Neuberger Berman submitted a shareholder proposal to Lions Gate Entertainment Corp., advocating for an end to the dual-class voting structure at the company ahead of a spinoff of its studio business.
(Bloomberg) — Neuberger Berman submitted a shareholder proposal to Lions Gate Entertainment Corp., advocating for an end to the dual-class voting structure at the company ahead of a spinoff of its studio business.
The investment manager owns 0.02% of the company’s class A shares and 4.4% of the non-voting class B shares, according to a statement and Bloomberg calculations.
Neuberger Berman said “one share, one vote” is a foundational principle of corporate governance and that dual-class structures are inconsistent with market practice with a 7% adoption among S&P 500 companies. It also said the structure may impair value and increase risk as it complicates capital structure and gives certain shareholder outsized influence.
“The company appreciates the proposal and will continue to evaluate whether single or dual-class stock is the most appropriate share structure for executing its strategic initiatives,” Lions Gate said in its proxy statement.
Neuberger Berman, which has been a shareholder since 2016, submitted the proposal after sending a letter to Lions Gate’s board last month.
“The company has been engaged in a lengthy multi-year strategic review with little to show in part because of changing industry trends and an increasingly difficult macro environment, Neuberger Berman senior portfolio manager Benjamin Nahum said in an interview.“Why not do something that you have more control over, will enhance your credibility and increase the appeal of your stock to new investors?”
Neuberger Berman will reach out to other Lions Gate shareholders urging them to vote for its proposal but will not accept proxy cards, said Caitlin McSherry, the firm’s director of investment stewardship.
Lions Gate in March filed with regulators to spin off its studio business, which is made up of its television production and motion picture segments. The deal would create two public companies — a studio business and Starz, the TV network it acquired in 2016 in a $4.4 billion transaction.
The collapsing of the dual-class structure will allow the studio spinoff “a better chance to success,” Nahum said.
Neuberger Berman’s proposal will be subject to a shareholder vote at the annual general and special meeting scheduled in November.
(Updates with Lions Gate’s comment in fourth paragraph, details on spin-off in eighth.)
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