AOL Time Warner chairman Steve Case will likely weather a board meeting Jan. 16 with his title intact, but shareholders could oust him at the company’s annual meeting in May.
That’s when stockholders will vote on numerous corporate matters, including a slate of directors the company will present in a proxy statement to be put out in late March.
In the past, issues from executive compensation to pension plans have been routinely approved. But AOL TW shareholders are a very angry bunch, and many are howling for Case’s blood — from small investors to heavyweights like board member Ted Turner, Capital Research & Management’s Gordon Crawford and Liberty Media’s John Malone.
‘Still an issue’
Debate over Case’s future role “may have died down in the press, but it’s still an issue to me,” said one shareholder, who hopes he won’t see Case’s name in the proxy. That means a divided board would have to oust the chairman first, which requires an onerous 75% vote. In 2004, the board will only need a simple majority.
Former AOL TW CEO Gerald Levin quit last year before the annual meeting, where he made a teary farewell appearance. So far, Case has given no indication he’s willing to fall on his sword. So his face, and the letters A-O-L in the company’s name, continue to draw the venom of shareholders and employees.
“Steve says to this day, ‘Oh well, my shareholders were really upset with me when I did this Time Warner deal.’ Come on, give me a break,” a vitriolic Malone says on CNBC’s “The Big Heist,” a two-hour analysis of the disastrous merger that airs tonight.
As for Levin, Malone says, “This was Gerry’s personal decision, maybe his personal Waterloo. I mean, what did Napoleon talk about before he invaded Russia? I’m sure Napoleon was looking at it and saying, ‘Boy, I can make history bigtime if I pull this off.’ So he wasn’t out there talking to naysayers.”
News Corp. chairman Rupert Murdoch believes first and foremost that AOL TW “needs a unified board right now. They need a very pragmatic board to turn its head to making more profits. It’s been (handed) billions of dollar of debt from this deal. They’ve got to dig themselves out of that.”
Viacom topper Sumner Redstone said, “It was impossible to overestimate the extent to which AOL was, in fact, overvalued.”
And NBC topper Bob Wright wouldn’t be surprised if the company “went back to Time Warner … if AOL went on to become like the Blockbuster model, in the way that Blockbuster supports Viacom, as opposed to the frontrunner of what Time Warner is all about.” In reality, that happened months ago.
Slow growth at America Online forced AOL TW to lower its inflated financial forecasts. And the Justice Dept. and Securities & Exchange Commission are examining whether the books were cooked at the Netco. AOL TW has acknowledged potential lapses at AOL by restating revenue for eight consecutive quarters after the deal closed.
There are at least 30 shareholder lawsuits pending against the conglom alleging material misrepresentation and/or omissions of material fact in violation of securities’ law. Some employees, whose 401(k) plans have been decimated, are suing the administrative committee of the AOL Time Warner Savings Plan for violating the Employee Retirement Income Security Act.
Meanwhile, exposes, analyses and critiques of the merger that failed keep on coming, two years after the deal closed and three years after it was first announced. There’s new management throughout the corporate ranks. Time Warner’s Richard Parsons, Jeff Bewkes and Don Logan are in the top operating jobs and newcomer Jon Miller is heading up AOL.
Changing the name back to Time Warner would remove an irritant and take some pressure off the Net unit, making it just one arm of a giant conglom. (After all, Warner Music hasn’t been doing so well either.) Case’s exit would do the same, although it wouldn’t make much of a difference in the company’s operations. If he’s still around in May, AOL TW promises one heck of an annual meeting.