New York Times Co. to Accept Dissident Investors as Directors
Tuesday, March 18, 2008
The New York Times Co. capitulated to a shareholder insurrection and will support two dissident director nominees for election to its board next month, a first for outsiders at the family-run company.
Scott Galloway, the founder of Firebrand Partners backed by money from the hedge fund Harbinger Capital Partners, has been buying shares of Times Co. stock since late last year. He threatened a proxy fight to seat four directors on the company's board at its annual shareholders meeting on April 22.
Yesterday, the Times Co. went halfway to meet Galloway, saying it would recommend Galloway and private-equity executive James Kohlberg for election, expanding its board from 13 to 15 seats. With company backing and without rivals put forth by other shareholders, their election to the board is virtually certain.
Galloway and Harbinger had pushed for the four directors to replace four sitting Times Co. directors. But they agreed to call off their proxy fight in exchange for gaining two seats on the struggling media company's board.
It is the first time since the Times Co. began trading publicly in 1967 that it has nominated directors put up by family outsiders.
"We are pleased to have reached an agreement with Harbinger and Firebrand," Times Co. chairman Arthur Sulzberger Jr. said in a statement. "Both the board and management welcome the perspectives and insights of our proposed new directors."
The Times Co. would not comment beyond the statement.
Meetings between Galloway and Sulzberger were at times awkward but remained cordial, said a source close to the situation who spoke on condition of anonymity because the talks were private.
During negotiations, it became clear the Times Co. was unwilling to take four outside directors, according to two other sources, who also spoke on condition of anonymity.
But Firebrand/Harbinger's large stake in the company -- it is the Times Co.'s largest non-family shareholder, with 19.04 percent of outstanding stock -- made the dissidents' position strong. The choices of Galloway and Kohlberg were reached by mutual agreement, the sources said.
Taking the proxy fight to next month's Times Co. meeting would have resulted in "collateral damage and civilian injuries," one of the sources said.
Left out and disappointed were Firebrand/Harbinger board nominees Gregory Shove, a Firebrand adviser and former AOL executive, and Allen Morgan, a Mayfield Fund managing director.