Time Warner faces unhappy shareholder - Brief Article

Folio: The Magazine for Magazine Management, March 1, 1994

Time Warner's 'poison pill' takeover defense, adopted on January 20, prompted one shareholder to file suit on January 25 in Delaware's Chancery Court, charging the Time Warner board of directors with a "knee-jerk reaction" to Seagram & Co.'s most recent purchase of Time Warner stock, bringing its stake to 11.7 percent (see "Time Warner board concocts poison pill," February 15, page 15).

The defense allows a doubling of the number of outstanding Time Warner shares, to 7.5 million, should someone try to buy more than 15 percent of the company. The suit also alleges the 15-member board is protecting its status, not shareholders' interests. Indeed, two board members, Carla Hills and David T. Kearns, don't own a single share, while Henry Luce III holds 81 percent--6.35 million--of the directors' total 7.8 million shares. By contrast, there are 376.8 million Time Warner shares outstanding; Seagram owns about 44.1 million.