Shareholders chide New York Times
Unhappy New York Times Co. investors ratcheted up their dissent Tuesday, with 42% of shareholders at the company’s annual meeting withholding their proxy votes from the Times-nominated slate of directors.
The ostensible target of the protest vote was the two-tier stock system that seals the Ochs-Sulzberger family’s control of the media company, but the deeper cause of shareholder unrest is a stock slump that has cut the value of the shares by more than half over the last five years.
The “withhold” campaign, originally launched by Morgan Stanley money manager Hassan Elmasry, escalated from a year earlier when 30% of shareholders withheld their votes. Elmasry, whose portfolio holds a 7% stake in New York Times Co., has said the two-tier structure, under which family members elect nine of the 13 board members, makes management deaf to shareholder concerns.
“We understand shareholder frustration as reflected in today’s vote,” Chairman and Publisher Arthur O. Sulzberger Jr. said in a statement released after the 90-minute meeting in Times Square’s New Amsterdam Theater. “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.”
Sulzberger and Chief Executive Janet Robinson spent about 45 minutes before the vote outlining the company’s plans for navigating the transition from an ink-and-paper world to one in which the news and the advertising that supports it will increasingly be delivered online.
Without naming Elmasry, Sulzberger rebutted his criticism that the company overspent in its $410-million acquisition of the Internet advice site About.com and in its $500-million investment in its new headquarters tower. About.com’s revenue rose 50% last year and its operating profit margin expanded to 38% from around 27% when New York Times Co. bought it in 2005, Sulzberger said. “As a result,” he said, “we believe About.com is now worth at least twice what we paid for it.”
He said the new headquarters, which Times staffers will begin to occupy in June, is now probably worth $1 billion.
Sulzberger and Robinson also detailed ways that the company had responded to shareholder concerns, citing a 31% hike in the dividend, the sales of a number of businesses, the consolidation of printing operations and a forthcoming move to save newsprint costs by cutting the width of the paper to 12 inches from 13 1/2 inches.
But Sulzberger didn’t bend on the issue of the stock structure, saying that it can be changed only by his family, “and we are unanimous in our commitment to retain it.” He said that his grandfather, Arthur H. Sulzberger, created the system “specifically to get us through times like this, times of great transition and potential short-term disruptions in valuation.”
The company announced that the four directors elected by the publicly traded Class A shares won at least 71.7 million votes each, or 58% of the 124.3 million shares represented at the meeting. The remainder was withheld.
The nine directors elected by the family-controlled Class B shares each received 766,098 of the votes cast.
The Ochs-Sulzberger clan holds about 19% of Class A shares and 89% of Class B.
Class A shares slid 21 cents to $23.77 on Tuesday.
