PRESUMABLY News Corporation chose to hold its annual shareholder
meeting on October 16th at its Los Angeles film studio to show off the
profitability of its entertainment unit. But the location must have also
reminded investors of the Hollywood-like drama dogging the media
company over phone-hacking and bribery at News of the World, a British tabloid owned by News Corporation until it was closed last year.
As if they needed reminding. Shareholders arrived at the meeting ready to challenge Rupert Murdoch, News Corporation’s octogenarian boss, about the company’s corporate governance. Many investors, such as CalPERS, America’s largest public-pension fund, complain that he serves both as chief executive and chairman; that executive compensation is too high; that a dual share-class structure disadvantages independent shareholders; and that the board of directors is too passive. Mr Murdoch’s sons, James and Lachlan, and his grandson’s godfather, Viet Dinh, are all board members.
In the event no shareholder’s proposal to end these practices received enough votes to pass. Since the Murdochs own around 12% of the company but control nearly 40% of voting shares, that is hardly surprising. Still, shareholders’ discontent could be heard as clearly as an intercepted phone call. Excluding the 40% of voting shares controlled by Mr Murdoch, around two-thirds of independent votes cast were in favour of appointing an independent chair (stripping Mr Murdoch of the role). Many also opposed the company’s dual-share structure and the re-election of James and Lachlan Murdoch to the board. As for executive pay, it is too high “given everything that has happened at the company”, said Julie Tanner of Christian Brothers Investment Services, which filed the motion to appoint an independent chairman.
Some shareholders have been placated for the time being by News Corp’s climbing value. Its share price has risen by around 50% in the past year, thanks to a $10 billion share buy-back and its decision to split itself in two, siphoning off its newspaper business from its buoyant entertainment business. Those not won over by dividends can “take [their] profits and sell”, Mr Murdoch announced defiantly on Twitter before the meeting. One shareholder says his rudeness is just another grievance to add to a long list.
As if they needed reminding. Shareholders arrived at the meeting ready to challenge Rupert Murdoch, News Corporation’s octogenarian boss, about the company’s corporate governance. Many investors, such as CalPERS, America’s largest public-pension fund, complain that he serves both as chief executive and chairman; that executive compensation is too high; that a dual share-class structure disadvantages independent shareholders; and that the board of directors is too passive. Mr Murdoch’s sons, James and Lachlan, and his grandson’s godfather, Viet Dinh, are all board members.
In the event no shareholder’s proposal to end these practices received enough votes to pass. Since the Murdochs own around 12% of the company but control nearly 40% of voting shares, that is hardly surprising. Still, shareholders’ discontent could be heard as clearly as an intercepted phone call. Excluding the 40% of voting shares controlled by Mr Murdoch, around two-thirds of independent votes cast were in favour of appointing an independent chair (stripping Mr Murdoch of the role). Many also opposed the company’s dual-share structure and the re-election of James and Lachlan Murdoch to the board. As for executive pay, it is too high “given everything that has happened at the company”, said Julie Tanner of Christian Brothers Investment Services, which filed the motion to appoint an independent chairman.
Some shareholders have been placated for the time being by News Corp’s climbing value. Its share price has risen by around 50% in the past year, thanks to a $10 billion share buy-back and its decision to split itself in two, siphoning off its newspaper business from its buoyant entertainment business. Those not won over by dividends can “take [their] profits and sell”, Mr Murdoch announced defiantly on Twitter before the meeting. One shareholder says his rudeness is just another grievance to add to a long list.
Source:economist..com
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