(Adds employment agreement information)

By Kenneth Li and Vibhuti Sharma

Aug 2 (Reuters) - Viacom Inc and CBS Corp have worked out a management structure in which Viacom Chief Executive Officer Robert Bakish would lead the combined company if the two entities reach a deal to merge, sources familiar with the matter said.

The working agreement removes a major roadblock in talks to recombine the companies, both controlled by National Amusements Inc, which is owned by Shari Redstone and her father Sumner Redstone. Talks are continuing and they still face significant hurdles, such as the exchange ratio in the all-stock deal, one source said.

The Wall Street Journal first reported on the agreement on Friday.

A deal could be announced as early as Thursday when both companies are set to release quarterly financial reports, the source said.

Joe Ianniello, interim CEO of CBS, would oversee all CBS-branded assets, which will not include the Showtime cable network or book publisher Simon & Schuster, one source said. According to his employment contract, Ianniello is entitled to be paid $70 million if he is not named CEO of CBS.

CBS CFO Christina Spade would take over as chief financial officer of the combined company.

Wade Davis, CFO of Viacom, whose role is more expansive than the title suggests, could leave the combined company as the company would likely eliminate the Chief Operating Officer role.

CBS former CEO Leslie Moonves, who stepped down last year following sexual harassment allegations, had been locked in a battle over control of CBS.

Shari Redstone has proposed merging CBS with media company Viacom twice since 2016.

CBS and Viacom declined to comment. (https://on.wsj.com/31g7djI) (Reporting by Kenneth Li in New York and Vibhuti Sharma in Bengaluru; editing by Shinjini Ganguli and Cynthia Osterman)