September 19, 2002 5:08 PM PDT
Case holds on to AOL post, for now
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Will AOL Time Warner oust Case?September 18, 2002
"He's still chairman," said AOL Time Warner spokesman Edward Adler, responding to speculation that some board members have begun to seek his removal. "Everything else is just unfounded rumor and speculation."
Case's future with the company has been in the spotlight since reports surfaced this week that he might be the target of a coup attempt by some of the company's most powerful shareholders.
"Clearly there's a huge power shift going on," said Paul Kim, an analyst at Kaufman Bros. "It's clearly being leaked by someone who wants it up there, so right now it's up to Steve Case if he wants to stay or leave."
Although Case is still chairman of the company after Thursday's meeting, this doesn't mean he is in the clear. The battle over the chairman's future could intensify over the coming months, leading up to AOL Time Warner's annual shareholders meeting.
AOL has historically mailed its proxy in March and held its annual meeting in May, according to AOL spokeswoman Tricia Primrose. No date has yet been set for next year's annual shareholders meeting, she said.
The issue could reach a crossroads when AOL Time Warner directors come together to vote on whom to renominate for another one-year term on the company's board. This vote usually occurs at the March board meeting, Primrose said. Once the vote has been carried out, the slate of directors will be included in a company proxy, which is mailed to shareholders before the annual meeting.
The proxy outlines issues that call for a shareholder vote, such as director re-election and investor initiatives. Shareholder votes, or proxies, are tallied at the annual meeting.
Even if Case retains support and is renominated as an AOL director, shareholders can always launch a proxy fight to unseat him or put forth a competing slate of directors.
Investors interested in submitting a proposal must send their initiative into the company by Dec. 2.
Any shareholder requests to nominate someone as a director need to be submitted to the company within 90 to 120 days before the board meeting, according to the company's bylaws.
A number of influential shareholders are looking for management change. This includes Ted Turner, a board member and the largest individual shareholder; Gordon Crawford, a portfolio manager for investment firm Capital Research and Management; and John Malone, chairman of Liberty Media, according to two sources close to the company.
Case has become the focus of ire for many of these people as he is the last architect of the troubled merger between America Online and Time Warner to still hold a position in the company. Executives who ran AOL Time Warner early on, such as former CEO Gerald Levin, former chief operating officer Robert Pittman and former chief financial officer J. Michael Kelly, have either left or have been demoted.
Case is the last man standing, and is facing hostility from inside and outside the company. Many executives from Time Warner blame Case for their diminished fortunes after seeing their cash bonuses replaced by now-worthless stock options.
Furthermore, as the former head of AOL, Case is haunted by some questionable accounting practices conducted by the division in its booking of advertising revenue. Last month, the company admitted that the unit may have misreported some $49 million in revenue, a disclosure that came in the midst of an investigation of AOL by the Securities and Exchange Commission.
Last week, AOL warned that it would miss its financial targets by as much as 5 percent for the year.