N.Y. Times Investors Urged to Protest Board

Withhold Votes for Directors, Adviser Says

An influential advisory group for institutional investors recommended yesterday that shareholders of the New York Times Co. withhold their votes for four of the company's directors at this month's annual meeting, in a sign of growing shareholder unrest with company management.

The advice is the latest pressure brought against the Times Co. for its poor stock performance in recent years. The Times Co., like The Washington Post Co., is a public company that has two classes of stock, one with far greater voting power than the other.

Such an arrangement allows a few individuals, mainly the Times Co.'s Ochs-Sulzberger families, to control the company despite holding only a small portion of the overall shares, called Class B. Class A stock is available for public purchase; shareholders elect four directors. Class B stockholders elect the board's nine other directors, who include Times Co. chairman and Times publisher Arthur O. Sulzberger Jr. and Times Co. President Janet L. Robinson.

Institutional Shareholder Services of Rockville, a leading shareholder-advisory firm that provides corporate-governance services to institutional investors, said it no longer thinks the two-class stock structure works for the Times Co. ISS's report urges Times Co. shareholders to withhold their votes for Class A directors William E. Kennard, James M. Kilts, Raul E. Cesan and Doreen A. Toben at the company's annual meeting April 24. The effort is largely symbolic; the directors are unlikely to be unseated.

"While we do not advocate removal of [the four] directors, we believe that a strong message to effect change is necessary," the ISS report says. "The company should take further steps to introduce more accountability to its board, such as separating the positions of chairman and publisher" and establishing board committees composed only of Class A directors.

ISS noted that the return on investment to Times Co. shareholders over five years was down 9.3 percent. The Standard & Poor's 500-stock index, by comparison, was up 6.2 percent.

The ISS report followed similar efforts by other shareholders to press for change at the Times Co. For more than a year, Morgan Stanley fund manager Hassan Elmasry has called for the abolition of the Times Co.'s dual-class stock structure, saying Sulzberger and other directors have mismanaged the company. Morgan Stanley holds 7.6 percent of the Times Co.'s shares. Elmasry also has called for stripping Sulzberger of one of his titles.

In 2004, ISS recommended that shareholders of the Walt Disney Co. withhold their votes for Chairman Michael D. Eisner, who announced his resignation six months after 43 percent of Disney shareholders followed ISS's advice at that year's annual meeting.

"We are disappointed that ISS has recommended a withhold vote for our Class A directors," Times Co. spokeswoman Catherine J. Mathis said in a statement. "We note, however, that they did not advocate their removal, which we see as recognition of the high quality of our board members."