By: E&P Staff and The Associated Press
Shareholders delivered another rebuke to the New York Times Co. Tuesday, withholding as much as 42 percent of the vote for directors at the company’s annual meeting in New York City.
While the vote is largely symbolic since the Sulzberger family remains in control of the company, the significant withhold vote reflects growing impatience among investors about the company’s lagging stock price. The size of the withhold vote was even larger than last year, when 30 percent of investors withheld their votes for directors elected by holders of the company’s publicly traded shares.
In a statement released after the shareholder meeting, Arthur Sulzberger Jr., chairman of the company, said:
“We understand shareholder frustration as reflected in today’s vote. At the same time, many shareholders have expressed to us that we are pursuing the key actions needed to improve performance and returns to shareholders. We conduct regular reviews of our strategic plan and are moving ahead with appropriate urgency. Accordingly, we have asked our highly qualified, independent directors to stay on the Board and to continue working with us to build long term value for our shareholders. Institutional Shareholder Services, a proxy governance firm, said in a recent report, that it did not advocate removal of the Class A nominees and we are very pleased that our directors have agreed to remain on the Board.”
He continued, “Management and the full Board will continue to listen carefully to the issues raised by our shareholders. That said, the Ochs-Sulzberger family remains firmly and unanimously committed to the dual class share structure that has been in place since before the Company went public in 1969. With approximately 19 percent of the Company’s Class A shares and 89% of its Class B shares, our family’s interests are very much aligned with other shareholders in seeing the Company’s performance improve.”
Four directors elected by Class A shareholders received votes equalling at least 58 percent of the shares represented, indicating a withhold vote of as much as 42 percent. The company did not provide a breakdown of votes by director.
A statement from Morgan Stanly Investment Management said about the meeting: ?Today’s withhold vote by Class A shareholders is a clear mandate for meaningful change at The New York Times Company. Several of the Company’s long-standing institutional shareholders, including Morgan Stanley Investment Management, have made specific recommendations to the Board on how the Company can improve its governance, management, and capital allocation.”
We are disappointed that the Company has not yet moved to implement these recommendations. The withhold vote this year is significantly higher than last year and is an emphatic call for accountability. A clear majority of the Company’s public shareholders, over 50 percent of the non-family Class A shareholders, are calling on the Board to take prompt action.?
The remaining nine directors easily won election. Only holders of the Times’ Class B shares, which are controlled by the Ochs-Sulzberger family, vote for those directors.
Earlier, The New York Times Co. released Sulzberger’s opening remarks at the company’s annual shareholder meeting. Below is some of the text.
Our embrace of change attests to the willingness of management and this Board to confront our challenges and welcome constructive input from inside and outside the organization. This frank and open approach to our strategic direction is necessary as we introduce new products, re-engineer our operations and management processes, both acquire and sell businesses and re-evaluate investments based on their strategic fit and return to shareholders.
Our stock performance has led to a number of issues being raised by unhappy investors. We have responded to their criticisms in the past, but let me address them again now.
We can begin with the suggestion that the Company should give up its two classes of stock.
The dual class stock structure is hardly unique to The New York Times Company. It is not an accident that what are generally agreed to be the three best newspapers in the United States -The Times, The Wall Street Journal and The Washington Post – all have this capital structure in common.
It also exists outside the newspaper industry. More than 300 companies today trade using a dual class structure. Indeed, there are a number of companies going public today using this structure from Clearwire, which is controlled by Craig McCaw, to Google.
The dual class structure was adopted to protect the long-term stability and mission of the enterprise, while also enabling it to adapt to the kinds of changes we confront today. This stability has resulted in a very strong stock price in the past. As you will hear today, we are taking measures to ensure it will do so again.
Within the dual class structure we have established a strong, modern governance system with a Board of Directors, all of whose members consider themselves accountable to all of our shareholders.
One critical decision not open to all our shareholders is the ultimate determination of our Company’s capital structure. Only the trustees of the Ochs/Sulzberger family have the ability to change that and we are unanimous in our commitment to retain it.
I also remind all of our shareholders that anyone who purchased New York Times Company stock did so with full knowledge and understanding of how the Company was structured. We are grateful to all of our shareholders who did so believing, as we do, that this structure is necessary for the stability and integrity of a journalistic enterprise.”