Resolution calling for appointment of independent chair likely to fail
Investors are set to stage a major revolt at News Corporation’s annual meeting tomorrow for the second year in a row, although efforts to unseat Rupert Murdoch as chairman of the company look set to fail.
A resolution calling for the appointment of an independent chair at the media giant has received support from a host of UK and US institutional investors, as well as proxy advisory firms ISS and Glass Lewis.
The motion is likely to be defeated, however, as the Murdoch family controls nearly 40 percent of the company’s voting shares and also has the support of second-largest shareholder Saudi Prince Al Waleed Bin Talal, who has a 7 percent stake.
The resolution was filed by US-based Christian Brothers Investment Services (CBIS) and members of the UK’s Local Authority Pension Fund Forum (LAPFF). Recent shareholders to offer their backing include the Australian Council of Superannuation Investors and Hermes Equity Ownership Services.
Despite the anticipated failure of the resolution, Ian Greenwood, chairman of the LAPFF, hopes securing 50 percent support from non-Murdoch shareholders will send a ‘message’ to the company, reports the Telegraph. ‘This issue is not going to go away,’ Greenwood tells the newspaper.
A message of sorts will certainly be registered as both Greenwood and a member of CBIS are due to speak in favor of their resolution at the annual meeting, which is taking place at Fox Studios in Los Angeles.
News Corp has long been targeted by investors over its corporate governance, and pressure has increased since allegations of phone hacking led to the closure of a tabloid owned by the company’s UK subsidiary News International last year.
The media organization has acted to bring shareholders on side by announcing a $5 bn buyback program, which it doubled to $10 bn this summer. The owner of the Wall Street Journal has also confirmed plans to split its publishing businesses from its lucrative entertainment divisions. Furthermore, Murdoch’s son James has resigned from his role as chairman of News International.
To support their proposal, CBIS and LAPFF have produced a proxy advisory briefing laying out arguments in favor of the resolution and responding to arguments against it made in News Corp’s proxy statement. ‘There is a potential conflict of interest for a CEO to be her/his own overseer while managing the business,’ states the briefing, which has been distributed to the shareholders.
News Corp urges shareholders to reject the resolution in its proxy statement, arguing that the company already has a strong level of independent oversight and that studies do not support a ‘single, generally accepted approach to board leadership in the US’.
The media organization is also facing shareholder resolutions calling for the adoption of simple majority voting and the removal of the company’s dual class share structure, both of which are opposed by the board.
The shareholder rebellion follows a major protest last year when, with the hacking scandal still fresh in shareholder’s minds, Murdoch’s sons James and Lachlan both saw a third of votes cast against their reelection to the board.
