According to a report in the New York Times today, several directors of AOL Time Warner are seeking the ouster of chairman Steve Case, who previously headed online giant America Online (AOL) when it was a separate company. The enigmatic Case, however, is resisting the challenge, the report says, and it's possible that he has enough support on AOL Time Warner's board to remain in power: Three quarters of the board would need to vote for his ouster in order for the change to be made.
"There is no basis for any rumors that Steve Case is leaving," said AOL Time Warner spokesperson Edward Adler, responding to the Times article.
However, AOL Time Warner shares have fallen over 70 percent since the two companies combined in an historic corporate merger earlier this year. Adding to the company's financial woes are high-profile investigations by the Securities and Exchanges Commission (SEC) and US Department of Justice (DOJ), both of which believe AOL misled Time Warner shareholders by illegally inflating AOL's value.
Those who seek Case's ouster obviously believe that Case is responsible, in part, for the company's financial problems and is now detracting from the new company's credibility. But the problems go beyond mere financial concerns. There is a growing feeling that Time Warner, one of the great old economy companies, was duped into a merger by AOL, seen at the time as a powerful new economy company. And the architect of that deal, of course, was Case. Among the many conditions he added to the deal, in fact, was the three-quarter rule required to oust him. For this reason, a management shakeup could take months, people close to the firm say.
However people feel about Case, one thing remains clear: If AOL Time Warner continues its long slide into irrelevancy, Case--and many of other upper-level executives--will likely face further challenges keeping their jobs in the months ahead.