Cites breach of fiduciary duties by Alden directors
FOR IMMEDIATE RELEASE
Jan. 6, 2021; original release Jan. 5, 2021
CONTACT: Sally Davidow
sdavidow@cwa-union.org (202) 368-3324
The Chicago News Guild has called for the immediate removal of three members of the Tribune Publishing Board of Directors, citing a breach of fiduciary duties in a recent filing of regulatory disclosures. A shareholder proposal sent to Tribune Board Chairman cites misconduct by Tribune directors Randall D. Smith, Dana Goldsmith Needleman, and Christopher Minnetian related to the recently disclosed action of Mr. Smith – Alden Global Capital’s founder.
Mr. Smith admitted taking advantage of an independent investor’s interest in acquiring some company assets by proposing Alden’s participation with the investor. Mr. Smith used his Tribune board position – and his access to confidential information – to convert a business opportunity for Tribune into an opportunity for Alden. He appears to have also steered the investor to negotiate with Alden instead of Tribune. Needleman and Minnetian were appointed to the board as Alden representatives, and have close ties to the hedge fund and Smith.
Alden has a 31.6% stake in the company and three seats on the board of directors. A director is a “fiduciary” and is legally required to put the interest of the company and its shareholders ahead of their own interests. When a director learns of an opportunity that could benefit shareholders, a director cannot try to turn that opportunity to the director’s own benefit, but must act in the interest of the company and its shareholders
“The dealings outlined in Alden’s own filings about these proposed transactions show that Alden representatives who serve on the Tribune Publishing board have put their own interests ahead of shareholders,” said Jon Schluess, president of The NewsGuild-CWA, parent union of the Chicago News Guild.
That sentiment was shared by corporate governance expert Charles Elson, Director of the John L. Weinberg Center for Corporate Governance and Edgar S. Woolard Jr. Chair of Corporate Governance at the University of Delaware. According to Prof. Elson, Alden’s continued participation on the Tribune board “creates a conflict of interest that is frankly unsolvable.” [Chicago Tribune, January 5, 2021]
Jon Schleuss added, “Alden’s board designees can’t be trusted, and they should not be on Tribune Publishing’s board. Alden is treating Tribune shareholders with the same disrespect it shows its employees, the newspapers they own and the communities they serve,”
In a letter to Chairman Philip Franklin sent Monday, the Chicago NewsGuild expressed its concern as a stockholder as well as a representative of employees who similarly must rely upon the integrity of the board of directors to assure the viability of their company. Accordingly, the Chicago NewsGuild asked for a special meeting of shareholders to vote on a proposal to remove the three board members.
While the focus on director behavior should be on usurpation of corporate opportunities, the Chicago Guild also noted that Alden also demonstrated its disregard of duties and rules by ignoring its obligations under SEC regulations to promptly report their new plans. Every owner of more than 5% of a public company, and certainly someone like Mr. Smith and his Alden colleagues with years of corporate investment experience and access to professional advisers, should know that the SEC requires reporting the plans presented in the December 14 letter, which had clearly been in progress for some time before that, to be publicly reported within fewer than 10 days. This SEC rule is essential to protect the rights of all investors to be fairly informed, including ones that might be considering the purchase of a company’s shares as well as existing shareholders. But Mr. Smith and his Alden colleagues simply ignored that obligation.
These facts, all of which are plainly admitted in Alden’s New Year’s Eve disclosures, show an inexcusable abuse of the Alden directors’ positions on the board and their failure to meet their responsibilities to Tribune Publishing and its shareholders.
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About The NewsGuild
The Chicago News Guild is a labor union dedicated to protecting the rights of employees in the media and related industries in the Chicago metropolitan area, including the Chicago Tribune-owned publications in Chicago and the suburbs, and the Chicago Sun-Times and the Chicago Reader. The Guild also represents court interpreters and the professional and support staff at unions.
The NewsGuild-CWA is the largest union of journalists and other communications professionals in North America, representing more than 25,000 workers in the U.S. and Canada. In addition to the Chicago Tribune, the union represents workers at Tribune publications including the Baltimore Sun, the Orlando Sentinel, the Hartford Courant, The Virginian Pilot, the Allentown Morning Call and many more. The Communications Workers of America represents workers in telecommunications, customer service, media, airlines, health care, public service and education, and manufacturing.
