Over the past couple days, there has been a lot of attention paid by the media to dual-class equity structures and why they are so problematic for shareholders. At the New York Times Company's annual meeting on Tuesday, Morgan Stanley Investment Management teed up a protest vote against the company's Class A directors on the grounds that it was consistently failing to deliver value to its owners. Despite owning nearly six percent of the company's outstanding shares - a sizable chunk by most measures - Morgan Stanley's protest vote likely won't result in change at the company because the Sulzberger family controls nine of the thirteen seats on the board.

Preferred shares are nothing new in the media industry. Dating back to the early 1900's, preferred voting rights were originally established by many of the founding families at the large publishing houses to protect the journalistic integrity and independence of their newspapers. Today, they've morphed into the Superman of all take-over defenses, completely shielding underperforming and overcompensated executives and directors from any dissent or potential proxy contests. This presents a big problem for investors and unlike the comic books, there's no Kryptonite to combat it.

It should come as no surprise that ISS is against the establishment of dual-class equity structures in all cases as it is the single most disenfranchising thing a company can do to investors. For example, the presence of a dual-class structure by itself could drag down a company's CGQ score by tens of percentage points, even if a company has a clean bill of health on all other of its governance provisions (there are almost 250 companies in CGQ's coverage universe that fall in this camp).

We almost always support shareholder proposals seeking to eliminate dual-class structures. The actual elimination, of course, never happens because the people who benefit most from dual class structures control the voting power at the company. However, because these structures have a long legacy, we generally do not proactively withhold votes from directors at companies with dual-class structures in place unless there are other significant governance issues. Nevertheless, Morgan Stanley should be commended for taking a strong stand on the issue by sending a symbolic shot across the bow at this company. Unfortunately for investors, there are plenty of other targets out there.

Other major media companies with dual-class capital structures with unequal voting rights include Comcast (Roberts family), Media General (Bryan family), News Corporation (Murdoch family), Martha Stewart Living Omnimedia (Martha Stewart), The Washington Post Co. (Graham family), and Dow Jones & Co. (Bancroft family). And let's not forget Google - today's darling of the market - who is one of the newest members to this not-so-exclusive club.