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Breakingviews: Sign of the Times

Thursday, May 22, 2014 - 03:20

May 22 - Jeffrey Goldfarb and Rob Cox explain how a management imbroglio at the New York Times provides a lesson for investors surrendering their rights at the likes of Facebook and Alibaba.

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The big imbroglio at the New York Times. I executive editor Jill Abramson was fired. Create a lot of media navel gazing. But there is a liar larger sort of business perspective here involving corporate governance talked with a little well yeah I mean as you say to the entire New York media world was going crazy because. Arthur Sulzberger junior who's the publisher and the chairman new York times company publicly traded company. That -- times. Basically fired her without giving any abruptly don't just talk okay. You -- this void of no information which was still pretty quickly with what the irony is pretty Richard Neer a newspaper company thinking that it was gonna -- fire somebody without -- explain I mean they should know better that Sulzberger family the board they should know better that when you. Put up this kind of make this kind of decision don't actually fill it with a proper explanation that. Basically news reporter they're gonna try to find and there's all kinds of theories became in charge of the meeting in less than male counterpart all of which he's come out and that case anyway that the company said that it wasn't true. That you -- to look at compensation broadly of course rotten but is also our defensive rather than -- has but the point we -- making is that the new York times company that is slightly odd companies it has. This shareholding structure of the -- Sulzberger and his family. An extraordinary amount of power and they can basically elect 70% of the directors and it was inherited. Fraud and there's terror instruments finally -- and you know -- ultimately yes yes and it's been it's been part of the company's bylaws for for decades. I'm and that it offers an unusual amount of protection. To the chairman who is effectively runs the show. And enhance its name on is an instant results yet so the issue is a from a business perspective does this tell us something about governance because. Right now I see companies that are coming out. Well yeah FaceBook famously you have to -- -- -- you come out about that also have similar arrangements that give. Concentrated power concentrated power in -- all of all of them are a little bit different and some have. You know some of them actually expire when these folks go lower dire pass on the so there's an inherently in the one hand there's this idea that. Yet founders OK we can see maybe how you trust right visionary founder and Mark Zuckerberg needs you just turned thirty government and we've given this kid extraordinary power because. He's a great visionary -- we know that he's fully involved the company. The same may be true Jack mind his partners who have basically called. Out run the director ships at -- about question is the necklace it's it's sort of you know didn't generation the generation after that now. You know what you have here is it a case where you know that guy who's running it basically -- heeded necessarily great company or yes. Driven company that way he's in some of his decisions quickly regarding personnel. Are absolutely are questionable and that's that's what we see him to labor and some sound Janet Robinson CEO. We -- Anderson is that he's a sort of serial management state guide. So in normal company. That would probably pressure I have not shareholders commensurate with the economic interest would start to push possibly for is that. But the reason that -- times because governments are we will leave it there thanks our rob will be back with more breaking news tomorrow.

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Breakingviews: Sign of the Times

Thursday, May 22, 2014 - 03:20