NEW YORK (AP) -- The New York Times Co. defused a standoff Monday with its largest outside shareholder, Harbinger Capital, by agreeing to support two people nominated by the hedge fund as directors at its annual meeting next month.
Harbinger had accumulated a 19 percent stake in the company in recent weeks, rivaling the amount held by the Sulzberger family. The Sulzbergers still control the company through a special class of shares which allow them to name 70 percent of the board.
The Times will expand its board from 13 to 15 to accommodate the new nominees, one of whom is Scott Galloway, a New York University marketing professor and shareholder activist who has been advising Harbinger.
The agreement calls for Harbinger to halt its campaign to have its own slate of four directors elected at the shareholder meeting. In addition to Galloway, the Times has also agreed to support James Kohlberg, co-founder of the investment firm Kohlberg & Co., as a director.
Harbinger and Galloway have argued that the Times need to take drastic action to shed assets outside of its core newspaper and invest aggressively in building up its online businesses.
Times executives told investors at a recent conference that the company was always re-evaluating its portfolio of assets and moving quickly to expand readership and revenues on the Internet.
In addition to its main newspaper, the Times company also owns The Boston Globe, a stake in the Boston Red Sox, its headquarters building in Manhattan, a group of smaller newspapers and the International Herald Tribune. It also owns About.com, an online consumer information business.
Last fall another dissident investor, Morgan Stanley Investment Management fund manager Hassan Elmasry, abandoned a two-year campaign to press for changes in the Times' dual-share structure and other areas of corporate governance.
While Elmasry's efforts didn't result in any corporate changes, other public investors also signaled their unhappiness by withholding 42 percent of their vote for publicly elected directors last year. The previous year, shareholders withheld 30 percent of the vote.
Galloway and Kohlberg will stand as directors elected by the Times' publicly traded Class A shares, along with Robert Denham, a former CEO of the investment bank Salomon Inc., German media executive Thomas Middelhoff, and Doreen Toben, chief financial officer of Verizon Communications Inc.
Harbinger has agreed to support the entire five-person slate of Class A proposed by the Times. The other 10 directors will be elected by the Sulzbergers, who control the company's supervoting Class B shares.
Like other newspaper publishers, the Times' stock has declined sharply in the last year over concerns about weakening revenue trends as more readers and advertising dollars go to the Internet.
The shares have rebounded in recent weeks after Harbinger's campaign for changes there became public, but they're still down about 20 percent over the past year.
Unlike Elmasry, Harbinger and Galloway have said they don't intend to challenge the two-class share structure that allows the Sulzberger family to maintain control.
The media company's Class A shares rose 24 cents to close at $18.74 Monday.