Warner Music Shareholder Who Named Label in Sexual Misconduct Suit Fails to Win Board Seat

Former Atlantic Records employee Dorothy Carvello lost her bid for a seat on Warner Music Group’s board of directors last month after failing to comply with certain requirements in the company’s bylaws, spokespeople for Carvello and the record label said on Tuesday (Jan. 3).

Under a new rule passed by the U.S. Securities and Exchange Commission last year that makes it easier for minority shareholders to wage campaigns for board seats, Carvello sought to nominate herself for a seat on WMG’s board, to be voted on at the next shareholder meeting. The activist and author, who alleged in her memoir, Anything for a Hit: An A&R Woman’s Story of Surviving the Music Industry, that she was subjected to sexual abuse and misconduct while working at Atlantic from 1987 to 1990, plans to run again next year, according to her spokesperson.

Carvello’s odds of being elected by WMG investors to a seat on the company’s board were slim because a sizeable chunk of the record label is owned by WMG vice-chair Leonard Blavatnik, the Financial Times reported earlier on Tuesday. Still, Carvello’s novel attempt could set the stage for future bids by activists aiming to bring attention to causes not often discussed in the staid corporate arenas of annual shareholder meetings.

“While this is an unfortunate attempt by the corporation to block an important mission, she will continue to seek to have her name placed on the ballot next year,” a spokesperson for Dorothy Carvello wrote in an email.

Carvello submitted her nomination notice to WMG in early December, but it failed to meet certain requirements in the company’s bylaws, including that Carvello be a registered shareholder, a spokesperson for WMG wrote in a statement. Because Carvello bought her WMG shares through the online brokerage Robinhood, the brokerage’s name was on the shares, not Carvello’s.

WMG said it gave Carvello additional time to resolve the issues but the documents ultimately did not fulfill company requirements.

“We value the input of all shareholders, and anyone desiring to nominate director candidates must satisfy the standard requirements of WMG’s Bylaws, including being a registered shareholder,” WMG said in the statement.

Requiring that investors be registered shareholders to submit proposals or board nominations at annual meetings is a common corporate rule. However, it presents a complication for retail investors who most frequently purchase stocks through brokerages.

Carvello has gained attention in recent months for a letter sent by her lawyer to WMG board members requesting records relating to the company’s investigations into previously-reported sexual misconduct claims and royalties accounting at the label. And last month, Carvello filed a lawsuit against Atlantic Records and the estate of its late co-founder Ahmet Ertegun, along with WMG and two former Atlantic executives, alleging she was “horrifically sexually assaulted” by Ertegun and Morris and that Atlantic, WMG and Jason Flom (whom the suit says was an Atlantic vp at the time) enabled the abuse.

In its statement, WMG said its board and management “have made significant enhancements to our policies and procedures and take any allegations of misconduct seriously and are consistently working toward eliminating all forms of discrimination and harassment.”