The newspaper tycoon Lord Black of Crossharbour said yesterday he would reduce his group's voting power in Hollinger International, bowing to pressure from shareholders who have accused him of running the US publicly listed group as his "private fiefdom".
Mr Black's proposal, which was announced ahead of Hollinger International's shareholder meeting in New York, will see the voting powers of the group's Class B shares reduced from the current 67 per cent level to 35 per cent over three and a half years.
Prior to this proposal Lord Black has controlled Hollinger International though a holding structure which has seen him wield 72 per cent of the voting power in the company even though his interests have owned only 30 per cent of the equity.
Lord Black said he had also agreed to sell between 5 million to 10 million Class A shares of Hollinger International to Southeastern Asset Management, a major shareholder.
The tycoon, whose publishing interests include The Daily Telegraph and The Sunday Telegraph in the UK and The Jerusalem Post in Israel, said the voting power of the Class B shares would be gradually eroded and eventually converted to the equivalent of the Class A shares.
Investors have lambasted Black and other executives for allegedly enriching themselves through a series of management fees and side deals. One rebel shareholder, Tweedy Browne, has demanded that the non-executive directors of Hollinger International order the return of £46m in cash which it alleges has gone to executive directors rather than to the publicly listed company.
Lord Black told Bloomberg News ahead of yesterday's meeting that there was a need to quell some of the shareholder dissent. "There are some legitimate concerns, and we've got to address them. It's a combination of altering the fees, altering the manner in which the fees are paid and carefully explaining both."
Yesterday the company said that "going forward, Ravelston management [Black and others] will be employed and paid directly by Hollinger International." It said Southeastern had agreed an annual compensation level of $20m (£12.2m).
Southeastern would also have the right to nominate three directors to the Hollinger International board under the terms of the deal, which needs shareholder approval. It said it hoped the transaction would close on or before 30 September.