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Shareholders will get a chance to vote on controversial corporate governance provisions included as part of Comcast Corp.’s acquisition of AT&T Corp.’s broadband unit. The companies said Tuesday in a filing with the Securities and Exchange Commission that they no longer will bundle the vote on the merger and the vote on the governance provisions, which they described as “atypical” for a large, public corporation. These include suspending elections of directors and the annual meeting until April 2004, requiring 75 percent approval of the AT&T Comcast board to fire the chairman or chief executive within the next 10 years, and prohibiting any investor from acquiring more than 10 percent of the stock without board approval. A source said the SEC had pushed for the two votes. The companies initially resisted, but when it became apparent the agency would hold up approval of the prospectus, they consented to a separate vote on the governance issues. Splitting the vote appears to have won over some critics, including New York Comptroller William C. Thompson Jr. “The comptroller is very pleased with the separation of the corporate governance reform vote from the AT&T-Comcast merger vote,” spokesman Scott Taffet said. “This action is exactly what the Comptroller asked for in his letter to SEC Chairman [Harvey] Pitt in April.” Though AT&T and Comcast have agreed to the vote, it appears investors ultimately have the same choice they had before the latest change. The companies said defeat of the corporate governance provisions would cause them to terminate the merger regardless of whether the overall deal wins approval. “Approval of the AT&T Comcast charter proposal is a condition to completion of the AT&T Comcast transaction,” the companies said. “Therefore, if AT&T shareholders or Comcast shareholders do not approve the AT&T Comcast charter proposal, the AT&T Comcast transaction will not be completed.” The companies said Comcast approval is assured because Sural LLC, a partnership controlled by Comcast chairman Brian L. Roberts, controls 86.6 percent of the voting stock, and it has pledged support for the governance provisions. By contrast, AT&T shareholders could reject the provisions. The AT&T board said in the prospectus that it views the governance provisions as a “negative” factor, but not significant enough to torpedo the overall deal. “The AT&T board believes that the AT&T Comcast transaction is in the best interests of AT&T shareholders and, therefore, urges AT&T shareholders to vote for the AT&T Comcast charter proposal,” it said. Ann Yeager, director of research at the Council of Institutional Investors, said splitting the vote is a victory for stockholders. “We are really pleased from a shareholder perspective,” said Yeager, who had asked the SEC to force the companies to hold separate votes. “This is a very good thing.” The council would have preferred that Comcast and AT&T not condition the merger on approval of the governance provisions, Yeager said. But she noted that the law permits such linkages. “This is certainly not ideal,” she said. “But having a separate vote is significant.” AT&T spokeswoman Eileen M. Connolly said the split vote ensures shareholders may vote on the deal at a July 10 meeting. “We believe that it was the most expedient way to give shareholders the opportunity to vote on this transaction,” she said, adding that a vote against the governance provisions is a vote against the merger. “There isn’t a merger without the corporate governance.” This is the second major change to the AT&T Comcast corporate governance provisions in as many weeks. The companies agreed April 30 to hold an annual meeting and elect directors in 2004 rather than in 2005 as initially proposed. Philadelphia-based Comcast agreed in December to acquire New York-based AT&T Broadband for about $37 billion. Comcast did not return a call for comment. Copyright (c)2002 TDD, LLC. All rights reserved.

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