Nat Worden
Shareholder advisory firm Institutional Shareholder Services recommended that New York Times (NYT Quote - Cramer on NYT - Stock Picks) investors withhold votes for four directors at the publishing giant, citing complaints made public by Morgan Stanley fund manager Hassan Elmasry.
The ISS report, released Thursday, provides ammunition for Elmasry, whose fund holds a 7% stake in the publisher. Elmasry has launched a publicity campaign in favor of dislodging the company's dual-class share structure, which preserves control in the hands of the Sulzberger family. The report recommends separating New York Times' chairman and publisher roles, which are both held by Arthur Sulzberger Jr. He beneficially owns about 90% of the company's Class B stock. "As chairman, Mr. Sulzberger presides over the board of directors; as publisher, he presides over the company's core business," said ISS. "Therefore, he is ultimately accountable to himself, both as chairman and as a Class B shareholder. Neither he nor other members of the management team is accountable to the company's Class A shareowners in any meaningful way." While Class A shareholders of New York Times make up the vast majority of the company's shareholder base, they can elect only four of the company's directors. The remaining nine board members are elected by holders of the Class B shares, which are mostly owned by the Sulzbergers. "Shareholders are left with few avenues through which to voice their opinion other than by withholding from Class A directors," ISS said in its report. "While we do not advocate removal of the Class A directors, we believe that a strong message to effect change is necessary."
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