By: Mark Fitzgerald
The New York Times Co. avoided a proxy war by giving two seats on its board of directors to big minority shareholder Harbinger Capital Partners — but its slate of directors faces a new challenge at its annual meeting April 22.
RiskMetric’s influential Institutional Shareholder Services (ISS) proxy advisor unit is recommending stockholders vote “withheld” on three current board members up for reelection.reelection: Thomas Middelhoff, running as a Class A director; and Ellen Marram and David Liddle, running as Class B directors.
(Under the Times dual class system, both shares are freely traded, but the super-voting Class B shares, owned mostly by Sulzberger and Ochs family members, select 10 of the newly expanding 15 board seats.)
The last time ISS recommended withholding votes for management candidates, 42% of shares were voted that way.
All three candidates that ISS are recommending a “withheld” vote are on the company’s compensation committee.
“In light of the company’s continuous poor stock performance, ISS believes that there is disconnect between pay and performance,” ISS said in its report.
Separately, another independent proxy advisory firm, Proxy Governance, recommended a vote for all the Times candidates.
“Proxy Governance believes that the board is properly discharging its oversight role and adequately policing itself,” the firm said in a 10-page report. It said the company’s performance was “in line” with peer newspaper companies, and that while CEO Janet Robinson’s compensation, on a three-year average, was 4% higher than CEO compensation at comparable newspaper companies, overall “compensation appears reasonable given its financial performance relative to peers.”
If a substantial number of shareholders heed ISS’s advice, this will be the third consecutive year in which the Times Co. has faced substantial dissent from stakeholders.
Last year, ISS recommended shareholders withhold votes from Class A directors, saying it was concerned about the “lack of board response to shareholder concerns” — and 42% of shares were withheld.
ISS notes in its report that approximately 54% of share not controlled by the Sulzberger family withheld votes from the Class A directors.
Earlier this year, Harbinger Capital Partners and Firebrand Investments — whose Class A stake of 19.36% is now more than the Sulzberger’s — put up a slate of four candidates in opposition to the Times nominees. On March 17, the Times agreed to add two Harbinger representatives to the board, while expanding it from 13 to 15 members, and Harbinger agreed to stop the proxy fight.