Digest Shareholders Cede Control to Silence Critics

17 April 2002

The quasi-feudal share structure of the Reader’s Digest Association is set for change as controlling stockholders, the Wallace-Reader’s Digest Funds, move into the twenty-first century by consigning the group’s non-voting A-class shares to the trashcan of history.

Instead, holders of Class A stock, among them large institutional shareholders, will see their shares convert on a one-for-one basis to the new all-voting stock. Holders of Class B (voting) shares – of which fifty percent are owned by Wallace-Reader’s Digest Funds – will do rather better, swapping each of their old shares for 1.24 units of the new issue, a bountiful reward for ceding the comfort of control.

The transformation, which is expected to become a done deal today (Wednesday) is intended to quell long-standing criticism of RD’s corporate governance framework.

Thomas O Ryder, chief executive of Reader’s Digest, and president of the Wallace Funds Christine DeVita, were unavailable to comment on the situation. A cynic suggested they were too busy counting the dollars accruing from their 24% share premium.

Data sourced from: MediaWeek.com (USA); additional content by WARC staff