Tegna Proxy Battle to Be Decided Friday Amid Diversity Accusations
Tegna shareholders vote Friday on whether three candidates pushed by shareholder Standard General should be added to the board, resolving a proxy fight that included allegations of discrimination, poor management and hidden motives. Standard released a heavily redacted report last week chronicling what it says is widespread discrimination, while the broadcaster’s current leadership says the investor treats diversity, equity and inclusion as weapons. “Sadly, Standard General continues to exploit these crucial issues,” said a Tegna spokesperson. “Not once before launching this proxy fight did Standard General seek constructive engagement with us.” Tegna suffers from “poor governance,” said Standard investment analyst Amit Thakrar in an interview.
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Thakrar said Standard's nominees, former Fisher Communications CEO Colleen Brown, Change Home Loans Chairman Carlos Salas and former CBS executive Elizabeth Tumulty, will provide “oversight” and look into discrimination allegations including an incident involving Tegna CEO Dave Lougee and consultant Adonis Hoffman (see 2103090064). A former FCC aide, Hoffman was a prospective Standard nominee before withdrawing. Standard opposes nominations of Lougee, Chairman Howard Elias and board member and WNET CEO Neal Shapiro. Institutional Shareholder Services endorsed the current leadership, Tegna said.
Under CEO Soohyung Kim, Standard is Tegna’s largest minority shareholder. Kim blasted leadership during a similar fight last year (see 2004200052). Kim, who was an investor in Media General, appears to want to become a large-scale station owner, industry officials said. They said with Gray Television buying Meredith and the past few years of consolidation, opportunities to break in at scale are fewer.
This isn’t an attempt to destabilize the company and is solely based on Tegna’s shareholder responsibility, Thakrar said. “These issues affect the bottom line.” Hoffman told us that when Kim asked him to be a board candidate, he didn’t condition this on Hoffman supporting certain polices or pursuing sales. “There was nothing like that,” Hoffman said.
Activist shareholders don’t usually win such shareholder votes, “but there are multiple ways of winning,” said New Street analyst Blair Levin in an interview. Even if Standard loses the vote, the battle could cause Tegna to take actions Standard could find more favorable, he said. In a website dedicated to the fight, Standard says its last proxy fight pushed the board to engage with deal opportunities and increase retransmission consent rates. Standard said Lougee's salary is the highest of any predecessor there. “The Board increased Mr. Lougee’s compensation by 16% in 2020” while “employees were furloughed and station employees saw their salaries cut” during the pandemic, said Standard. Tegna said Lougee’s compensation is 65% performance based. “Only equity compensation awards increased, which were determined prepandemic, are long-term in nature and are aligned with shareholder value creation,” Tegna said.
The discrimination report commissioned by Standard lists anecdotes from unidentified employees and cites FCC public inspection data. Former employees say they were discriminated against racially, over maternity leave, or on age. Tegna appointed a chief diversity officer in 2020, launched an employee diversity working group and set inclusion goals, says the TV station owner.
Hoffman didn't think leadership sufficiently investigated Lougee’s treatment of him and other diversity issues. “Tegna is a company that broadcasts in areas with strong minority populations,” and that should prompt its board to take special care on diversity, Hoffman said. “This is why the SEC encourages independent directors.”