of challenging operating conditions facing the media industry as a result of the ongoing unprecedented national and global economic conditions.

              Grant Date of Awards—The grant date for RSUs, PSUs and stock option awards is the date on which the Compensation Committee approves awards under the Company's LTMIP or, if so determined by the Committee, a future grant date. The Committee may approve an award that will have a future grant date, with the exercise price of any stock option not to be less than the closing price of a share of the Company's Class B Common Stock on the NYSE on the date of grant. The Company does not set grant dates intentionally to precede the release of material non-public information. Communications regarding individual grant awards, including the terms and conditions, are provided to recipients as soon as administratively feasible. For annual management grants made in 2008, the Committee set, at its February 20, 2008 meeting, a grant date of February 28, 2008, which reflected the second business day following the date of the Company's public announcement of its earnings report for the fourth quarter and full year 2007.

              Delegation of Authority to Grant Awards—The Compensation Committee has delegated to the President and Chief Executive Officer limited authority, with respect to executives who are not senior executives, to grant long-term incentive awards under the LTMIP to such executives in connection with their hiring, promotion or contract renewal and to modify the terms of outstanding equity grants in certain post-termination scenarios. The Committee delegated this authority in order for the Company to have the ability to (i) act in a timely manner in a competitive environment in connection with the hiring of new executives or the compensating of an existing executive being given a significant increase in responsibility and (ii) maintain flexibility to manage compensation in post-termination scenarios when mutually beneficial to the Company and the executive. The Committee's delegation specifies the circumstances in which the authority can be used; limits the amount that can be awarded to an individual, the total amount that can be awarded in any period, and aggregate incremental expense that can be incurred by the Company resulting from modifications of the terms of outstanding equity grants; and specifies the method for establishing the grant date. The delegation also requires that the President and Chief Executive Officer report to the Committee periodically on his exercise of this delegated authority.

Stock Ownership Guidelines

              In order to further align the senior executives' interests with those of the Company's stockholders, the Company has established stock ownership guidelines. The guidelines provide that, within five years, starting in fiscal year 2007 or in the year in which a senior executive becomes subject to the guidelines, these senior executives are expected to acquire and establish holdings in Company

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stock equal in value to a multiple of their cash base (base salary less mandatory deferrals, if applicable), depending upon their positions as follows:

 
 
  Senior Executive
   
  Ownership Guideline Multiple
   

 

 

CEO

      5x cash base    

 

 

Other Senior Executives

      2x to 3x cash base    

              All types of equity holdings, with the exception of stock options, are included in determining ownership. The Compensation Committee monitors compliance with these guidelines by seeking an annual progress report from senior management. During 2008, senior management reported to the Committee that all of the senior executives subject to the guidelines, including the named executive officers, either met or were on track to meet the guidelines. The Committee determined to continue to monitor compliance with the guidelines.

Retirement and Deferred Compensation Plans

              The Company provides eligible employees, including the named executive officers, with the opportunity to build financial resources for retirement through the Company's broad-based tax-qualified defined benefit and defined contribution plans. In addition, eligible executives, including the named executive officers, participate in the Company's non-qualified defined benefit and deferred compensation plans. In some instances, participants in these qualified and non-qualified plans may also have frozen benefits in other qualified and non-qualified plans. Information regarding these retirement and deferred compensation plans is set forth in the narrative following each of the Pension Benefits in 2008 table and Non-qualified Deferred Compensation in 2008 table.

All Other Compensation

              The Company provides for other compensation to participating employees (including the named executive officers) by providing Company-matching contributions in the CBS 401(k) and 401(k) excess plans, and Company-paid life insurance. Compensation paid to the named executive officers in relation to these programs is included in the "All Other Compensation" column of the Summary Compensation Table for Fiscal Year 2008.

              In certain instances, the Company provides executives, including the named executive officers, with additional benefits that the Company believes are reasonable and typical for executives in similar industries and helps the Company to attract and retain these executives. Among these benefits are transportation-related benefits, which the Company believes provide travel flexibility and efficiencies that result in a more productive use of the applicable executive's time, given the demands of his position. In addition, Mr. Moonves is entitled to reimbursement for certain taxes and fees resulting from his obligation to the Company under his employment agreement to provide services in two different locations. The Company also requires that certain senior executives provide extended services at the Company's West Coast operations, for which the Company provides an expense allowance; executives are reimbursed for taxes on imputed income associated with certain expenses. These additional benefits are also described in footnote 7 to the "All Other Compensation" column of the Summary Compensation Table for Fiscal Year 2008.

Post-Termination Arrangements

              Post-termination payments with respect to the named executive officers are set forth in each of their respective employment agreements. None of the Company's employment arrangements with the named executive officers or long-term incentive plans provide for payment solely upon a change-in-control. Each of the named executive officers is entitled to post-termination payments and benefits upon the occurrence of a termination without cause and a resignation for good reason and

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death or disability. The terms of these payments and benefits and the estimated potential payments that would be made to the named executive officer if his employment terminated for each of these reasons as of the 2008 fiscal year end are described under "Potential Payments Upon Termination."

              In assessing post-termination payments and benefits in connection with senior executive employment arrangements, the Compensation Committee considers competitive practice with respect to comparable executives at the identified peer companies. The objective of these payments and benefits is to recruit and retain talent in a competitive market and, as applicable, compensate executives for restrictive covenants and other obligations following a termination without cause or a resignation for good reason.

Compensation Deductibility Policy

              In approving compensation, the Compensation Committee takes into account Section 162(m) of the Code, which generally limits to $1 million the federal tax deductibility of compensation (including stock options, PRSUs and PSUs) paid in one year to the named executive officers. Performance-based compensation (including stock options, PRSUs and PSUs) may qualify for an exception to the limit on deductibility, provided the plan under which such compensation is paid meets certain requirements, including stockholder approval.

              The Company intends to comply with Section 162(m) for annual short-term and long-term incentives in order for compensation to be deductible. However, the Compensation Committee may approve compensation exceeding the $1 million limitation in order to provide appropriate compensation and in some instances may require deferral of some or all amounts exceeding $1 million. The named executive officers are eligible to receive annual awards under the Senior Executive STIP, and the senior executives are eligible to receive long-term compensation under the Company's long-term management incentive plan. Both of these plans are designed to comply with the Section 162(m) exception for performance-based compensation. The stockholders of the Company have approved the Senior Executive STIP and the Company's long-term management incentive plan.

              In order for bonus awards made under the Senior Executive STIP to be eligible for deductibility under Section 162(m), the Compensation Committee establishes a performance criterion for the bonus awards, which criterion must not be certain of being achieved at the time it is set.

              For 2008, the Section 162(m) performance criterion was the achievement during 2008 of a 90% or greater level of the weighted average performance of (i) the percentage of an OIBDA Metric Target of $3.075 billion actually achieved (75% weighting) and (ii) the percentage of an FCF Metric Target of $1.295 billion actually achieved (25% weighting). The "OIBDA Metric Target" is calculated by starting with the Company's budget for 2008 for the OIBDA metric and then taking into account items pre-approved by the Compensation Committee that may otherwise distort the calculation of the performance criterion. The "FCF Metric Target" is calculated by starting with the Company's budget for 2008 for the FCF metric and then taking into account the same items. The items that were pre-approved by the Committee and taken into account in the calculation of the OIBDA Metric Target and the FCF Metric Target were with respect to restructuring charges, impairment charges, the disposition of the Company's investment in the Sundance Channel, the acquisitions of IOA and CNET and the Company's voluntary contribution to the qualified pension plan.

              Assuming that the Compensation Committee determines that the performance criterion has been achieved, the terms of the Senior Executive STIP establish a maximum bonus for each named executive officer equal to a multiple of his base salary in effect at the beginning of the year with the amount of the bonus, if any, actually awarded to any named executive officer being subject to the Committee's downward discretion. This framework for establishing a maximum bonus is designed to provide that the awards will be eligible for deductibility up to eight times his base salary under Section 162(m) of the Code.

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              At its first meeting after the 2008 fiscal year end, the Compensation Committee reviewed and discussed the Company's performance versus the 2008 performance criterion. Actual performance with respect to the OIBDA metric was $2.554 billion and with respect to the FCF metric was $1.672 billion. The Committee then certified that the 2008 performance criterion had been achieved, noting that, in particular, such achievement with respect to the FCF Metric Target reflected the solid underlying performance of operations within management's control in the face of challenging operating conditions facing the media industry. Therefore, the Committee determined that the named executive officers were eligible for an annual bonus award under the Senior Executive STIP as described above, subject to the Committee's downward discretion.

              With respect to the Company's long-term management incentive plan, the Compensation Committee also establishes performance goals for PRSUs and PSUs, rendering them eligible for deductibility under Section 162(m), as described in the "Long-Term Management Incentive Program—Terms of LTMIP Awards—Performance Goals (PRSUs)" section above.

Employment Contracts

              All of the named executive officers are, and were during 2008, parties to employment contracts with the Company, as the Committee has considered it to be in the Company's best interest, and as the best means, to secure the employment of each of these executives. The terms and provisions of these contracts are more fully described in the narrative section following the Summary Compensation Table for Fiscal Year 2008 and in "Changes in Named Executive Officers' Employment Agreements in 2008" in this "Compensation Discussion and Analysis."

              However, the Company does not, as a matter of course, enter into written employment agreements with senior executives. The Company may enter into an employment agreement with a senior executive when it considers it to be in the Company's best interest, as it did with respect to the named executive officers. The Compensation Committee approves all employment arrangements with senior executives. With respect to employees other than senior executives, employment contracts are subject to an approval process coordinated through the Office of the Executive Vice President, Human Resources and Administration.

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COMPENSATION COMMITTEE REPORT

              The following Compensation Committee Report does not constitute soliciting material and shall not be deemed filed or incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent the Company specifically incorporates such information by reference.

              The Compensation Committee Charter states that the primary purpose of the Compensation Committee is to discharge the responsibilities of the Board of Directors relating to the compensation of the Company's executive officers and other senior executives. Under the Charter, the Compensation Committee's authorities and duties include, among other things:

    Adopting and periodically reviewing the Company's philosophy, strategy and principles regarding the design and administration of the Company's compensation programs;

    Reviewing and approving the total compensation packages for the Executive Chairman, the President and Chief Executive Officer, the Company's other executive officers, all operating unit heads who report directly to the President and Chief Executive Officer and, in certain instances, other persons among the Company's most highly compensated executives (excluding "Talent," as such term is currently used in the media or entertainment industries); and

    Overseeing the administration of the Company's incentive compensation plans (including the bonus plan for executives subject to Section 162(m) under the Code) and equity-based compensation plans.

              The Compensation Committee retains an independent compensation consulting firm to advise the Committee in its review of senior executive compensation. The consultant reports directly to the Compensation Committee.

              The full text of the Compensation Committee Charter is available on the Company's website at www.cbscorporation.com. The Compensation Committee assesses the adequacy of its Charter at least every other year, or more frequently as the Committee may determine.

              The Compensation Committee of the Board of Directors of CBS Corporation has reviewed and discussed with the Company's management the Compensation Discussion and Analysis ("CD&A") included in this proxy statement. Based on this review and these discussions, the Compensation Committee has recommended to the CBS Corporation Board of Directors that the CD&A be included in this proxy statement and incorporated by reference from this proxy statement into the Company's Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on February 25, 2009.

Members of the Compensation Committee

Charles K. Gifford, Chair
William S. Cohen
Leonard Goldberg
Bruce S. Gordon

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EXECUTIVE COMPENSATION

Summary Compensation Table for Fiscal Year 2008(1)

              The following table sets forth information concerning total compensation for the fiscal year ended December 31, 2008 for the Chief Executive Officer, the Chief Financial Officer and the three other most highly compensated executive officers of the Company (the "named executive officers") who served in such capacities at the end of 2008.

 
 
  Name and
Principal
Position
(a)

   
  Year
(b)

   
  Salary
($)
(c) (2)

   
  Bonus
($)
(d) (3)

   
  Stock
Awards
($)
(e) (4)

   
  Option
Awards
($)
(f) (5)

   
  Change in
Pension
Value and
NQDC
Earnings
($)
(g) (6)

   
  All Other
Compensation
($)
(h) (7)

   
  Total
($)
(i)

   

 

 

Sumner M. Redstone

 

 

 

 

2008

 

 

 

 

1,003,846

 

 

 

 

5,500,000

 

 

 

 

3,768,315

 

 

 

 

1,586,179

 

 

 

 

13,453

 

 

 

 

17,418

 

 

 

 

11,889,211

 

 
        Executive         2007         1,437,500         4,750,000         2,714,203         723,002         17,218         72,177         9,714,100    
        Chairman         2006         3,050,000         7,320,000         1,033,826         657,753         23,936         78,600         12,164,115    
        and Founder                                                                                    

 

 

Leslie Moonves

 

 

 

 

2008

 

 

 

 

3,513,462

 

 

 

 

9,500,000

(8)

 

 

 

11,560,836

 

 

 

 

6,833,750

 

 

 

 

324,035

 

 

 

 

229,981

 

 

 

 

31,962,064

 

 
        President and         2007         5,323,367         18,500,000         11,193,762 (3)       1,366,750         118,189         314,759         36,816,827    
        Chief Executive
    Officer
        2006         5,613,200         15,000,000 (3)       5,889,255         1,714,271         109,478         310,907         28,637,111    

 

 

Fredric G. Reynolds

 

 

 

 

2008

 

 

 

 

1,756,731

 

 

 

 

3,400,000

 

 

 

 

2,163,983

 

 

 

 

1,238,102

 

 

 

 

158,259

 

 

 

 

24,534

 

 

 

 

8,741,609

 

 
        Executive Vice         2007         1,756,731         4,250,000         1,586,114         788,789         92,149         24,534         8,498,317    
        President and         2006         1,750,000         3,750,000         545,959         310,070         87,456         26,064         6,469,549    
        Chief Financial
    Officer
                                                                                   

 

 

Louis J. Briskman

 

 

 

 

2008

 

 

 

 

1,305,000

 

 

 

 

1,600,000

 

 

 

 

1,223,120

 

 

 

 

755,298

 

 

 

 

637,084

 

 

 

 

25,886

 

 

 

 

5,546,388

 

 
        Executive Vice         2007         1,305,000         2,000,000         692,231         450,737         483,519         24,263         4,955,750    
        President and         2006         1,265,769         1,800,000         511,644         123,683         398,730         21,689         4,121,515    
        General Counsel                                                                                    

 

 

Joseph R. Ianniello(9)

 

 

 

 

2008

 

 

 

 

670,962

 

 

 

 

800,000

 

 

 

 

639,541

 

 

 

 

361,212

 

 

 

 

40,345

 

 

 

 

27,619

 

 

 

 

2,539,679

 

 
        Deputy Chief
    Financial
    Officer
                                                                                   

(1)
Given the Company's emphasis on equity-based compensation, and because SEC rules require that equity-based compensation be reported based on amounts expensed for accounting purposes, the first table below is provided to facilitate an understanding of the Compensation Committee's view of the 2008 compensation awarded to the named executive officers by the Committee, and the second table below is provided to reconcile amounts shown in the first table to amounts shown in the Summary Compensation Table above. These tables are not required by SEC rules and are not designed to replace the Summary Compensation Table.


 
 Compensation Committee's View of 2008 Compensation Awarded
 
 
  Name
   
  Salary
($)

   
  Bonus
($)

   
  Value of
Stock
Award
($)(a)

   
  Value
of Option
Award
($)(b)

   
  Other
Compensation
($)(c)

   
  Total 2008
Compensation
Awarded
($)

   
 
    Sumner M. Redstone         1,003,846         5,500,000         4,633,727         3,872,635         17,418         15,027,626    
    Leslie Moonves         3,513,462         9,500,000         7,599,992         (d)       229,981         20,843,435    
    Fredric G. Reynolds         1,756,731         3,400,000         1,780,812         1,700,932         24,534         8,663,009    
    Louis J. Briskman         1,305,000         1,600,000         2,217,582         1,498,820         25,886         6,647,288    
    Joseph R. Ianniello         670,962         800,000         610,549         583,174         27,619         2,692,304    

        (a)
        Represents the grant date fair value of the stock award determined in accordance with SFAS 123R. As of December 31, 2008, the market value of the stock awards set forth in the "Value of Stock Award" column with respect to each of the named executive officers was as follows: Mr. Redstone, $925,708; Mr. Moonves, $4,313,509; Mr. Reynolds, $598,181; Mr. Briskman, $1,003,627; and Mr. Ianniello, $205,086.

        (b)
        Represents the grant date fair value of the option awards determined in accordance with SFAS 123R. As of December 31, 2008, the market value of the option awards set forth in the "Value of Option Award" column with respect to each of the named executive officers was $0.

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        (c)
        Represents total of Company contributions to 401(k) Plan and 401(k) Excess Plan, Company-paid life insurance, tax reimbursements, perquisites and other personal benefits.

        (d)
        Mr. Moonves did not receive a stock option grant in 2008. During 2009, the Compensation Committee determined to grant Mr. Moonves, as part of his bonus, $1.5 million in stock options to purchase shares of the Company's Class B Common Stock. This award was granted with terms consistent with the annual equity awards granted to senior executives in February 2009. This award will be reportable in the Company's 2010 proxy statement in accordance with SEC rules.
 
 Reconciliation to Amounts Shown in the Summary Compensation Table
 
 
 
  Name
   
  Total 2008
Compensation
Awarded
($)

   
  Plus Portion
of Prior
Stock
Award
Grants
Expensed
in 2008
($)

   
  Plus Portion
of Prior
Stock
Option
Grants
Expensed
in 2008
($)

   
  Less Portion
of 2008
Stock
Awards
to be
Expensed
in
Future
Years
($)

   
  Less Portion
of 2008
Stock
Options
to be
Expensed
in
Future
Years
($)

   
  Plus
Changes
in
Pension
Value
($)

   
  Total
Shown in
Summary
Compen-
sation
Table
($)

   
 

 

  Sumner M. Redstone         15,027,626         2,223,739         906,858         (3,089,151 )       (3,193,314 )       13,452         11,889,210    

 

 

Leslie Moonves

       
20,843,435
       
10,030,859
       
6,833,750
       
(6,070,015

)
     
       
324,035
       
31,962,064
   

 

 

Fredric G. Reynolds

       
8,663,009
       
1,389,863
       
880,440
       
(1,006,691

)
     
(1,343,270

)
     
158,260
       
8,741,611
   

 

 

Louis J. Briskman

       
6,647,288
       
580,102
       
503,110
       
(1,574,564

)
     
(1,246,632

)
     
637,085
       
5,546,389
   

 

 

Joseph R. Ianniello

       
2,692,304
       
374,144
       
238,586
       
(345,152

)
     
(460,548

)
     
40,344
       
2,539,678
   
(2)
Salary includes amounts deferred under qualified and non-qualified arrangements. For 2008, all named executive officers, except for Mr. Redstone, deferred a portion of their salary under qualified and non-qualified deferred compensation arrangements. See the Non-qualified Deferred Compensation in 2008 table for further information on amounts deferred under non-qualified deferred compensation arrangements.

(3)
In connection with Mr. Moonves' 2006 performance, the Compensation Committee awarded to Mr. Moonves a total of $19,000,000, comprised of (i) $15,000,000 in cash, reflected in Column (d), "Bonus," for 2006, and (ii) an equity award of 128,328 restricted share units (RSUs) on January 31, 2007, the fair market value of which was approximately $4,000,000. The expense associated with this RSU grant is included in Column (e), "Stock Awards," as follows: for 2007, $1,222,218 and for 2008, $1,333,328. These RSUs, issued pursuant to the Company's long-term management incentive plan, vest over three years and are payable in shares of the Company's Class B Common Stock. The value of these RSUs is not included in the $15,000,000 bonus amount for 2006.

With respect to all named executive officers, amounts set forth in the "Bonus" column for 2008, 2007 and 2006 reflect cash payments made in February 2009 for fiscal year 2008 performance, February 2008 for fiscal year 2007 performance and February 2007 for fiscal year 2006 performance, respectively.

(4)
For 2008, amounts reflect the Company's 2008 compensation expense, calculated in accordance with SFAS 123R, associated with stock-based awards (RSUs and/or restricted shares and/or performance share units (PSUs)) granted in 2008 and in prior years. With respect to the amounts included in the "Stock Awards" column, the following table sets forth, with respect to awards made in 2008 and prior-year awards: (i) the amount of 2008 compensation expense for those awards, (ii) the grant date fair value of those awards outstanding as of December 31, 2008, and (iii) the market value, as of December 31, 2008, of those awards outstanding as of that date.

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Table of Contents

 Stock Awards
 
  2008 Stock Awards   Prior-Year Stock Awards    
 
  Named Executive
Officer

   
  2008
Compensation
Expense for
Stock Awards
($)

   
  Grant Date
Fair Value
of Awards
($)

   
  Market Value
as of
December 31,
2008
($)

   
  2008
Compensation
Expense for
Stock Awards
($)

   
  Grant Date
Fair Value
of Awards
Outstanding
as of
December 31,
2008
($)

   
 
Market Value
as of
December 31,
2008
of Awards
Outstanding
as of
That Date
($)

   

 

  Sumner M. Redstone         1,544,576         4,633,727         925,708         2,223,739         8,030,515         2,002,046    

 

 

Leslie Moonves

        1,529,977         7,599,992         4,313,509         10,030,859         20,100,195         6,055,760    

 

 

Fredric G. Reynolds

        774,120         1,780,812         598,181         1,389,863         3,828,231         1,121,211    

 

 

Louis J. Briskman

        643,018         2,217,582         1,003,627         580,102         1,424,454         394,275    

 

 

Joseph R. Ianniello

        265,397         610,549         205,086         374,144         1,211,219         256,454    

In accordance with SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions, which would otherwise be taken into account under SFAS 123R. Except for estimated forfeitures, these amounts reflect the Company's accounting expense for these awards and may not correspond to the actual value recognized by the named executive officer. See "RSUs, PSUs and Restricted Shares" and "Voluntary Exchange Offer" in Note 11 to the audited 2008 consolidated financial statements on pages II-62 and II-65 in the Company's Form 10-K for the fiscal year ended December 31, 2008 for a discussion of the assumptions made in calculating these amounts.

(5)
For 2008, amounts reflect the Company's 2008 compensation expense, calculated in accordance with SFAS 123R, associated with stock option awards granted in 2008 and in prior years. With respect to amounts included in the "Option Awards" column, the following table sets forth, with respect to awards made in 2008 and prior-year awards: (i) the amount of 2008 compensation expense for those awards, (ii) the grant date fair value of those awards outstanding as of December 31, 2008, and (iii) the market value, as of December 31, 2008, of those awards outstanding as of that date.
 Stock Option Awards
 
  2008 Stock Awards   Prior-Year Stock Option Awards    
 
  Named Executive
Officer

   
  2008
Compensation
Expense for
Stock Option
Awards
($)

   
  Grant Date
Fair Value
of Awards
($)

   
  Market Value
as of
December 31,
2008
($)

   
  2008
Compensation
Expense for
Stock Option
Awards
($)

   
  Grant Date
Fair Value
of Awards
Outstanding
as of
December 31,
2008
($)

   
 
Market Value
as of
December 31,
2008
of Awards
Outstanding
as of
That Date
($)

   

 

  Sumner M. Redstone         679,321         3,872,635         0         906,858         2,720,573         0    

 

 

Leslie Moonves

        0         0         0         6,833,750         20,501,250         0    

 

 

Fredric G. Reynolds

        357,662         1,700,932         0         880,440         2,283,586         0    

 

 

Louis J. Briskman

        252,188         1,498,820         0         503,110         1,304,908         0    

 

 

Joseph R. Ianniello

        122,626         583,174         0         238,586         626,522         0    

In accordance with SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions, which would otherwise be taken into account under SFAS 123R. Except for estimated forfeitures, these amounts reflect the Company's accounting expense for these awards and may not correspond to the actual value recognized by the named executive officer. See "Stock Options and Equivalents" in Note 11 to the audited 2008 consolidated financial statements on pages II-63 — II-65 in the Company's Form 10-K for the fiscal year ended December 31, 2008 for a discussion of the assumptions made in calculating these amounts.

(6)
For 2008, 2007 and 2006, amounts reflect changes in pension value only, as, except as noted below, none of the Company's non-qualified deferred compensation plans provide for above-market interest or preferential earnings. Also, for Mr. Redstone, the amounts for 2008, 2007 and 2006 include the minimum required distributions he received under qualified pension plans. For Messrs. Moonves and Reynolds, the increases in pension values from 2007 to 2008 are primarily due to changes in the underlying minimum interest rates upon which certain of their frozen benefits are based. For Mr. Briskman, the amounts for 2008, 2007 and 2006 include distributions he received under qualified and non-qualified pension plans pursuant to which he has an accumulated benefit, but is not currently accruing benefits. See "Pension Benefits in 2008" for further information on these plans.

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Table of Contents


With respect to Mr. Redstone, pursuant to Mr. Redstone's amended employment agreement, effective March 16, 2007, the balance of his deferred salary compensation account was converted to stock option equivalents ("SOEs") of equal value. The Company considers any increase in the intrinsic value of the SOEs as preferential, since other executives and employees do not have the ability to invest their deferred salary in SOEs. The increase in intrinsic value of SOEs between December 31, 2007 and December 31, 2008 was $0. The Company recognized compensation expense, calculated in accordance with SFAS 123R, in 2008 in the amount of ($1,319,087) in connection with the SOEs. See "Employment Agreements—Sumner M. Redstone" for further information on the SOEs. Information about each non-qualified deferred compensation plan is included in the "Description of Non-qualified Deferred Compensation" section.

(7)
The following table describes each component of the "All Other Compensation" column for 2008:
 
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
 
 
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   







 

   
 







   
 







   
 







   
 







   
 







  PERQUISITES AND
OTHER
PERSONAL BENEFITS
 







   
 







   
  Company
Contribution
to 401(k)
Plan
($)

  Company
Contribution
to 401(k)
Excess Plan
($)

   
   
   
  Named Executive
Officer

  Company-
Paid Life
Insurance
(a) ($)

  Tax
Reimbursement
(b) ($)

  Transportation-
Related
Benefits
(c) ($)

   
  Automobile
Insurance
($)

  Total
($)

 

  Sumner M. Redstone                         3,390                 14,028                 17,418    

 

 

Leslie Moonves

        3,100         19,400         60,000                 146,332         1,149         229,981    

 

 

Fredric G. Reynolds

        3,100         19,400         2,034                                 24,534    

 

 

Louis J. Briskman

        6,900         15,600         1,763         1,623                         25,886    

 

 

Joseph R. Ianniello

        6,900         13,033         1,085         6,601                         27,619    

        (a)
        Represents premiums paid in 2008 by the Company for life insurance coverage. Pursuant to his employment agreement, Mr. Moonves is covered by an individual life insurance policy, which he owns.

        (b)
        The Company requires that certain senior executives provide extended services at the Company's West Coast operations, for which the Company provides an expense allowance; executives are reimbursed for taxes on imputed income associated with certain expenses. The amounts shown in this column represent such reimbursements in 2008.

        (c)
        The amounts of perquisites and other personal benefits shown in this column include (i) the incremental cost to the Company of the personal use of the Company aircraft and (ii) the percentage of personal use of a car and driver provided for business-related security reasons. The incremental cost to the Company of the personal use of the Company aircraft is calculated by dividing the total variable costs (including fuel, maintenance, landing and navigation fees, catering, flight crew trip expenses, telecommunications, supplies and miscellaneous expenses) by the total flight hours for such year and multiplying such amount by the executive's total number of flight hours for his personal use for the year (including personal use flight segments with crew only). Fixed costs which do not change based on usage, such as pilot salaries, hangar rental and insurance are excluded. To the extent that Mr. Redstone uses the corporate aircraft of the Company for personal use, Viacom reimburses the Company 50% of a previously agreed upon per flight hourly amount and 50% of the incremental variable costs billed by the Company and such reimbursed amount is taken into account in the chart.



From time to time, tickets to sporting and other entertainment events are provided to certain employees, including the named executive officers, without charge, to attend these events as they relate to a business purpose. Tickets are made available to employees, including the named executive officers, for personal use if the tickets are not otherwise needed for business use. The Company does not incur incremental costs with respect to tickets to sporting and other entertainment events, as the tickets were purchased by the Company for business purposes and are made available if the tickets are not utilized for such purposes.

(8)
During 2009, the Compensation Committee also determined to grant to Mr. Moonves, as part of his bonus, $1.5 million in stock options to purchase shares of the Company's Class B Common Stock.

(9)
Mr. Ianniello first became a named executive officer of the Company for fiscal year 2008; therefore, only 2008 information is provided.

Employment Agreements

              All of the named executive officers have employment agreements that set forth the terms and conditions of their employment with the Company. The material terms of each of these agreements necessary to an understanding of the information provided in the Summary Compensation Table for Fiscal Year 2008 and the Grants of Plan-Based Awards During 2008 table is provided below. See "Potential Payments Upon Termination" for a description of the payments and benefits that would be provided to the named executive officers in connection with a termination of their employment.

Sumner M. Redstone

              Effective March 13, 2007, the Company entered into an amendment to Mr. Redstone's December 2005 employment agreement, pursuant to which he serves as Executive Chairman and

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Table of Contents


Founder of CBS Corporation, with a pay package structured to reduce fixed compensation, strengthen the pay-for-performance linkage and shift the pay towards equity. Under the amended agreement, Mr. Redstone receives a salary of $1 million per annum, and his target bonus is $3.5 million. His salary and target bonus are subject to annual review and increase at the discretion of the Compensation Committee. Mr. Redstone is provided with $2.5 million of life insurance during his employment with the Company.

              Pursuant to the amended agreement, Mr. Redstone received in 2008, and will continue to receive through 2011, an annual award of stock options for shares of the Company's Class B Common Stock having a value of $3 million. Mr. Redstone's annual stock option award for 2008 was granted on February 28, 2008. Mr. Redstone also received in 2008, and will continue to receive through 2011, an annual award of PSUs under the LTMIP (or a successor plan) with a target value of $3 million. Payouts under the PSUs range from zero to a maximum of 300% of the target number of shares of the Company's Class B Common Stock for the award. See the Grants of Plan-Based Awards in 2008 table for additional awards.

              In addition to the above, effective as of March 16, 2007 (the "Exchange Date"), the approximate $10 million balance of Mr. Redstone's vested deferred compensation account was converted into appreciation rights ("Stock Option Equivalents") with the same fair value on the conversion date. The Stock Option Equivalents have an exercise price equal to the closing price of a share of the Company's Class B Common Stock on the Exchange Date ($30.21), vest in 25% installments on the first four anniversaries of the Exchange Date and have a term of eight years from the Exchange Date. Accordingly, Mr. Redstone will only realize value on such deferred amount to the extent the price of a share of the Company's Class B Common Stock is higher, at the time the Stock Option Equivalents are exercised, than the exercise price.

Leslie Moonves

              On October 15, 2007, the Company entered into an employment agreement providing for the continued employment of Leslie Moonves as President and Chief Executive Officer of CBS Corporation, with a pay package structured to reduce fixed compensation, strengthen the pay-for-performance linkage and shift the pay towards equity. This agreement supersedes the prior employment agreement between Mr. Moonves and the Company dated July 1, 2004, as amended from time to time. The term of the new agreement commenced on October 1, 2007 and ends on September 30, 2011, subject to earlier termination in accordance with the terms of the new agreement.

              Mr. Moonves receives an annual salary of $3.5 million, which is subject to annual review and increase at the discretion of the Compensation Committee. Beginning with January 1, 2008, Mr. Moonves' target bonus for each whole calendar year is 300% of his salary (subject to annual review and increase at the discretion of the Compensation Committee). For 2009, Mr. Moonves waived his right for consideration of any increase in salary and bonus.

              Under the terms of his agreement, Mr. Moonves received on October 1, 2008, and will receive on each of October 1, 2009 and October 1, 2010, performance-based RSUs with a value of $7.6 million. Each RSU will correspond to one share of the Company's Class B Common Stock, with the number of RSUs to be determined by the closing price of one share of the Company's Class B Common Stock on the grant date. Each RSU grant is subject to a performance goal established by the Compensation Committee based on the Company's budgeted free cash flow for the calendar year following the calendar year during which the RSUs were granted, and will vest and be settled following the Compensation Committee's certification that the performance goal was achieved.

              Mr. Moonves is entitled to participate in arrangements for benefits, business expenses and perquisites available to other senior executives of the Company. The new agreement also contains restrictive covenants imposing non-competition obligations, restricting solicitation of employees, and

53


Table of Contents


protecting confidential information and the Company's ownership of work product, as well as other covenants, during Mr. Moonves' employment and for specified periods after the termination of employment.

              Under his employment agreement, Mr. Moonves will report to the Board and, for so long as Mr. Redstone is the Executive Chairman and Founder of the Company, to Mr. Redstone, and Mr. Moonves will be nominated annually for election to the Board and will agree to serve as a member of the Board for each period for which he is so elected. Under his employment agreement, Mr. Moonves agrees to perform services in New York as well as in Los Angeles. Accordingly, Mr. Moonves will be fully reimbursed by the Company with respect to any net incremental New York state and local taxes and fees he incurs as a result of his providing services in New York, with such amount to be reviewed and validated by the Compensation Committee. In addition, he is provided with $8 million of life insurance during the employment term.

              Further, Mr. Moonves' employment agreement provides incentives for him to continue his employment with the Company as a Senior Advisor or Producer for a three-year period beginning upon the expiration of the agreement on September 30, 2011, or earlier if Mr. Moonves resigns his employment for Good Reason or the Company terminates Mr. Moonves' employment without Cause.

Fredric G. Reynolds

              On August 15, 2005, the Company entered into an employment agreement with Mr. Reynolds for a four-year term, pursuant to which Mr. Reynolds serves as the Executive Vice President and Chief Financial Officer of CBS Corporation, at a salary of $1.5 million per annum plus deferred compensation at a rate of $250,000 per annum. Mr. Reynolds' annual target bonus is 100% of his salary and deferred compensation. Mr. Reynolds is eligible to receive annual grants of long-term compensation, as determined by the Company's Compensation Committee, based on a target value of $3.5 million. Mr. Reynolds' employment agreement provides that the vesting of any RSUs awarded as part of his annual grants of long-term compensation will be subject to the achievement of a performance goal. This performance goal is the same performance goal established each year for the Senior Executive STIP for the performance period in which such grant of RSUs is awarded. If the Compensation Committee certifies that the performance goal has been achieved, the award will vest and become payable in accordance with a four-year vesting schedule. If the performance goal is not achieved, the award will be forfeited.

              Mr. Reynolds' agreement contains restrictive covenants imposing non-competition obligations, restricting solicitation of employees, protecting confidential information and the Company's ownership of work product and requiring cooperation in litigation, as well as other covenants, during his employment and for specified periods after the termination of employment.

Louis J. Briskman

              On September 16, 2008, the Company entered into a new employment agreement with Mr. Briskman, effective September 7, 2008 through September 30, 2011, which provides for his continued employment as the Executive Vice President and General Counsel of CBS Corporation. The agreement provides for an annual salary of $1,300,000, which may be reviewed and increased at the discretion of the Compensation Committee. Mr. Briskman's annual target bonus is 115% of his salary as in effect on November of such year.

              Under the terms of the new agreement, Mr. Briskman received on September 23, 2008 an award of stock options to purchase a number of shares of the Company's Class B Common Stock, with an exercise price equal to the closing price of the Company's Class B Common Stock on the NYSE on the grant date ($14.85), having a grant date value of $500,000. Mr. Briskman also received on September 23, 2008 performance-based RSUs with a value of $1.2 million. Each RSU corresponds to

54


Table of Contents


one share of the Company's Class B Common Stock, with the number of RSUs to be determined by the closing price of one share of the Company's Class B Common Stock on the grant date ($14.85). The RSU grant is subject to a performance goal established by the Compensation Committee based on the Company's budgeted free-cash flow for fiscal year 2009. Mr. Briskman is eligible to receive annual grants of long-term compensation, as determined by the Company's Compensation Committee, based on a target value of $3 million, commencing in 2009.

              Mr. Briskman's employment agreement contains restrictive covenants imposing non-competition obligations, restricting solicitation of employees, protecting the Company's confidential information and its ownership of work product and requiring cooperation in litigation, as well as other covenants, during his employment and for specified periods after the termination of employment. The employment agreement provides that Mr. Briskman will continue to receive supplemental pension payments pursuant to an agreement dated March 2, 1999, as amended on May 3, 2000, with the former CBS Corporation. See the footnotes and narrative accompanying the Pension Benefits in 2008 tables for information on his supplemental pension payments.

Joseph R. Ianniello

              Effective as of November 17, 2008, Mr. Ianniello entered into a new employment agreement with the Company which provides that he will serve as the Deputy Chief Financial Officer of CBS Corporation through December 31, 2011. The new agreement provides for an annual salary of $800,000, which is subject to annual review and may be increased at the discretion of the Compensation Committee, and an annual target bonus equal to 100% of his annual salary. Mr. Ianniello is also eligible to receive annual grants of long-term compensation, as determined by the Company's Compensation Committee, based on a target value of $1.2 million, commencing in 2009.

              Mr. Ianniello's employment agreement contains restrictive covenants imposing non-competition obligations, restricting solicitation of employees, protecting the Company's confidential information and its ownership of work product and requiring cooperation in litigation, as well as other covenants, during his employment and for specified periods after the termination of employment.

Section 409A Amendments

              The employment agreements for Messrs. Redstone, Moonves, Reynolds and Briskman were each amended in December 2008 for compliance with the requirements of Section 409A of the Internal Revenue Code. The amendments did not add new benefits or compensation. Mr. Ianniello's new agreement incorporates provisions that comply with Section 409A of the Internal Revenue Code.

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Table of Contents


Grants of Plan-Based Awards During 2008

              The following table sets forth information concerning grants of equity awards under the Company's long-term management incentive plan to the named executive officers in fiscal year 2008. Awards consisted of RSUs, PSUs, and non-qualified stock options.

 








 

   
 








   
 








   
 








   
   
   
   
   
 








   
 








   
 








   
 








  Grant Date
Fair Value
of Stock
and
Option
Awards
($)
(j)
(4)

 








   
   
   
  Estimated Possible
Payouts Under Equity
Incentive Plan Awards
  Awards:
Number
of Shares
of Stock
or Units
(#)
(g)

  Awards:
Number of
Securities
Underlying
Options
(#)
(h)

  Exercise
or Base
Price of
Option
Awards
($/Sh)
(i)
(3)

   
   
  Committee
Action
Date
(c)
(1)

  Name
(a)

  Grant
Date
(b)

  Threshold
(#)
(d)

   
  Target
(#)
(e) (2)

   
  Maximum
(#)
(f)

 

 

Sumner M. Redstone

        1/1/2008         2/22/2007         28,257         113,029   (5)       339,087                               $ 4,633,727    
             

 

            2/28/2008         2/20/2008                                         700,934       $ 23.96         2,915,885    
             

 

            9/22/2008         9/21/2008                                         445,000         15.39         956,750    

 

 

Leslie Moonves

        10/1/2008         10/12/2007                 526,680   (6)                                       7,599,992    

 

 

Fredric G. Reynolds (7)

        2/28/2008         2/20/2008         7,304         29,215   (5)       58,430                                 730,814    
             

 

            2/28/2008         2/20/2008                 43,823   (8)                                       1,050,000    
             

 

            2/28/2008         2/20/2008                                         408,878         23.96         1,700,932    

 

 

Louis J. Briskman (7)

        2/28/2008         2/20/2008         4,174         16,694   (5)       33,388                                 417,601    

 

           

 

            2/28/2008         2/20/2008                 25,041   (8)                                       599,984    

 

           

 

            2/28/2008         2/20/2008                                         233,644         23.96         971,959    

 

           

 

            9/23/2008         5/22/2008                                         265,957   (9)       14.85         526,861    

 

           

 

            9/23/2008         5/22/2008                 80,808   (9)                                       1,200,000    

 

 

Joseph R. Ianniello (7)

        2/28/2008         2/20/2008         2,504         10,016   (5)       20,032                                 250,550    
             

 

            2/28/2008         2/20/2008                 15,025   (8)                                       360,000    
             

 

            2/28/2008         2/20/2008                                         140,186         23.96         583,174    
                                                                                                   

(1)
With respect to Mr. Redstone's January 1, 2008 grant, Mr. Moonves' October 1, 2008 grant and Mr. Briskman's September 23, 2008 grant, the "Committee Action Date" refers to the date on which the Compensation Committee approved the terms of their respective new or amended employment agreements. With respect to all other grants, "Committee Action Date" refers to the date on which the Compensation Committee approved the grants.

(2)
With respect to PSUs, for performance between threshold and target levels or target and maximum levels, the number of shares awarded is interpolated on a straight-line basis between the threshold and target number of shares or the target and maximum number of shares, as the case may be.

(3)
The exercise price of the options is the closing price of the Company's Class B Common Stock on the date of grant.

(4)
Amounts reflect the fair value on the date of grant, calculated in accordance with SFAS 123R, of RSUs, PSUs and stock option awards reported in the table. The market values, as of December 31, 2008, of all equity-based awards reported in the table are also set forth in the table below.
 
   
   
  2008 Equity Awards    
 
   
   
  Stock Options    
  PSUs/Performance-Based RSUs    
 
 
Name

   
  Grant Date Fair Value
($)

   
  Market Value
($)

   
  Grant Date Fair Value
(at Target) ($)

   
  Market Value
(at Target) ($)

   

 

  Sumner M. Redstone         3,872,635         0         4,633,727         925,708    

 

 

Leslie Moonves

                        7,599,992         4,313,509    

 

 

Fredric G. Reynolds

        1,700,932         0         1,780,814         598,181    

 

 

Louis J. Briskman

        1,498,820         0         2,217,583         1,003,627    

 

 

Joseph R. Ianniello

        583,174         0         610,550         205,086    
(5)
The amount for Mr. Redstone reflects the target number of PSUs granted to Mr. Redstone, to be delivered on December 31, 2010, subject to the satisfaction of performance conditions. For Messrs. Reynolds, Briskman and Ianniello, amounts reflect the target number of PSUs of which 50% are to be delivered on the third anniversary of the date of grant and 50% are to be delivered on the fourth anniversary of the date of grant, in each case subject to the satisfaction of performance conditions.

(6)
The amount reflects the performance-based RSUs granted to Mr. Moonves, subject to the satisfaction of a performance condition, which RSUs vest in the manner described in "Employment Agreements—Leslie Moonves."

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(7)
With respect to Messrs. Reynolds, Briskman and Ianniello, annual grants of long-term equity compensation for 2008 were delivered in the form of a combination of stock options, RSUs and PSUs, with all grants made on February 28, 2008.

(8)
The amounts reflect the performance-based RSUs granted to Messrs. Reynolds, Briskman and Ianniello, subject to the satisfaction of a performance condition, which RSUs vest over four years in increments of approximately 42%, 42%, 8% and 8% beginning on the first anniversary of the grant date.

(9)
The amounts reflect the non-qualified stock options and performance-based RSUs granted to Mr. Briskman in connection with his new employment agreement. The stock options generally vest in three equal installments beginning on the one-year anniversary of the date of grant, with the exception of the final installment, which vests instead on September 30, 2011. The performance-based RSUs vest ratably over three years beginning on the first anniversary of the date of grant, with the exception of the final installment, which vests instead on September 30, 2011, subject to the satisfaction of a performance condition.

Description of Plan-Based Awards

              Equity awards reported in the Grants of Plan-Based Awards During 2008 table were granted to the named executive officers under the Company's long-term management incentive plan.

              RSUs and Stock Options—The number of RSUs awarded is determined on the basis of the closing price of a share of the Company's Class B Common Stock on the date of grant. The number of stock options awarded is determined on the basis of the Black-Scholes value (as determined by the Compensation Committee's independent consultant) using the closing price of the Company's Class B Common Stock on the date of grant. Stock options have an exercise price not less than the closing price of a share of the Company's Class B Common Stock on the date of grant and generally have an eight-year term. Except as set forth in footnotes (6) and (9) above, vesting for stock options generally occurs in equal annual installments over four years, contingent on continued employment, and RSUs generally vest over four years in increments of approximately 42%, 42%, 8% and 8%, contingent on continued employment and satisfaction of a performance goal.

              For other terms of these awards relating to performance goals and grant dates and for the terms of the PSU awards, see "Compensation Discussion and Analysis—Long-Term Management Incentive Program—Terms of LTMIP Awards."

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Outstanding Equity Awards at Fiscal Year-End 2008

              The following table sets forth for each named executive officer information concerning the outstanding equity awards at December 31, 2008, which included unexercised and vested stock options, unexercised and unvested stock options, unvested RSUs and restricted shares, and unearned and unvested RSUs and PSUs.

 
 
   
   
  Option Awards
   
  Stock Awards
   


 

  Name
(a)

   
  Grant
Date
(1)

   
  Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(b)

   
  Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(c)

   
  Equity
Incentive
Plan
Awards:
# of
Securities
Underlying
Unexercised
Unearned
Options
(#)
(d)

   
  Option
Exercise
Price
($)
(e)

   
  Option
Expiration
Date
(f)

   
  Number
of Shares
or Units
of Stock
That Have
Not Vested
(#)
(g)

   
  Market
Value
of Shares
or Units
That Have
Not Vested
($)
(h)

   
  Equity
Incentive
Plan
Awards:
# of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
(#)
(i)

   
  Equity
Incentive
Plan
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
($)
(j)

   

 

 

Sumner M. Redstone

        3/16/2007         155,151         465,453               $ 30.21         3/16/2015                                    
             

 

            2/28/2008         0         700,934                 23.96         2/28/2016                                    
             

 

            9/22/2008         0         445,000                 15.39         9/22/2016                                    
             

 

            6/1/2006                                                 149,483         1,224,266                    
             

 

            1/1/2007                                                                 94,967       $ 777,780    
             

 

            1/1/2008                                                                 113,029         925,708    

 

 

Leslie Moonves

        1/27/1999         172,710         0                 24.74         1/26/2009                                    

 

           

 

            10/19/2007         1,250,000         3,750,000                 28.70         10/19/2015                                    

 

           

 

            6/1/2006                                                 394,383         3,229,997                    

 

           

 

            1/31/2007                                                 85,552         700,671                    

 

           

 

            10/15/2007                                                                 259,474         2,125,092    

 

           

 

            10/1/2008                                                                 526,680         4,313,509    

 

 

Fredric G. Reynolds

        5/25/2006         131,184         131,184                 26.30         5/25/2014                                    
             

 

            3/6/2007         88,383         265,152                 30.94         3/6/2015                                    
             

 

            2/28/2008         0         408,878                 23.96         2/28/2016                                    
             

 

            9/1/2005                                                 5,110         41,851                    
             

 

            5/25/2006                                                 33,270         272,481                    
             

 

            6/1/2006                                                 56,101         459,467                    
             

 

            3/6/2007                                                                 22,624         185,291    
             

 

            3/6/2007                                                 19,795         162,121                    
             

 

            2/28/2008                                                                 43,823         358,910    
             

 

            2/28/2008                                                                 29,215         239,271    

 

 

Louis J. Briskman

        1/27/1999         138,168         0                 24.74         1/26/2009                                    

 

           

 

            5/25/2006         74,962         74,963                 26.30         5/25/2014