NYTCO Bows To Pressure, Adds Board Members

The New York Times Company has bowed to pressure, adding two new members to its board of directors and bringing the total to 15, as part of a compromise with Harbinger Capital and Firebrand partners. The company will add one new member elected by its regular "Class A" shares (for a total of five) and one elected by the "Class B" shares owned by the Ochs-Sulzberger family (for a total of 10).

This arrangement will allow Firebrand founder Scott Galloway and James Kohlberg, another Harbinger nominee, to stand for election to the board of directors at the annual shareholder meeting on April 22. In return, Galloway and Kohlberg are dropping their original four-person slate for the election, which included two other nominees in addition to themselves.

Previously, "Class A" board members have usually been nominated--or at least approved--by the Ochs-Sulzbergers. Along with Galloway and Kohlberg, this year's Class A nominees include Robert E. Denham, Thomas Middelhoff and Doreen A. Toben. William E. Kennard, who was previously a "Class A" candidate, will now stand for election by the "Class B" shareholders.



Harbinger and Firebrand mounted their campaign to elect four new board members in February, citing growing criticism from shareholders that the company isn't moving fast enough to adapt to the changing digital media landscape.

Subsequently, they raised their stake in the company to 19%, promising to pump up new digital initiatives if their four-person slate was allowed to join the board.

Seeking to placate dissatisfied shareholders at the Bear Stearns conference in New York last week, NYTCO CEO Janet Robinson promised to redouble efforts to expand its online businesses over the next year.

While preserving the Ochs-Suzlbergers' control of the company, the agreement represents a significant concession by the family, which in the past has refused to change the board structure--probably fearing dissident shareholders would view this as a precedent for even more extensive changes.

The company's dual-class share structure became the topic of a public dispute with Hassan Elmasry, a London-based portfolio manager with Morgan Stanley, who said the Ochs-Sulzberger's grip on the company kept its management from adapting quickly to the changing media landscape. The bitter conflict eventually led the family to withdraw over $100 million from Morgan Stanley's management, and Morgan Stanley to dump its Class NYTCO shares, representing a roughly 7.2% stake in the company.

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