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 (Amendment No.               )

April 13, 2007

Dear Stockholder:

You are cordially invited to attend the 2007 Annual Meeting of Stockholders of CBS Corporation, which will be held at the Equitable Center, 787 Seventh Avenue (at 51st Street), New York, New York at 10:30 a.m., Eastern Daylight Time, on Wednesday, May 23, 2007. Holders of CBS Corporation Class A Common Stock are being asked to vote on the matters listed in the attached Notice of 2007 Annual Meeting of Stockholders.

If you hold shares of the Company’s Class A Common Stock, please complete, sign, date and return the enclosed proxy card promptly to ensure that your shares will be voted at the Annual Meeting. Alternatively, you may vote by telephone or the Internet by following the instructions on the enclosed proxy card, or if you attend the Annual Meeting, you may vote your shares in person.

National Amusements, Inc., which as of March 30, 2007 beneficially owned shares of the Company’s Class A Common Stock representing approximately 76% 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 and 2 in the attached notice. Therefore, approval of those matters is assured.

If you plan to attend the Annual Meeting and are a registered holder of the Company’s Class A Common Stock, you will need to mark the appropriate box on the enclosed proxy card, or so indicate when you vote by telephone or the Internet, and an admission ticket will be sent to you. 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 and you plan to attend the Annual Meeting, you will need to obtain an admission ticket in advance by sending a written request along with proof of ownership, such as your brokerage firm account statement, to Manager, Shareholder Relations, CBS Corporation, 51 West 52nd Street, New York, NY 10019.

If you would like to register to receive the materials relating to the Annual Meeting electronically next year instead of by mail, please go to www.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.

CBS CORPORATION

NOTICE OF 2007 ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT

To CBS Corporation Stockholders:

The 2007 Annual Meeting of Stockholders of CBS Corporation (the “Company”) will be held at the Equitable Center, 787 Seventh Avenue (at 51st Street), New York, New York at 10:30 a.m., Eastern Daylight Time, on Wednesday, May 23, 2007. 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 2007; and

3.                                      Such other business as may properly come before the Annual Meeting or any adjournment of the Meeting.

The close of business on March 30, 2007 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.

TABLE OF CONTENTS

CBS CORPORATION
2007 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 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on Wednesday, May 23, 2007 at 10:30 a.m., Eastern Daylight Time. The close of business on March 30, 2007 is the record date for determining the 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 Class A Common Stock will receive a proxy card or voting instruction card to vote their shares. Holders of the Company’s non-voting Class B Common Stock, par value $0.001 per share, will receive this proxy statement but are not entitled to vote at the Annual Meeting or any adjournment thereof.

As of March 30, 2007, the Company had outstanding 61,220,639 shares of its Class A Common Stock, each of such shares being entitled to one vote, and 678,005,170 shares of its Class B Common Stock (together with the Company’s Class A Common Stock, the “Common Stock”). The Company intends to commence its distribution of this proxy statement and related materials on or about April 17, 2007.

Submission of Proxies

The persons named in the proxy card (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 holder’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:

·       Complete, sign and date the proxy card or voting instruction card and return it in the envelope provided so that it is received prior to the Annual Meeting; or

·       By telephone or the Internet by following the instructions on the proxy card or voting instruction card. Your telephone or Internet proxy must be received no later than 11:59 p.m., Eastern Daylight Time, on May 22, 2007.

Shares Held in 401(k) Plans.   Voting instructions relating to shares of the Company’s Class A Common Stock held in the Company’s 401(k) plans must be received no later than 11:59 p.m., Eastern Daylight Time, on May 21, 2007, so that the trustee of the plans (who votes the shares on behalf of plan participants) has adequate time to tabulate the voting instructions. Shares held in 401(k) plans 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 a 401(k) plan) also have the option of voting their shares in person 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 ADP Proxy Services, P.O. Box 9163, Farmingdale, NY 11735. Revocations made by telephone or the Internet must be received by 11:59 p.m., Eastern Daylight Time, on May 22, 2007. A holder may also revoke a proxy by voting in person at the Annual Meeting.

Shares Held in 401(k) Plans.   Voting instructions relating to shares of the Company’s Class A Common Stock held in the Company’s 401(k) plans may be revoked prior to 11:59 p.m., Eastern Daylight Time, on May 21, 2007 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 voting instructions bearing a later date than the voting instructions being revoked to ADP Proxy Services, P.O. Box 9163, 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.

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; and

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 2007.

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 approve each of the matters set forth above. A broker non-vote (as described below) will have no effect on such matters. An abstention with respect to any matter will have the effect of a vote against such matter.

Some beneficial holders of the Company’s Class A Common Stock hold their shares in “street name” through a broker or other nominee. Under the rules of the New York Stock Exchange (“NYSE”), the broker or nominee 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 if they do not receive instructions from the beneficial owner of the shares held in street name.

As of March 30, 2007, National Amusements, Inc. (“National Amusements”) beneficially owned through its wholly owned subsidiary, NAIRI, Inc. (“NAIRI”), approximately 76% of the Company’s outstanding Class A Common Stock and approximately 12% 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

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Common Stock in favor of each of the matters listed as Items 1 and 2 above. Such action by National Amusements will be sufficient to constitute a quorum and to approve 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 this proxy statement and the related materials. The Company will furnish copies of these materials to banks, brokers, fiduciaries and custodians that hold shares on behalf of beneficial owners so that they may forward the materials to the beneficial owners. The Company has retained IVS Associates, Inc. to tabulate the votes and 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:

o      Audit Committee Charter

o      Compensation Committee Charter

o      Nominating and Governance Committee Charter

·       Business Conduct Statement

·       Supplemental Code of Ethics for Senior Financial Officers

These documents are available on the Company’s 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 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, and directors are expected to meet stock ownership guidelines;

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·       The non-management directors play an active role in succession planning, including the evaluation of the Executive Chairman and the Chief Executive Officer; 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 and its subsidiaries. The BCS is available on the Company’s website at www.cbscorporation.com and has also been distributed to the Company’s directors and employees worldwide. As part of the Company’s compliance and ethics program, directors and employees are required to certify as to compliance with the BCS and must disclose any potential conflicts of interest on an ongoing basis. The Company has also implemented an online training program on the BCS. 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;

·       CBS Corporation’s commitment to being an equal opportunity employer and to providing 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 also provides numerous avenues for employees to report violations of the BCS or any matters of concern anonymously or with attribution to the appropriate officers of the Company and/or the Audit Committee. These avenues include telephone hotlines (in the United States and for international locations), email contacts, or direct communication with the Company’s Compliance Officers. The BCS makes clear that retaliation against an employee for a report made in good faith 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 Securities and Exchange Commission (“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 participate in the Company’s $8.0 billion stock purchase program (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 13 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 and Sumner M. Redstone. All of the current members of the Board, except for Messrs. Countryman, Goldberg, Kopelson and Morris and Ms. Griego, were elected at the Company’s 2006 Annual Meeting of Stockholders. Mr. Goldberg was elected in January 2007, and Messrs. Countryman, Kopelson and Morris and Ms. Griego were elected in March 2007.

During 2006, the Board of Directors held 12 meetings and acted by unanimous written consent 2 times. Each incumbent director who was a member of the Board in 2006 attended at least 75% of the meetings of the Board and Committees on which such director served during 2006. In addition to Board and Committee meetings, directors are expected to attend the Annual Meeting, and all but one of the directors standing for election in 2006 were present at the Company’s 2006 Annual Meeting of Stockholders.

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 two 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 2006, the non-management directors met 8 times, and the independent directors met 7 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 standard’s 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 $100,000 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:

o      a company that made payments to or received payments from CBS 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;

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o      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

o      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 set forth above, the determination of whether the relationship is material or not, and therefore whether the director would be independent or not, shall be 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 March and April 2007, the Nominating and Governance Committee reviewed the independence of the 14 director nominees standing for election at the Annual Meeting to determine which nominees meet the independence standards outlined above. Based on this review by, and the recommendations of, the Nominating and Governance Committee, the Board determined that 9 of the 14 nominees are independent. The independent director nominees are Messrs. Califano, Cohen, Countryman, Gifford, Goldberg, Gordon, Morris and Frederic V. Salerno and Ms. Griego. Mr. Salerno is not a current director of the Company, but is a nominee for election as a director at the Annual Meeting.

During its review, in determining that the director nominees named above are independent, the Board considered the transactions disclosed under “Related Person Transactions” and the following types of transactions, relationships or arrangements, all of which the Board determined were immaterial to, and would not impair, each such director’s independence:

·       With respect to Mr. Califano, the contributions made by the Company and its subsidiaries in each of the previous three fiscal years to a not-for-profit organization of which Mr. Califano is an executive officer were less than the greater of $500,000 or 1% of that organization’s consolidated gross revenues for each such year.

·       With respect to Mr. Goldberg and Ms. Griego, the annual purchases made by the Company and its subsidiaries from companies of which each director is an executive officer and/or holds a significant equity interest, and sales by the Company and its subsidiaries to such companies, were less than 1% of the annual consolidated gross revenues of the applicable company during each of the previous three fiscal years.

·       With respect to Mr. Morris, the annual purchases made by the Company and its subsidiaries from the company of which he is an executive officer, including its parent and any subsidiary in a consolidated group with such company, and sales by the Company and its subsidiaries to such consolidated group, were less than 1% of the annual consolidated gross revenues of the consolidated group during each of the previous three fiscal years.

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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.

*                                         On March 26, 2007, the Board elected Mr. Countryman to succeed Mr. Gifford as Chair of the Audit Committee, effective May 1, 2007.

During 2006, the Audit Committee held 10 meetings, the Compensation Committee held 13 meetings and the Nominating and Governance Committee held 14 meetings. Information about the Committees, including their respective roles and responsibilities and charters, is set forth below.

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 six regular meetings each year, and it regularly meets separately at these meetings with the independent auditor, the Company’s General Counsel, its 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 2006, 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 of the members of the Audit Committee, at least one of the members, Mr. Gifford (Chair), qualifies as an “audit committee financial expert,” as that term is defined in the regulations promulgated under the Securities Act of 1933, as amended (the “Securities Act”). The Board has also determined that of the members of the Audit Committee as it will be constituted effective May 1, 2007, at least one of the members, Mr. Countryman (Chair, effective May 1, 2007), qualifies as an “audit committee financial expert.”

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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. Mr. Califano and Mr. Gifford (Chair) do not serve on any other public company audit committee. Mr. Gordon currently serves on one other public company audit committee. The Board has determined that Mr. Salerno will serve on the Audit Committee upon his election as a director at the Annual Meeting. Mr. Salerno currently serves on the audit committees of more than three other public companies. The Board has determined that Mr. Salerno’s service on the audit committees of such other companies 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;

·       Reviewing and approving the total compensation packages for the Executive Chairman, the Chief Executive Officer, the Company’s other executive officers, the operating managers who report directly to the Chief Executive Officer, and other persons among the Company’s most highly compensated executives, up to a total of 20 executives (other than “Talent” (as such term is commonly 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)) and its equity 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, severance arrangements, previously awarded equity-based grants and retirement benefits. In approving compensation for the senior executives, the Committee reviews the evaluations by the Executive Chairman and the Chief Executive Officer, as appropriate, of the senior executives’ respective performances. The Committee reports to the Board on the process for setting compensation for the Executive Chairman and Chief Executive Officer. The role of the Company’s executive officers in determining or recommending the amount or form of executive compensation is more fully described in “Compensation Discussion and Analysis.”

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. In 2006, the Committee delegated to the Chief Executive Officer limited authority to grant long-term incentive awards to executives who are not senior executives under the Company’s long-term management incentive program, as more fully described in “Compensation Discussion and Analysis.”  The Committee delegated this authority in order for the Company to have the ability to 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.

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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, Towers Perrin, to advise the Committee in its review of senior executive compensation. In furtherance of this review, 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 and other publicly traded U.S. companies, and provides other analysis, as more fully described in “Compensation Discussion and Analysis.”

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; and

·       Developing and recommending items for Board meeting agendas.

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 “Director Compensation.”

In accordance with 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.

2007 Director Nomination Process.   In connection with the 2007 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 retained a search firm to assist its efforts in identifying potential candidates for membership on the Board. This search firm discussed with the

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Committee the desired background and qualifications of candidates for director and matters relating to the composition and size of the Board. In addition, 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 all of the current members of the Board and Mr. Salerno 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 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. CBS directors 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.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The table below sets forth as of February 28, 2007, 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 or restricted share units (“RSUs”) if such stock options do not become exercisable or such RSUs do not vest within 60 days from February 28, 2007. 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, 2007, there were 61,256,839 shares of the Company’s Class A Common Stock outstanding and 724,184,939 shares of the Company’s Class B Common Stock outstanding.

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*                                         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, 4,314 Class A and 4,334 Class B; Califano, 2,202 Class A and 2,215 Class B; Cohen, 3,558 Class A and 3,573 Class B; Shari Redstone, 2,244 Class A and 2,248 Class B; and Salerno, 7,918 Class A and 7,946 Class B (these 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, 4,170; Califano, 4,170; Cohen, 4,170;  Gifford, 2,155; and Shari Redstone, 2,155. 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 which the indicated executive officer or director had the right to acquire within 60 days from February 28, 2007, through the exercise of stock options: Andelman, 34,379; Briskman, 262,519; Califano, 22,919; Cohen, 22,919; Gifford, 14,431; Bruce Gordon, 17,924; Susan Gordon, 17,828; Moonves, 532,233; Shari Redstone, 6,583; and Sumner Redstone, 2,276,186.

(3)                               Includes the following number of shares of the Company’s Class B Common Stock (a) owned by family members but as to which the indicated director or executive officer disclaims beneficial ownership: Califano, 927; Moonves, 1,617; 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; and (c) owned by a trust, as to which the indicated director has shared voting and investment power: Goldberg, 5,000 and Shari Redstone, 1,500.

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

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(5)                               Information (a) for Messrs. Countryman, Kopelson and Morris and Ms. Griego is as of March 27, 2007, the effective date of their election to the CBS Board of Directors; and (b) for Mr. Salerno is as of April 11, 2007.

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

(7)                               Except for 40 shares of the Company’s Class A Common Stock owned directly by Mr. Redstone, all shares of the Company’s Class A Common Stock are owned beneficially by National Amusements.

Except for 603,188 shares of the Company’s Class B Common Stock and 2,276,186 stock options to purchase shares of the Company’s Class B Common Stock (also described in footnote (2) above) owned directly by Mr. Redstone, 118 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 Mr. Redstone’s spouse, all shares of the Company’s 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.

(8)                               Includes 1,482,696 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, 2007, through the exercise of stock options.

(9)                               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.

(10)                        This information is based on a Schedule 13D dated January 3, 2006 and filed with the SEC by Gamco Investors, Inc. et al. on January 13, 2006. The Schedule 13D reported that the Gabelli entities collectively owned 7.3% of the Company’s Class A Common Stock as of January 3, 2006. The Schedule 13D reported that the Gabelli entities have investment discretion and/or voting power with respect to substantially all of such shares. There have been no filings with respect to these shares since January 2006.

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 2006 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

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. In connection with the Separation, CBS Corporation and Viacom entered into various agreements, including a separation agreement, a tax matters agreement and a transition services agreement. In accordance with the terms of the separation agreement, Viacom paid to the Company an estimated special dividend of $5.4 billion in December 2005. Pursuant to the provisions of the separation agreement, the estimated special dividend was subject to adjustment. During 2006, Viacom paid to the Company the net undisputed adjustment to the special dividend of $172 million plus net interest of $3.1 million. In January 2007, the Company and Viacom resolved the remaining disputed items with respect to the special dividend, and Viacom paid to the Company an additional $170 million, resulting in an aggregate adjustment to the special dividend of $342 million.

During 2006, the Company, through its normal course of business, was involved in transactions with companies owned by Viacom. The Company, through its Television segment, licenses it 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 is also involved in certain nonmaterial transactions with Viacom. The Company’s total revenues from these transactions were $222.8 million for the year ended December 31, 2006. In addition, the Company, through Showtime Networks and CBS Television, purchases motion picture programming from Viacom, primarily Paramount Pictures, and places advertisements with various subsidiaries of Viacom. The total purchases from these transactions were $198.7 million for the year ended December 31, 2006. As of December 31, 2006, Viacom owed the Company approximately $447.9 million, and the Company owed Viacom approximately $72.0 million in connection with the Company’s various normal course of business transactions with Viacom.

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, the Company entered into an agreement (the “NAIRI Agreement”) with National Amusements and NAIRI pursuant to which the Company agreed to buy, and National Amusements and NAIRI agreed to sell, a number of shares of the Company’s Class B Common Stock each month such that the ownership percentage of the Company’s 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 of shares of the Company’s Common Stock under its $8.0 billion stock purchase program announced in October 2004. In 2006, the Company did not make any purchases under this program, and the Company has made no purchases under this program in 2007 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.

Mr. Redstone is the indirect beneficial owner of approximately 10.7% of the common stock of WMS Industries Inc. (“WMS”) as of April 5, 2007, according to a Schedule 13D filed with the SEC on April 6, 2007, of which 9.5% is held directly by National Amusements. A subsidiary of the Company licensed to WMS the right to use certain brands for slot machines that WMS produces. In 2006, WMS paid the Company’s subsidiary an aggregate of approximately $935,600 in connection with these agreements.

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The Company believes that the terms of the licensing arrangements were no more or less favorable to its subsidiary than it would have obtained from unrelated parties. The Company may continue to enter into licensing agreements with WMS in the future.

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 2006, certain divisions of the Company supported the cause by airing public service announcements (PSAs) that promote Family Day. It is anticipated that divisions of the Company will from time to time promote Family Day. In addition, in 2006, the Company made a contribution of $50,000 to CASA in connection with its $250,000 commitment to CASA, payable in equal installments over five years, commencing with this 2006 contribution.

Julie Chen, the wife of Mr. Moonves, is an anchor on CBS Networks’ 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 who is a nominee for election as a director at the Company’s 2007 Annual Meeting, 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 7 years. She is not an executive officer of the Company or of Showtime. In 2006, she earned approximately $131,000 in compensation. Her compensation is comparable to other Showtime employees at a similar 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 2006, the Company paid GAMCO approximately $268,461 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 4,844,623 shares of the Company’s Class A Common Stock, according to a Schedule 13D filed with the SEC on January 13, 2006 by such entities, the most recent filing available, which, as of February 28, 2007, represents approximately 7.9% of the outstanding shares of the class.

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—a director, executive officer or holder of greater than 5% of the Company’s voting stock—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.

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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, for a term of one year and 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, except for Mr. Salerno. All of the current members of the Board, except for Messrs. Countryman, Goldberg, Kopelson and Morris and Ms. Griego, were elected at the Company’s 2006 Annual Meeting of Stockholders. Mr. Goldberg was elected in January 2007, and Messrs. Countryman, Kopelson and Morris and Ms. Griego were elected in March 2007. Mr. Salerno is not a current director of the Company, but is a nominee for election as a director at the Annual Meeting.

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, independence status as determined by the Board in accordance with the standards discussed under “CBS Corporation’s Board of Directors—Director Independence,” and service on the boards of directors of other publicly traded companies and investment companies.

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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 2006

The following table sets forth information concerning the compensation of the Company’s Outside Directors for 2006.

(1)                               Reflects cash amounts earned in 2006 for the annual board retainer, committee chair retainers, and meeting fees for board and committee meetings, including a committee chair retainer and meeting fees for a special litigation committee that met 4 times during 2006. For 2006, Messrs. Andelman, Califano, Cohen, Gifford and Mses. Redstone and Reese deferred these amounts under the CBS Corporation Deferred Compensation Plan for Outside Directors.

(2)                               Amounts reflect the 2006 compensation expense associated with stock-based awards (RSUs) granted in 2006 and in prior years. However, 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 No. 123 (revised 2004) “Share-Based Payment” (“SFAS 123R”). 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 Board members largely reflect differences in length of service. The expense is calculated in accordance with SFAS 123R. See “RSUs and Restricted Shares” in Note 12 to the audited 2006 consolidated financial statements on pages II-69 – II-70 in the Company’s Form 10-K for the fiscal year ended December 31, 2006, for a discussion of the assumptions made in calculating these amounts.

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The fair value of stock awards granted during 2006 on the date of grant and the outstanding stock awards held by each of the directors named in the table as of the end of fiscal year 2006 (except as otherwise noted) are as follows:

(a)                                Amounts reflect the fair value of 2,105 RSUs, on the date of grant, January 31, 2006, in accordance with SFAS 123R.

(b)                               Amounts reflect the aggregate number of stock awards outstanding as of the date of the indicated director’s departure as noted in footnote (4) below. An award of 2,105 RSUs for this director was forfeited as a result of his or her leaving the Board during 2006 prior to the vesting of the RSUs.

(3)                               Amounts reflect the 2006 compensation expense, calculated in accordance with SFAS 123R, associated with stock option awards made in 2006 and in prior years. However, 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. 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 Board members largely reflect differences in length of service. See “Stock Options” in Note 12 to the audited 2006 consolidated financial statements on pages II-66 – II-69 in the Company’s Form 10-K for the fiscal year ended December 31, 2006, for a discussion of the assumptions made in calculating these amounts.

The outstanding option awards held by each of the directors named in the table as of the end of fiscal year 2006 (except as otherwise noted), and the fair value of the option awards granted during 2006 on the date of grant using the Black-Scholes option-pricing model, are as follows:

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(a)                                Amounts reflect the fair value, in accordance with SFAS 123R, of options to purchase 12,734 shares of the Company’s Class B Common Stock granted to newly elected directors on January 3, 2006.

(b)                               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 directors on January 31, 2006.

(c)                                Awards of options to purchase 5,093 shares of the Company’s Class B Common Stock granted on January 31, 2006, to each director indicated, and options to purchase 12,734 shares of the Company’s Class B Common Stock granted on January 3, 2006, to Mses. Reese and Sprieser, were forfeited as a result of such director’s leaving the Board during 2006. Amounts reflect the aggregate number of option awards outstanding as of the date of the indicated director’s departure as noted in footnote (4) below.

(4)                               The following directors left the Board during 2006: Philippe P. Dauman, effective September 6, 2006; Ann N. Reese, effective October 30, 2006; Judith A. Sprieser, effective December 13, 2006; and Robert D. Walter, effective May 26, 2006.

(5)                               Mr. Dauman formerly served as an executive officer of Former Viacom. The present value as of December 31, 2006 of all pension benefits accrued in connection with this service is $1,529,098, which represents a change of -$12,798 from December 31, 2005. The present value is reduced, even though the monthly annuity remains the same, due to the fact that he has not yet started to receive payments and would, based on the current mortality tables, receive fewer total payments over his expected lifetime.

(6)                               Amounts for Ms. Redstone reflect the personal use of the Company aircraft. The incremental cost to the Company of the personal use of the Company’s aircraft is calculated by dividing the total variable costs (including fuel, unscheduled maintenance, landing and navigation fees, catering, flight crew trip expenses, telecommunications and supplies and miscellaneous expenses) by the total flight hours for such year and multiplying such amount by Ms. Redstone’s total number of flight hours for her personal use for the year. Fixed costs which do not change based on usage, such as pilot salaries, hangar rental and insurance, are excluded. To the extent Ms. Redstone uses the corporate aircraft of Viacom for personal use, the Company reimburses Viacom 50% of a previously agreed upon per flight hourly amount and 50% of the incremental variable costs to Viacom using the methodology described above.

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 and Morris and Mses. Griego and Redstone are currently deemed Outside Directors. Mr. Salerno, upon election to the Board at the Annual Meeting, would also be deemed an Outside Director. Messrs. Redstone and Moonves are not compensated for serving on the Board and are not eligible to participate in any director plans.

Cash Compensation

The Company pays the following cash compensation to Outside Directors:

·       A $60,000 annual retainer, paid 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

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·       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 for the upcoming calendar year. 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, calculated based on the closing market prices on the first day of the next 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 on January 15th of the following year. The value of a stock unit account is determined by reference to the average of the 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 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

Under the Director RSU Plan, Outside Directors receive an annual grant of RSUs on January 31st of each year equal to $55,000 in value based on the closing price of the Company’s Class B Common Stock on the NYSE on the date of grant. The RSUs will vest one year from the date of 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 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 the Company’s Class B Common Stock. Dividend equivalents will accrue on the RSUs (including deferred RSUs) in accordance with the plan until the RSUs are settled, at which time the dividend equivalents are payable in shares of the Company’s Class B Common Stock.

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 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.

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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 meet with management, customers, talent and others important to the Company, in order for them to experience the Company’s products, services and entertainment offerings.

Shareholder Derivative Litigation and Related Matters

Two shareholder derivative lawsuits, consolidated as In re Viacom Inc. Shareholders Derivative Litigation, were filed in July 2005 in New York State Supreme Court relating to executive compensation and alleged corporate waste. The actions name each member of Former Viacom’s Board of Directors, Messrs. Tom Freston and Leslie Moonves (each of whom were executive officers of Former Viacom), and, as a nominal defendant, Former Viacom, alleging that the 2004 compensation of Messrs. Redstone, Freston and Moonves was excessive and unwarranted and challenging the independence of certain Former Viacom directors. Mr. Redstone is the Company’s Executive Chairman of the Board of Directors and Founder, and Mr. Moonves is the Company’s President and Chief Executive Officer. Mr. Freston was formerly Viacom’s President and Chief Executive Officer. Plaintiffs seek unspecified damages from the members of the Former Viacom Board of Directors for their alleged breach of fiduciary duties, disgorgement of the 2004 compensation paid to the above-named officers of Former Viacom, equitable relief, and attorney fees and expenses. The Company moved to dismiss the complaints and oral argument was heard on February 16, 2006. On June 26, 2006, the court denied the Company’s motion to dismiss. The Company’s appeal from that decision was argued on January 5, 2007, and the Company is awaiting a decision. The trial court proceedings have been stayed pending the resolution of the Company’s appeal. On January 23, 2007, a new shareholder derivative action was filed in New York Supreme Court, which contains allegations similar to those in earlier actions. Any liabilities in this matter adverse to the Company and/or Viacom will be shared equally between the Company and Viacom. In January 2007, the parties reached an agreement in principle to settle all of these actions, which is subject to final documentation and court approval. The Company believes that the plaintiffs’ positions in these actions are without merit, and, if they are not settled, it intends to vigorously defend itself in the litigation.

The Company has received shareholder demands seeking access to books and records of the Company relating to executive compensation paid to Sumner M. Redstone, Tom Freston and Leslie Moonves, accompanied by statements that such demands are in furtherance of an investigation of possible mismanagement, self-dealing and corporate waste by directors and officers of Former Viacom. Another shareholder demand seeking access to books and records relates to the compensation of Sumner M. Redstone and Mel Karmazin (former Chief Operating Officer of Former Viacom). One of the demands also seeks access to books and records of the Company relating to Sumner M. Redstone’s acquisition of a controlling interest in Midway Games Inc. The Company intends to comply with all reasonable requests. Under the separation agreement between the Company and Viacom, liabilities in connection with executive compensation claims relating to officers of Former Viacom are shared equally by the Company and Viacom.

Compensation Committee Interlocks and Insider Participation

None of the members of the Compensation Committee during fiscal year 2006 was, or has ever been, an officer or employee of the Company, and no executive officer of the Company served on the compensation committee of any company that employed any member of the Company’s Compensation Committee.

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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, 2007, 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, 2007, 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 2007.

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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 Securities Exchange Act of 1934, as amended (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 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 opinion on

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management’s assessment of the effectiveness of the Company’s internal control over financial reporting and 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, 2006, the Company’s disclosures under “Management’s Discussion and Analysis of Results of Operations and Financial Condition” in the Company’s 2006 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, 2006.

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 Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees) 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, 2006.

Members of the Audit Committee

Charles K. Gifford, Chair
Joseph A. Califano, Jr.
Bruce S. Gordon

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SERVICES PROVIDED BY THE INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM AND FEES PAID

The following table sets forth the fees paid by the Company and its subsidiaries for services rendered by PwC for the years ended December 31, 2006 and 2005.

(1)                               In addition to the fees incurred by the Company and its subsidiaries for 2005, Viacom also incurred fees to PwC for 2005 in the amount of $12,686,478, as set forth in Viacom’s 2006 Proxy Statement. A portion of the fees incurred by the Company and Viacom in 2005 relate to the Separation, which was effective as of December 31, 2005.

(2)                               Audit-related fees in 2006 and 2005 principally related to employee benefit plan audits and certain attestation services (primarily audits required by contract).

(3)                               Tax fees in 2006 and 2005 principally related to assistance with tax appeals, tax compliance services and tax advice and tax planning services for domestic and international subsidiaries.

(4)                               All other fees in 2006 principally related to PwC reference materials, and all other fees in 2005 principally related to PwC reference materials, seminars 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 in 2006 were pre-approved by the Audit Committee. Under the Audit Committee’s pre-approval policies and procedures in effect during 2006, 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 2007, the Audit Committee adopted pre-approval policies and procedures that permit the Chair to pre-approve, and to delegate such pre-approval authority only to another Audit Committee member or members for, 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.

Setting Senior Executive Compensation

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”) are reviewed and approved by the Compensation Committee. The Committee reviews all components of the senior executives’ compensation, including base salary, annual and long-term incentives, severance arrangements, previously awarded equity-based grants and retirement benefits.

The Compensation Committee retains an independent compensation consulting firm, Towers Perrin, to advise the Committee in its review of senior executive compensation. In furtherance of this review, the consultant examines the compensation practices at companies with which the Company competes for senior executive talent, including those companies engaged in similar business activities (e.g., diversified media companies) and other publicly traded U.S. companies (general industry). Compensation arrangements for senior executives are evaluated against the most appropriate company comparisons. For certain senior executives, comparisons to the compensation of both industry-specific companies and general industry companies are considered with appropriate weighting. For some, comparisons are more appropriately made to only diversified media companies.

For 2006, for purposes of this competitive review, 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 24 publicly traded companies with certain similarities (e.g., in market capitalization, geographic region and complexity) from which the Company may source, or to which the Company may lose, executive talent. 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 Compensation Committee considers the scope of responsibility and the nature of the business for which the individual executive is responsible. As a result, the companies available and/or appropriate for comparison may differ from one senior executive to the next.

In addition to competitive data provided by the consultant in assessing the reasonableness of senior executive compensation, the Compensation Committee also considers, with management’s input, a senior executive’s skills, competencies, depth of experience, responsibilities, individual performance and impact on Company performance. The Company may provide for compensation levels above competitive

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practice to reflect the need for individual competencies that certain key senior executives bring to the organization.

The Compensation 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, variable, at-risk compensation, both short- and long-term, makes up the majority of each senior executive’s compensation.

Base Salary

The Company provides the senior executives with base salary 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, including the named executive officers, between 25% and 40% of targeted total compensation. When reviewing proposals for changes to base salary, the Compensation Committee considers the following:

·       Appropriate competitive compensation data for the position;

·       Individual performance;

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

·       Existing contractual obligations, if any.

For 2006, Mr. Moonves and Ms. Gordon received the base salary increases stipulated by their employment contracts. Mr. Briskman’s employment contract provided for the consideration of a merit increase during 2006, and the Compensation Committee considered all of the factors outlined above in approving his increase. Messrs. Redstone and Reynolds did not receive base salary increases as their employment arrangements provide for their base salaries to remain the same during the terms of their contracts. The Summary Compensation Table for Fiscal Year 2006 reflects any changes in base salary during 2006.

Annual Incentive Awards

The Company’s short-term incentive plans directly link annual bonus award levels to the Company’s financial performance. Annual bonus compensation for Messrs. Redstone, Moonves, Reynolds and Briskman and Ms. Gordon 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 Section 162(m) exception for performance-based compensation under the Code. The Senior Executive STIP provides for performance-based annual bonuses. Annual bonus compensation for other senior executives is also performance-based and is provided under the Company’s Short-Term Incentive Plan (“STIP”).

At the beginning of each fiscal year, the Compensation Committee approves performance goals and related funding levels for each of the Company’s short-term incentive plans. The performance goals are set based on budget determinations which take into account expected growth rates of the Company’s industry peers. In this process, each individual division’s budget goal is set relative to its competitive marketplace, and the overall performance goal is primarily based on an aggregation of these divisional budget goals. In approving the performance goals, the Compensation Committee’s intent is that, over time, actual performance relative to the set goals will demonstrate that the goals have been set at a level which is challenging, but achievable, and by no means assured. At the end of the year, the Compensation Committee evaluates actual performance relative to the goals set in order to determine the funding available for individual payouts. Bonuses for corporate executives are based on the Company’s performance; bonuses for division executives are based primarily on division performance. The Compensation Committee may adjust performance goals and/or the funding levels to take into account

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extraordinary events or other circumstances which have the effect of distorting the applicable performance goals.

Once the Compensation Committee determines that the performance goals have been met with respect to the Senior Executive STIP, it determines the level of award payments to the named executive officers. 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 LTMIP (as defined below) (for information on stock-based awards for 2006 performance, see the last paragraph of the “Long-Term Management Incentive Program” discussion below), or in any other form prescribed by the Committee. In setting the individual awards, the Committee does not rely exclusively on formulaic achievement of financial metrics, but instead follows a more flexible approach that takes into account all of the following factors, without specific weightings: the achievement of corporate objectives and individual performance, including contributions to the achievement of the financial goals, and the achievement of non-financial goals, such as fostering diversity in the workplace, positioning the Company for longer-term success, promoting the development of management, succession planning, legal compliance and ethical behavior.

For 2006, the performance criterion for the Senior Executive STIP was operating income before depreciation, amortization and inter-company eliminations. At its first meeting after the 2006 fiscal year end, the Compensation Committee reviewed and discussed the Company’s performance versus the 2006 performance goal that had been set under the Senior Executive STIP to determine if the goal had been met. The Compensation Committee certified that the goal had been met and, therefore, approved awards for the named executive officers under the Senior Executive STIP. In setting the amounts of these bonuses, the Committee took into account the factors discussed above and the following Company accomplishments:

·       The Company delivered an attractive return on investment to shareholders by increasing its dividend payments by 43% from $.14 to $.20 per quarter exceeding its earnings and cash flow financial targets, as well as significantly reducing potential shareholder dilution through the Voluntary Exchange Offer.

·       Senior management aggressively and effectively positioned the Company in exploiting content on emerging platforms by strategically entering into digital media partnerships in key growing markets, including digital video, online music, Internet advertising, wireless markets and enhanced distribution which created new revenue streams for the Company.

·       The Company continued to deliver high quality, broad appeal programming and content through its businesses as demonstrated by its top industry positioning in key viewer categories.

·       Senior management continued to reshape the Company’s portfolio mix through corporate restructuring, acquisitions and divestitures, including the formation of a new network, The CW, consolidation of Kingworld and CBS Paramount Television into a single CBS Television Distribution Group, and sales of small market radio stations and Paramount Parks, as well as the acquisition of CSTV Networks, Inc.

·       The Company continues to attract and retain executive and creative talent in each of its key businesses that drives the development of compelling media content.

Long-term Incentives

Long-Term Management Incentive Program

The Company’s long-term management incentive program (“LTMIP”) is designed 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, build executive ownership and ensure pay-for-performance. The LTMIP consists of awards of stock options, restricted share units (“RSUs”) and performance-based RSUs. The value to be delivered through these equity vehicles is reviewed with reference to competitive market data,

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the Company’s 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 Committee determined that, for 2006, the type/mix of equity-based vehicles used to deliver value would vary by an executive’s level in the organization. For the most senior levels of management (including all of the named executive officers), awards were comprised of an equal value of stock options and performance-based RSUs. For the next most senior levels (including individuals who hold positions that are most likely to impact the financial results of the Company), awards were comprised of a mix of performance-based RSUs and time-based RSUs (i.e., RSUs whose vesting is conditioned exclusively on continued service during a specified vesting period), with a greater emphasis on the performance-based RSUs. For all other levels of eligible management, the entire award would be delivered in time-based RSUs. The performance-based RSUs were subject to the achievement of certain pre-determined performance goals set by the Compensation Committee in early 2006 in order to vest. The Committee may in the future make adjustments to this “tiered-approach” of award types or approve different award types.

To determine the appropriate type/mix of annual equity awards for eligible executives for 2006, the Compensation Committee reviewed the LTMIP with its independent compensation consultant and senior management. Considerations were based on current market trends on the use of restricted stock and the following internal factors:

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

·       Increased accountability for senior executives:  Performance-based RSUs drive senior executives to achieve certain operational goals. If these goals are not achieved, the award is forfeited.

·       Retention of talent in both up and down markets:  Time-based RSUs provide real value and are earned over the vesting period, and unless the Committee determines otherwise, a recipient must remain an employee of the Company over this period.

For the senior executives, the actual annual grant levels are, on an individual-by-individual basis, discussed by management and the Compensation Committee and ultimately approved by the Compensation Committee. The Compensation Committee takes into consideration the competitive total compensation analysis provided by the independent compensation consultant in determining these awards and any contractual target values. On January 31, 2007, in connection with his 2006 performance evaluation, the Compensation Committee awarded to Mr. Moonves 128,328 RSUs payable in shares of the Company’s Class B Common Stock, issued pursuant to the Company’s long-term management incentive plan. The award will time-vest in three equal installments beginning on the first anniversary of the date of grant. The award will be reportable in the Company’s 2008 proxy statement in accordance with SEC rules.

Terms of LTMIP Awards

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 NYSE 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 equal to the closing price of a share of the Company’s Class B Common Stock on the NYSE on the date of grant and generally have an eight-year term. In general, vesting for stock options and RSUs occurs in equal annual installments over four years, contingent on continued employment (and in the case of performance-based RSUs, satisfaction of the performance goal).

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The Compensation Committee establishes performance goals for grants of RSUs that are performance-based. The performance goals are set based on budget considerations similar to those taken into account under the Senior Executive STIP. In approving the performance goals, the Compensation Committee’s intent is that, over time, actual performance relative to the set goals will demonstrate that the goals have been set at a level which is challenging, but achievable, and by no means assured. For 2006, the performance criterion was the achievement of a specific, pre-established level of free cash flow (defined as operating income before depreciation and amortization, less cash interest, taxes paid, working capital requirements and capital expenditures). With respect to Messrs. Moonves and Reynolds, pursuant to the terms of their respective employment contracts, the performance criterion for their RSUs is operating income before depreciation, amortization, and inter-company eliminations. If the Company has not achieved the established performance goal, the performance-based RSUs will not vest and will be canceled. Dividend equivalents accrue on the RSUs 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 RSUs vest. If the RSUs do not vest, then the dividend equivalents accrued on those RSUs are forfeited.

The date on which the Compensation Committee approves awards under the Company’s LTMIP is usually the grant date for both RSUs and stock option awards. In connection with new hires, the renewal of an employment agreement and in certain other cases, the Compensation Committee may grant an award that will become effective on a future date, with the exercise price of any stock options equal to the closing price of a share of the Company’s Class B Common Stock on the NYSE on or after 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.

In 2006, the Compensation Committee delegated to the President and Chief Executive Officer limited authority to grant long-term incentive awards to executives who are not senior executives under the LTMIP. The Compensation Committee’s delegation specified the circumstances in which the authority could be used, limited the amount that can be awarded to an individual and the total amount that can be awarded in any period, and specified the method for establishing the grant date as a future date. The delegation also requires that the President and Chief Executive Officer report to the Compensation Committee periodically on his exercise of this delegated authority. The Compensation Committee delegated this authority in order for the Company to have the ability to 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.

Other Equity-based Arrangements

Voluntary Exchange Offer (“VEO”)—In 2006, the Company’s Board of Directors and the Compensation Committee authorized the Company to proceed with an exchange offer under which eligible employees of CBS and its subsidiaries could exchange eligible options for restricted shares, or RSUs in the case of employees who were not subject to U.S. income tax, of the Company’s Class B Common Stock. The VEO was intended to accomplish a number of important corporate objectives:

·       Improve the retentive effects of the Company’s long-term incentives to ensure the continuity of its employees;

·       Reinforce the “ownership culture” and more closely align employees’ interests with those of the Company’s stockholders; and

·       Reduce the potential dilution associated with the Company’s long-term incentive plans.

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All of the named executive officers were eligible to participate in the VEO, and all of them exchanged their “out-of-the-money” options for restricted shares. Information regarding the individual VEO awards is provided in the Outstanding Equity Awards at Fiscal Year-End 2006 Table, and a description of material terms of the VEO is included in the narrative disclosure following that table.

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. Commencing in fiscal year 2007, the guidelines provide that, within a five-year time frame, these senior executives are expected to acquire and establish holdings in Company stock equal in value to a multiple of their cash base (base salary less mandatory deferrals, if applicable), depending upon their positions as follows:

All types of equity holdings, with the exception of stock options, are included in determining ownership. The Compensation Committee monitors compliance with these 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 401(k) 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 2006 table and Non-qualified Deferred Compensation in 2006 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 2006.

In certain instances, the Company provides executives, including the named executive officers, with additional benefits that the Company believes are reasonable and help the Company to attract and retain these executives, as described in footnote 6 to the “All Other Compensation” column of the Summary Compensation Table for Fiscal Year 2006.

Post-Termination Agreements

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.

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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 and RSUs) paid in one year to the named executive officers. The tax deductibility of deferred compensation paid to an executive officer when he or she is no longer subject to Section 162(m) is not subject to the limitation. Performance-based compensation (including stock options and performance-based RSUs) is also subject to an exception, 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 to ensure that this compensation will be deductible. However, the Compensation Committee may approve annual 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. Certain named executive officers receive annual awards under the Senior Executive STIP, and the senior executives 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.

Employment Contracts

The Company does not, as a matter of course, enter into written employment agreements with senior executives. However, the Company may agree to enter into an employment agreement with a senior executive when it considers it to be in the Company’s best interest. 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.

All of the named executive officers are, and were during 2006, under employment contracts with the Company. The terms and provisions of these contracts are more fully described in the narrative section following the Summary Compensation Table for Fiscal Year 2006.

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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. The Compensation Committee also has overall responsibility for evaluating and making recommendations to the Board regarding overall compensation packages, equity-based and incentive compensation plans, policies and programs of the Company.

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 program;

·       Reviewing and approving the total compensation packages for the Executive Chairman, the President and Chief Executive Officer, the Company’s other executive officers, the operating unit heads who report directly to the President and Chief Executive Officer and 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 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”). As discussed in the CD&A, the Committee, in determining performance-based compensation for the named executive officers for 2006 including the annual bonus for 2006 performance under the Senior Executive STIP, took into account, in addition to the fact that the named executive officers met the pre-established performance goal, the following Company accomplishments:

·       The Company delivered an attractive return on investment to shareholders by increasing its dividend payments by 43% from $.14 to $.20 per quarter, exceeding its earnings and cash flow financial targets, as well as significantly reducing potential shareholder dilution through the Voluntary Exchange Offer.

·       Senior management aggressively and effectively positioned the Company in exploiting content on emerging platforms by strategically entering into digital media partnerships in key growing markets, including digital video, online music, Internet advertising, wireless markets and enhanced distribution which created new revenue streams for the Company.

·       The Company continued to deliver high quality, broad appeal programming and content through its businesses as demonstrated by its top industry positioning in key viewer categories.

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·       Senior management continued to reshape the Company’s portfolio mix through corporate restructuring, acquisitions and divestitures, including the formation of a new network, The CW, consolidation of Kingworld and CBS Paramount Television into a single CBS Television Distribution Group, sales of small market radio stations and Paramount Parks, as well as the acquisition of CSTV Networks, Inc.

·       The Company continues to attract and retain executive and creative talent in each of its key businesses that drives the development of compelling media content.

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 March 1, 2007.

Members of the Compensation Committee

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

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EXECUTIVE COMPENSATION

Summary Compensation Table for Fiscal Year 2006

The following table sets forth information concerning total compensation for the fiscal year ended December 31, 2006 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 2006.

(1)                                  Salary for the named executive officers includes the following amounts deferred under the Company’s qualified and excess 401(k) plans and deferral arrangements pursuant to certain employment agreements as of December 31, 2006:

(a)                                   Includes permissible catch-up contributions.

(2)                                  Amounts reflect payments made in February 2007 for fiscal year 2006 performance in connection with the Senior Executive STIP, a shareholder-approved plan which is designed to comply with the Section 162(m) exception for performance-based compensation under the Code. Satisfaction of the performance goal set by the Compensation Committee under the Senior Executive STIP determines the maximum amount of bonus compensation that may be awarded to executive officers for the performance year. Bonus amounts awarded to each named executive officer were based on the satisfaction of the performance goal and various qualitative factors as described in “Compensation Discussion and Analysis.”

(3)                                  Amounts reflect the Company’s 2006 compensation expense, calculated in accordance with SFAS 123R, associated with stock-based awards (RSUs and/or restricted shares) granted in 2006 and in prior years. However, 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. These amounts reflect the Company’s accounting expense for

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these awards and may not correspond to the actual value recognized by the named executive officer. In connection with the VEO (as described in the narrative following the Grants of Plan-Based Awards During 2006 table), stock options to purchase shares of the Company’s Class B Common Stock were exchanged by the named executive officers for restricted shares of the Company’s Class B Common Stock having a value equal to 75% of the fair value attributed to the exchanged options. For the restricted shares issued in exchange for unvested options, compensation expense was recorded based on the grant date fair value of the exchanged options over the remaining vesting period for the options. See “RSUs and Restricted Shares” and “Voluntary Exchange Offer” in Note 12 to the audited 2006 consolidated financial statements on pages II-69 – II-70 in the Company’s Form 10-K for the fiscal year ended December 31, 2006 for further discussion of the assumptions made in calculating these amounts in column (e).

(4)                                  Amounts reflect the Company’s 2006 compensation expense associated with the stock option awards made in 2006, and in prior years calculated in accordance with SFAS 123R. However, 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. 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” in Note 12 to the audited 2006 consolidated financial statements on pages II-66 – II-69 in the Company’s Form 10-K for the fiscal year ended December 31, 2006 for a discussion of the assumptions made in calculating these amounts.

(5)                                  None of the non-qualified deferred compensation plans provide for above-market interest or preferential earnings. See “Description of Non-qualified Deferred Compensation” for more information on earnings on amounts deferred under these plans. Therefore, column (h) only includes the aggregate change in the actuarial present value of the named executive officer’s accumulated benefit under all defined benefit plans (including supplemental plans) from December 31, 2005 through December 31, 2006. Information about each plan is included in the narrative following the Pension Benefits in 2006 table. For Mr. Briskman, the amount includes distributions he received in 2006 under pension plans pursuant to which he has an accumulated benefit, but is not currently accruing benefits. See “Pension Benefits in 2006” for further information on these plans.

(6)                                  The following table describes each component of the All Other Compensation column: