The announcement on Sunday evening ends his 20-year tenure atop one of the country's most important media empires.
Six additional women have come forward to accuse Moonves of harassment or assault, with the claims stretching back decades, the New Yorker reported on Sunday.
At the moment, CBS chief operating officer Joe Ianniello has been named interim CEO of the company with the replacement of six new board members being enacted as well.
The latest New Yorker story by Pulitzer Prize victor Ronan Farrow includes allegations that Moonves, 68, forced oral sex, exposed himself, committed violent acts and derailed careers in incidents that occurred from the 1980s to the early 2000s.
The money will be subtracted from from whatever severance is due Moonves - who has held the titles of chairman, president and CEO - after an external investigation into misconduct allegations from a previous New Yorker report reveals its findings.
The Redstones, who wanted to merge CBS with the Viacom group - which they also control - sued CBS, saying the network had attempted to dilute their voting rights to a 20 per cent share. "And this I know is true to the core of my being: Women can not achieve equality in the workplace or society until there is a reckoning and a taking of responsibility".
When reached for comment by Business Insider, CBS provided the following statement: "CBS takes these allegations very seriously".
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Five current independent directors and one National Amusement-affiliated director have stepped down from the board of directors and 6 new directors have been elected, the company said.
In a letter to the New Yorker, Moonves called the accusations untrue and claimed three of the encounters were consensual, though he didn't specify which. The CBS board unanimously rescinded the dividend it previously approved which sought to dilute the Redstone family's control over the company.
Moonves had almost $70 million in earnings a year ago, and CBS has held the top spot in network ratings for a decade under his leadership.
Among the new accusations made to The New Yorker is one by veteran television executive Phyllis Golden-Gottlieb, who worked with Moonves in the late 1980s.
Moonves for his part denies the allegations, according to Fox News.
Shortly after his first New Yorker story was published, a source familiar with the situation told me that Moonves was the anonymous subject of a recent article published this past May by Dr. Anne Peters in the Annals of Internal Medicine, under the headline "A Physician's Place in the #MeToo Movement". They also said Moonves tried to sabotage their careers when they rejected his advances.
"This is a moment that demands a frank and honest assessment about where we stand and more generally the safety of women", O'Donnell said. Moonves has since remained in his position with CBS.