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May 15, 2013

Shareowners Re-file Governance Resolutions at News Corp
    by Robert Kropp

Christian Brothers Investment Services and the British Columbia Investment Management Corporation request separation of positions of board chair and CEO, while the Nathan Cummings Foundation calls for elimination of the media company's dual-class share structure. -- When shareowners advocating for responsible corporate governance come up against the dual-class stock structure common at many media companies, they recognize that they face an uphill battle.

So it is with Christian Brothers Investment Services (CBIS) and the British Columbia Investment Management Corporation (bcIMC), co-filers of a shareowner resolution calling for the separation of the positions of board chair and CEO at News Corp. Both positions at the media company are held by Rupert Murdoch. The resolution is also supported by the UK-based Local Authority Pension Fund Forum (LAPFF).

At last year's annual general meeting, two-thirds of the independent shareowners agreed with the argument advanced by CBIS and voted in favor of the resolution. A proxy advisory briefing distributed to shareowners in advance of last year's meeting stated, "The shareholder proponents call for an independent Chair to improve the board's oversight of management and risk and strengthen accountability to shareowners."

The investors also cited a report from GMI Ratings finding that five-year shareowner returns are nearly 28% higher at companies with a separate CEO and chair. GMI also found that the cost of employing a combined CEO/chair is 151% of the cost of a separate CEO and chair.

Despite the overwhelming support of independent shareowners for the measure, it was defeated because the company's dual-class share structure enables the Murdoch family, which owns just 14% of the company's stock, to maintain de-facto control of the company.

Announcing this year's refilling of the resolution, Julie Tanner of CBIS stated, "The proposed reorganization presents an excellent opportunity for the board to demonstrate responsiveness to last year's resounding vote."

"With the level of support our resolution has received, the News Corp board can no longer afford to ignore the company's independent shareholders and must appoint an independent Chairperson," Tanner continued. "Having a CEO serve as Chair presents a conflict of interest and is an impediment to a strong, independent board."

Also returning to the proxy ballot at News Corp this year is a resolution filed by the Nathan Cummings Foundation calling for the elimination of the dual-class share structure that has served to insulate Murdoch from the request of independent shareowners. The resolution also gained two-thirds of the support of independent shareowners at last year's meeting.

"These results demonstrate the need for a one vote, one share structure," Laura Campos of the Foundation stated after last year's meeting. "The company has failed to convince shareholders that the status quo is in our best interest. We deserve a say in the running of our company, and Murdoch should not continue to be insulated from shareholder concerns."

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