New York Times Co. chairman Arthur Sulzberger has provided a not-so-subtle response to the hedge funds prepping for a proxy fight: He nominated two members to its board of directors one day after the hedge funds nominated four.

The company announced that two board members, Brenda Barnes and James Kilts, will not stand for reelection when the company's shareholders meet on April 22. To replace them, Sulzberger nominated Dawn Lepore, an eBay board member and the chief executive of Drugstore.com, and Robert Denham, a Wall Street lawyer and the former chief executive of the bank formerly known as Salomon.

It's clear that Sulzberger is sending a message to shareholders of the embattled media company: If you want more digital expertise and financial prowess around our board table, vote for my nominees.

"The skills, expertise and leadership qualities of these two nominees will greatly benefit our company during this time of tremendous change in the media world," Sulzberger said in a statement.

The hedge funds Harbinger Capital and Firebrand Partners, who announced yesterday they've taken a 10 percent stake in the company, nominated four members to the New York Times board. They want the company to focus on its core assets and build its digital businesses. But they've said they won't attempt to disrupt the shareholder structure, which gives the Sulzberger family more control, including the decision over who occupies nine of the 13 board seats.

Their nominees also include a mix of digital and financial experience: Gregory Shove, a former head of AOL's electronic commerce business; James Kohlberg, co-founder of the private equity firm Kohlberg & Co.; Allen Morgan of the Mayfield Fund; and Scott Galloway, the founder of RedEnvelope.com and Firebrand Partners (profiled here).  

According to a letter filed by the hedge fund group yesterday, they met with the New York Times management on Friday. The details of the meeting were not disclosed, but the funds are trying to affect change through a kinder, gentler means of activist investing.

It's an admirable effort, but a daunting one. Sulzberger has so far been resistant to such efforts, and today's nominations are a sign that he's not about to give in now.

The nominating and governance committees of the board must now decide whether to recommend the funds' four nominees. The full slate of directors to be voted on will be announced later this month.


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