May 5, 2003 11:32 AM PDT

AOL shareholder wants Case off board

AOL Time Warner's largest institutional shareholder plans to vote against the re-election of three board members, including Chairman Steve Case, according to a report.

Citing "a person familiar with the situation," The Wall Street Journal said Monday that Capital Research & Management will not endorse the re-election of Case and his two close supporters Vice Chairman Ken Novack and Miles Gilburne, adding fuel to the prospect that the May 16 shareholders meeting will be among the company's liveliest ever. Capital owns 7.5 percent of AOL Time Warner's outstanding shares as of Dec. 31.

The move, if it happens, won't have any effect on the makeup of the board because the members are running unopposed. But it could send a message that Capital wants Case to step down altogether.

Case already has agreed to relinquish his role as chairman and become a regular board member, citing concerns he might distract the company from focusing on its business, particularly after America Online's mega-merger with Time Warner.

AOL Time Warner has reshuffled executives and suffered financial woes since the merger. The company also has been dealing with an investigation by the Securities and Exchange Commission and the Justice Department for the way it accounted for certain advertising transactions engineered by AOL when Case was CEO.

An AOL representative said the company wouldn't comment on the report.

In separate news, shareholder advisory group Institutional Shareholder Services (ISS) has advised its members to vote against a proposed employee stock-option plan and to withhold votes from directors Gilburne and Jim Barksdale. ISS said Barksdale, the onetime CEO of AOL unit Netscape Communications, and Gilburne, who was an executive at AOL, aren't independent enough to serve on certain board committees.

 

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