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New York Times expands board to end proxy fight
NEW YORK |
NEW YORK (Reuters) - New York Times Co said on Monday that it will add two seats to its board of directors and give them to a group of dissident investors to avert a proxy battle.
The Times, under a deal with hedge fund Harbinger Capital Partners and investment firm Firebrand Partners, will raise the number of board seats to 15 from 13.
Harbinger and Firebrand have spent more than $500 million to amass a 19 percent stake in the Times since late December, making them the company's largest public shareholder.
They had proposed four nominees to the board and threatened to take their slate directly to shareholders at the company's annual meeting on April 22, creating the possibility that all four could get elected.
"Our nominees look forward to working with the other directors and management to build and deliver value for all shareholders," Harbinger Senior Managing Director Philip Falcone said in a statement.
The new slate will include Firebrand founder Scott Galloway and James Kohlberg, chairman of private equity company Kohlberg & Co. They were two of the four nominees that Harbinger had originally proposed.
The Times agreed to the dissident group's nominees to fend off a time-consuming and costly proxy fight, according to sources familiar with the matter.
"There's always real benefit to not taking it to the kind of death match that is the annual meeting," said one of the sources.
It is not clear what power the nominees would have because the Times is majority-controlled by the Ochs-Sulzberger family.
But the agreement signals the Times is not immune to outside influence despite a dual-class share structure designed to safeguard the integrity and longevity of its core property, The New York Times newspaper.
Times Chairman Arthur Sulzberger Jr. said the company welcomed the "perspectives and insights" of the new nominees.
Galloway and Kohlberg will be among five nominees to be voted on by ordinary shareholders; the Harbinger-Firebrand group has agreed to vote for the slate. The other 10 nominees will be elected through a trust held by the Ochs-Sulzberger family, which has controlled the Times for more than a century.
The Times, which has picked its own board nominees since going public in 1967, resisted the group at first.
The company did not say why it changed its position, but it has come under increasing pressure by shareholders to pay more attention to non-family investors, especially as its publishing business has suffered and its stock price has fallen.
Publicly traded Times shares have lost nearly a third of their value in the past two years.
The Harbinger-Firebrand group was urging the Times to consider selling a number of its properties, including its smaller local newspapers, and move more aggressively into digital properties.
A source close to Firebrand said the nominees want to "listen and understand the thinking, and ask questions" once they get on the board, rather than immediately demand changes.
A Harbinger-Firebrand spokesman declined comment.
New York Times shares were up 45 cents, or 2.4 percent, to $18.95 on the New York Stock Exchange in afternoon trading. Shares had risen as high as $19.08 earlier on the news.
(Additional reporting by Michele Gershberg)
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