Comcast Corp. shareholders yesterday rejected proposals from labor groups that would have placed new limits on chief executive Brian L. Roberts's influence over the cable television firm that his family has controlled for 40 years.
Roberts owns supervoting shares that account for 33.3 percent of the company's corporate votes even though he and his family own less than 1 percent of the company's stock. Comcast was founded by Roberts's father, Ralph Roberts, in 1963.
Despite a strong financial performance, corporate governance groups have been highly critical of the cable company's structure largely because of the ability of Roberts to control the company through supervoting shares.
Institutional Shareholders Services, a firm which provides advice to investors on corporate governance issues, ranks Comcast's corporate governance among the bottom 10 percent of the companies listed in the Standard & Poor's 500 index.
Sixty-nine percent of shareholders rejected a Communications Workers of America proposal that would have changed the voting structure, effectively eliminating the dual stock class structure that allows Roberts to control the company. Under the labor union's proposal, each share of Comcast would have one vote on any corporate matter.
The CWA has been putting pressure on Comcast to alter its corporate structure for the past three years, dating back to the cable company's merger with AT&T's cable unit in 2002. In contrast with most telecommunications companies, Comcast workers are generally not unionized.
Shareholders also rejected a proposal sponsored by the AFL-CIO that would have required that two-thirds of Comcast's board be independent. The proposal was aimed at the company's current bylaws that require a vote of at least nine of the company's 12 board members to oust Roberts as chief executive. About 75 percent of shareholders voted against the proposal.
ISS recommended to its clients that they vote in favor of both the CWA and AFL-CIO proposals.
Comcast Executive Vice President David L. Cohen defended the current voting structure and said it has not weakened oversight. He also said the system benefited the company in other ways.
"It has been helpful in preserving a stability of management that has inured to the benefit of shareholders," Cohen said.
The shareholder vote came on the same day that the Philadelphia-based company announced that Roberts will assume the additional title of chairman, a move that runs counter to a trend among large corporations that have recently separated the roles of chairman and chief executive.
Roberts takes over the chairman title from C. Michael Armstrong, who stepped down from the position one year earlier than originally anticipated. Armstrong, the former chief executive of AT&T Corp., joined the board after Comcast's merger with the long-distance giant's cable unit in 2002. Armstrong said yesterday that he was leaving to spend more time with his family.
The shareholders meeting was the first since Comcast dropped its $56 billion bid for Walt Disney Co. Some investors worried that Comcast had pursued the entertainment giant because it had lost confidence in the future of the cable industry.
"Nothing could be further from the truth," Roberts told investors during the shareholder's meeting. He pointed to the company's growth in high-speed Internet and popularity of its premium cable television packages. Roberts also said the company plans to begin rolling out a new Internet-based telephone service during the next two years.