Shareholders in the Des Moines Register and Tribune Co. have succeeded in tabling for at least six months a proposal by the company's management to grant stock options to nearly two dozen top executives of the financially ailing corporation.
The action was the latest in a series of controversial developments at the company, which is mostly owned and managed by descendants of Gardner Cowles Sr., who built the Register and Tribune into one of the Midwest's biggest newspaper dynasties. The Cowles family, through separate but related companies, also owns the Minneapolis Star and Tribune.
Under the stock-option proposal, options to buy Register and Tribune stock would be given as incentives to the company executives, including chairman David Kruidenier (who would have been granted an option to buy 3,000 shares), President Michael Gartner (2,400 shares) and Publisher Gary Gerlach (1,800 shares). The company's stock sells for about $19 a share, but could be worth many times more if the Register and Tribune were ever bought by another company.
The stock option plan, which was to have been brought to a vote at the company's annual meeting Monday, was put on a back burner for at least six months after several shareholders raised objections.
The most significant voice in the argument to delay the vote came from John Cowles Jr., grandson of the companny's patriarch. Cowles was deposed earlier this year as head of the Minneapolis company and replaced by Kruidenier, his cousin, who is also chairman of the Des Moines company. Cowles still sits on the boards of both companies.
Cowles, in a telephone interview yesterday, said that while he favors the plan, he suggested the delay so that objections by a number of dissident shareholders can be considered.
"I think there is, whether justified or not, a significant degree of skepticism on the part of a significant number of shareholders toward the company's management," Cowles said. "Some type of restraint might expedite the healing process."
Dissident shareholders have criticized the company's management in the wake of declining profits--including an $816,000 loss in the most recent fiscal year--a series of financially unsuccessful acquisitions, and what the critics say are several questionable management decisions. Two stockholder suits are pending against the company's management.
Cowles said the decision to delay the action was made in a meeting of the five trustees of a voting trust that controls 51 percent of the stock in the Register and Tribune Co. Kruidenier and Gartner, both trustees, disqualified themselves because of their personal interest in the decision, he said. Two other trustees voted in favor, but because the rules of the trust require the votes of three trustees for approval, his objection was enough to block the action.