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Charter board converts Allen's stock, appoints new members

Wed, 01/19/2011 - 7:30am
Mike Robuck

Paul Allen, who co-founded Microsoft, lost his appointees to Charter Communications' board of directors after the board voted to convert his stock.

Charter's board of directors converted all of Allen's 2,241,299 shares of Class B common stock of Charter into the same number of shares of Class A common stock of Charter. The conversion was effective yesterday, and the end result was that Allen no longer had a 35 percent voting interest associated with the Class B common stock, which meant he lost his right to appoint four members to the board.

According to a Charter spokeswoman, Allen currently owns about 3 percent of the shares and has warrants to purchase another 4 percent. Allen is still Charter's largest individual shareholder.

"The Class B shares convert to Class A on a one-for-one basis," the Charter spokeswoman said via e-mail this morning. "The difference is the super voting power goes away, so his voting percentage is aligned with his economic interest."

Following the stock conversion, William L. McGrath and Christopher M. Temple, two board members who had been appointed by Allen, resigned from the board.

Charter emerged from Chapter 11 bankruptcy near the end of 2009. Upon emergence from bankruptcy, the court, as part of the terms for the restructuring plan, allowed Allen to appoint four members to the board of directors. With the resignations of McGrath and Temple, Allen still has two of his appointees on the board.

The remaining two Allen appointees will go through board reelection, along with the other directors, as part of the annual process.

With the resignations of the Allen appointees, the board appointed Edgar Lee and Stan Parker to fill the vacancies. The board also appointed John D. Markley Jr. as a member of the audit committee to fill the vacancy resulting from Temple's resignation.

Charter's board also appointed Lee and Parker to fill the vacancies on the nominating and corporate governance committee resulting from McGrath's resignation from the board and from Markley's resignation from the nominating and corporate governance committee.  

"It has been a pleasure serving on the board with Bill and Chris. My fellow directors and I, along with Charter's leadership team, appreciate their sound counsel and hope to have the opportunity to work with them again in the future," said Charter chairman of the board Eric Zinterhofer. "Stan and Edgar are highly regarded business leaders, and I'm confident the financial expertise they bring to the board will be invaluable as Charter executes its strategy for long-term growth."

Lee is senior vice president of Oaktree Capital Management. He was previously an associate director in the TMT Investment Banking division of UBS Investment Bank and was an associate in the fixed income division at Lehman Brothers Inc.  

Parker is a senior partner of Apollo Global Management. Prior to that, he worked in the financial entrepreneurs group within the investment banking division of Salomon Smith Barney.

Parker also serves on the board of directors of AMC Entertainment, AMC Entertainment Holdings, Affinion Group, Ceva Logistics and Momentive Performance Materials.

Allen bought a controlling interest in Charter in 1998, but he has seen little, if any, return on his investment. In 2009 Allen stepped down as chairman and from his board of directors' seat.

Several years ago, Allen was diagnosed with non-Hodgkin's lymphoma but is reportedly cancer-free these days.

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