• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

AOL Time Warner Governance Questioned

Posted on: Friday, 16 May 2003, 06:00 CDT

By BRIAN BERGSTEIN

LEESBURG, Va. (AP) -- AOL Time Warner Inc. chief executive Richard Parsons tried to sound optimistic notes at the media giant's annual shareholder meeting Friday, but he also acknowledged the rampant anger of investors who offered only tepid support for the re-election of four directors tied to America Online.

"I realize we've got challenges, but you've got to love this company," Parsons told 400 people in a conference center ballroom.

AOL founder Steve Case, who resigned as chairman and handed the title to Parsons on Friday, was approved for re-election to the board on only 78 percent of the shares voted.

Former America Online executive Miles Gilburne was supported on 65 percent, and James Barksdale - co-founder of Netscape Communications, which AOL bought in 1999 - got 79 percent. Kenneth Novack, who had been vice chairman of AOL and the combined company, was approved on 82 percent of shares voted.

All 13 AOL Time Warner directors were running unopposed - which infuriated labor groups that sought to put forward an alternative slate - so the board's makeup for the next year was not in doubt.

But considering that all other directors got 96 percent support or better, including former vice chairman Ted Turner, the vote showed that investors blame the Internet side of the empire for the company's debacle.

The stock is down more than 70 percent since the AOL-Time Warner merger closed in January 2001, and the company lost $99 billion last year, largely from writeoffs that accounted for AOL Time Warner's declining value. The Internet division largely has been the weak link, losing subscribers and revenue.

Published reports had said Capital Research & Management, AOL's largest shareholder, would withhold support for Case, Gilburne and Novack. The pension fund for California state workers and Institutional Shareholder Services, an influential advisory firm, had called for investors to reject Gilburne and Barksdale.

Case began the meeting by telling the audience he was tempted to look back and "set the record straight." Instead he expressed confidence about the future.

"While nobody is happy about the stock price, I believe brighter days are ahead," Case said.

When Parsons thanked Case for his service as chairman and praised his role in the Internet revolution, Case got a standing ovation from many of the investors and AOL employees in the audience.

Parsons acknowledged several times that the company still must resolve federal investigations of its accounting.

And his presentation seemed infused with the realization that the company still must justify its formative merger. The lead song in a video montage about the company's properties, which include CNN, HBO, Sports Illustrated and Warner Bros. - America Online was mentioned last - was Faith Hill's ballad "Baby You Belong." The song has in its chorus: "Nothing's ever been so meant to be. ... Baby you belong with me."

Some investors grilled Parsons about strategic issues, such as whether the company has too many layers of management; how AOL is going be useful for people with high-speed Internet access; and whether its cable holdings will become as outdated as "high-button shoes" with the rise of satellite services.

But most of the two-hour meeting was filled with complaints about AOL Time Warner's governance.

A proposal by a Christian organization to require the company to detail how much more its executives make than low-rung workers got only 7 percent approval. A measure to require AOL Time Warner to adopt more worker-friendly practices in China also failed with 7 percent of the vote, about what it got last year.

Parsons said he was comfortable that AOL Time Warner's practices are in line with the rest of corporate America, though he pledged to use conservative accounting tactics and said he would like to see more women and minorities on the board.

"I thought Parsons gave some responsive answers," said Hank Schiffman of Reston, Va., who described himself as a "disappointed shareholder.""I just think overall, the composition of the board is out of touch with the direction of corporate governance."

AOL shares were up 26 cents to close at $14.24 in trading on the New York Stock Exchange.

-----

On the Net:

AOL Time Warner

More science, space, and technology from RedNova

Copyright © 2003 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press.

More News in this Category