PrintMarch 14, 2007
NYT board of directors hears critics
The Wall Street Journal reports ($link):
In a sign that the New York Times Co. may be trying to appease investors who have criticized it, the newspaper publisher invited Morgan Stanley money manager Hassan Elmasry and another large shareholder, T. Rowe Price Group Inc., to make presentations to its board of directors late last month. [....]
[Mr. Elmasry] has called for the company to dismantle its dual-class share structure, which gives the family control, and split the role of its chairman and publisher. Both positions are held by Arthur Sulzberger Jr.
As we have emphasized for years, the two class shareholding system at the New York Times Company keeps the Sulzberger-Ochs family in control of the board of directors with much less than a majority of the equity. Nevertheless, the board obviously found it prudent to hear the presentations.
After Mr. Elmasry's proposals were excluded from the company's proxy statement to be released Wednesday, Mr. Elmasry wrote a letter to the company's four Class A directors, dated Jan. 22, expressing his disappointment. [....]"By excluding the proposals from the proxy, the Company has left the Class A shareholders with limited avenues for expressing their dissatisfaction with the poor performance of the managers of their business," he said in the letter
Members of the board who are Class B directors [elected by the family trust] who simultaneously serve as trustees of the family trust might be concerned about possible future challenges to their ability to serve the two potentially conflicting interests, a factor mentioned on these pages by Rosslyn Smith. At a minimum, stiff-arming critics looks bad when the company's performance is so poor, even compared to other firms in the troubled newspaper industry.
The New York Times Company is still a long way from being subject to market discipline. But it is an encouraging sign that the company's directors are willing to listen to pointed critics representing major shareholders. About time, too. The NYT itself often calls for negotiations with our enemies. It shoudl follow its own advice with regard to its own governance.
