Yesterday provided a serious reality check for Arthur Ochs Sulzberger, Jr., chairman of The New York Times Company. In what could only be an act of protest against the junior Sulzberger’s leadership, public investors controlling more than a quarter of the shares decided to just throw their hands up in the air by refusing to vote for the four out of thirteen directors of the company’s board they have the right to choose.
The system is a complex two-tiered one that allows the Sulzbergers to maintain control. Four out of thirteen directors are chosen by the public investors, while a Class B of investors (90 percent of which is the family) chooses the remaining nine.
According to reports today, only Morgan Stanley, the fourth largest of the company’s investors, with 5.8 percent of the stock, was willing to reveal its reasons for withholding the vote. They want to do away with this system, which allows the family ultimate say. Unspoken, but clearly implied, is that it is such a system that has forced these investors to sit idly by while Sulzberger has made a series of management and investment blunders that, by many accounts, might have cost him his place as chairman in a more normal set up (see: Eisner, Michael). Not to mention the fact that the Times has fared worse than most other newspapers in the recent downturn — 47 percent down over the last two years versus the industry average of 35.8.
So how was this rebellion covered by the major rags? Could the Times’ own reporter, Judas-like, kiss Sulzberger, singling him out as the most probable source of this share-holder vote of confidence. The short answer: No, she couldn’t.
Almost unbelievably, the Times’ article didn’t even mention the name Arthur Ochs Sulzberger, Jr. Not even once. (And shockingly, when it does mention the Sulzberger family, it misspells their name, twice referring to them as “Ochs-Sulzburger.”). The piece goes out of its way to emphasize that the vote withdrawal had to do not with any desire on Morgan Stanley’s part to have the company sold, but rather, “to eliminate the company’s two classes of stock…to force the board to improve management and the share performance.” But it fails to follow up on this idea by exploring who should be held accountable for problems at the company.
Now compare this with the Washington Post’s story. All you have to do is read a couple paragraphs down before arriving at this: “Company Chairman Arthur Ochs Sulzberger Jr. has drawn increasing criticism for building a new headquarters and for investing in such things as the Boston Red Sox and the Internet company About.com. At the same time, the flagship newspaper has endured a series of controversies over its failure to stop junior reporter Jayson Blair from plagiarizing and for its discredited coverage of Iraq’s weapons capabilities…The company also has been criticized for pay increases it gave top executives while its stock performance has been lackluster. Sulzberger received cash and stock compensation of more than $2.4 million, plus options valued at $765,000, in 2005. The $3.2 million total was an increase of more than 14 percent over 2004.”
The Post, though, doesn’t engage in pure schadenfreude. It places the Sulzberger’s woes in context by referring to a few other high profile shareholder revolts in the past year and the problems inherent in family-owned companies with dual-class systems (like, by the way, the Washington Post Co.).
Pity the poor reporter who has to spit in the face of the big boss. But when a story focuses on a paper’s own business dealings, it’s a chance to show how deep that paper’s commitment really is to objectivity and truth. The Times can’t really expect us to trust it is telling us the whole story if it can’t even bring itself to print the name of its chairman. And, for God’s sake, learn how to spell his name.