The candidates would take up the four board positions that are elected by holders of NYTCO regular "A" shares. With super-voting "B" shares, the Ochs-Sulzberger family appoints the other nine, thus retaining control of the company. None of the candidates come from a newspaper company.
In their letter to chairman Arthur Sulzberger Jr. and CEO Janet Robinson, Harbinger Capital Partners and its partner Firebrand Partners said they were submitting the proposal in a spirit of "cooperation with the Board and management that moves beyond the old dichotomy of "hostile" and "friendly."
Harbinger chief investment officer Scott Galloway added that "we are not pursuing a change in the dual class shareholder structure." Altogether, the two companies own 4.9% of NYTCO stock.
Nonetheless, the plan is a public slap at the management of the company, as the board "has not been effective in inspiring the requisite bold action this media environment demands." One area where it must move more quickly is the "redeployment of capital" to acquire more digital assets, including content and distribution platforms.
In addition to himself, Galloway said he is nominating three other executives to sit on the NYTCO board. They include Allen Morgan, managing director of the Mayfield Fund, a venture-capital firm, who specializes in Internet media; Gregory Shove, formerly with AOL, now Firebrand; and James Kohlberg, who co-founded the private-equity firm Kohlberg & Company.
While not on Harbinger's agenda, the NYTCO's two-tiered voting structure came under fire over the last couple years from investors who say it isn't responsive to shareholder concerns--including the need to aggressively embrace digital media.
The most prominent critic, Hassan Elmasry, a London-based fund manager with Morgan Stanley, organized boycotts of previous shareholder votes as a symbolic protest against the dual-class voting system. These had little effect, and Elmasry finally dumped Morgan Stanley's 7.2% share in October of last year.
Elmasry's persistent criticism drove the Ochs-Sulzbergers to tit-for-tat retribution in February 2007, when the family withdrew their personal investments from Morgan Stanley's management. The move was said to involve assets worth hundreds of millions.