“Morgan Stanley Investment Management is ratcheting up the pressure on the Sulzberger family to boost the New York Times Co.â€™s flagging stock price. The Wall Street firm, which owns 7 percent of the NYTCO stock, wants shareholders to vote on a proposal at next yearâ€™s annual meeting to dismantle the dual-class stock system that keeps the Ochs-Sulzberger family in controlâ€”and to separate the job of company chairman and publisher of the New York Times, according to the WSJ and AP.”
When I was first looking for a lawyer for Cucina Media, I was lucky enough to be introduced to John Montgomery. In our first meeting, he talked about why corporations can act against their mission, and what to do about it. It seems that (and excuse my oversimplification) the bylaws of most corporations make the corp responsible to the shareholder. This sounds logical, right? Well, that shareholder can then sue if the corp acts against the shareholder’s interest, and shareholder interest often being entirely about increasing shareholder value (these days meaning stock price) means the company is obliged to do what ever gives the stock a pop.
But Monty also explained to me that you don’t have to use a boilerplate for your bylaws; you can make the company responsible to the shareholders and somebody else. This could be
- the environment
- journalistic standards (assuming you can define them tightly enough for a lawyer’s satisfaction
or anyone else you can think of
If you find the quote above boring, or irrelevant, let me tell you… watching the struggle the LA Times has gone through to improve profitability and increase shareholder value… well, you can improve profitability two ways: increase revenue or cut costs. Revenue cannot grow indefinitely; that means at some point you must cut costs. The greatest cost a business carries is the staff.
Unless of course, profitability is not your only driver. At which point a corporation can actually start taking a long view on important matters.
Your assigned reading:
Of course, you can always cheat and watch the DVD…. but the book is better.
I’ll expect a 200 word report by monday.