Hollinger’s Lord Black Caves-In to Shareholder Pressure

23 May 2003

“It’s a win for everyone,” announced Hollinger International chairman/ceo Lord Conrad Black of Crossharbour following the group’s annual meeting Thursday in Manhattan.

Which only goes to show that the Canadian-born newspaper magnate – who took British citizenship to qualify for his ennoblement – has a way with manipulating words that his journalists would envy.

Journalists, in fact, were conspicuous by their absence from what (wrongly) promised to be a stormy meeting, even Black’s own titles being excluded. However, ballsier bosses than the secretive peer would scarce dare close their door in the face of the Wall Street Journal, which alone was present to report what appeared to be a carefully stage-managed event.

Black, however, made two concessions to allay the mounting wave of criticism over his personal interpretation of corporate governance.

Firstly, he agreed in principle to do away with Hollinger’s super-voting Class B shares – a move that will substantially neuter his control over the publicly-quoted company, although the execution will be phased over a five year period.

The concession is a trade-off with the group’s largest minority shareholder, Memphis-based Southeastern Asset Management, which will reciprocate by buying from Hollinger between five and ten million Class A shares, thereby pumping some desperately needed liquidity into the company.

Black's second concession was to another large shareholder, investment management group Tweedy Browne which has a 17.7% holding in the group [WAMN: 22-May-03]. Tweedy had demanded – and, at yesterday’s meeting, got – an undertaking that Hollinger’s independent directors conduct an investigation into over $73 million in extra-curricular fees paid to Black, his wife and other senior Hollinger honchos.

Among these boardroom independents – who hitherto had no known problem with the payment of the said fees – are Henry A Kissinger, Richard N Perle and (until his resignation yesterday) A Alfred Taubman, the former Sotheby’s chairman who was released from federal prison last week.

Said Black of the investigation: “I have no fear that any seriously bad behavior will be found. None has occurred.” However, he could not resist a sideswipe at those who believe in the doctrine of accountability by those who use other people’s money

“Like all fads, corporate governance has its fanatics. We will do our best to ensure that corporate-governance fanatics don’t throw the baby out with the bathwater.”

Data sourced from: The Wall Street Journal Online and The Times (UK); additional content by WARC staff