Dual-class share structure focus of News Corp voteOctober 2012
News Corp's controversial dual-class share structure is coming under sustained attack, with institutional and individual investors due to push for its removal at the company's AGM in Los Angeles this month.
The company is also likely to come under fire over executive remuneration, even though bonuses for chairman Rupert Murdoch and his son James were ‘reduced' – to $10.4m and $5m respectively – in the wake of the News of the World phone-hacking scandal in the UK.
The California Public Employees' Retirement System (Calpers), Christian Brothers Investment Services and members of the UK's Local Authority Pension Fund Forum have jointly filed a shareholder resolution seeking to eliminate the dual-class share structure. A small shareholder has filed a resolution calling for the introduction of simple majority voting.
Calpers, the largest pension fund in the US with $237bn of funds under management, has also revised its corporate governance policy so that it will now actively campaign against dual-class, classified or plurality voting structures, as well as avoid initial public offerings that use them.
Shareholders are also likely to oppose the Murdoch family's continuing dominance of News Corp and, in particular, two proposed board appointments and a mooted move to install James as head of Fox Networks, the US broadcaster.
Former Colombian president Alvaro Uribe and Elaine L Chao, former US secretary of labor, have been nominated to serve on the board, to replace Andrew Knight and John Thornton, who are both retiring.
Critics claim the move reflects the company's fascination with well-connected members of the political elite, rather than any desire for independent oversight.
Meanwhile, James Murdoch's possible appointment as Fox Network boss has also rankled. His appointment, said an unnamed shareholder quoted in the Guardian, would be a “slap in the face for shareholders, not to mention victims of the hacking scandal”.
In its verdict that BSkyB was a ‘fit and proper' holder of a broadcasting licence last month, UK regulator Ofcom said that though there was no “reasonable basis to conclude [James was] deliberately engaged in any wrongdoing”, it did say his conduct “fell short of the conduct to be expected of him as a chief executive officer and chairman”. And it added: “We consider James Murdoch's conduct, including his failure to initiate action on his own account on a number of occasions, to be both difficult to comprehend and ill-judged.”
Meanwhile, not only is the trickle of arrests continuing, but News Corp also faces further civil claims. According to reports, a further 230 claims could be forthcoming. In addition, it has been reported that Labour MP Siobhain McDonagh has launched a legal action against both News International and the Sun relating to the theft of her mobile phone.
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