News Corp. fended off an investor proposal calling for an independent chairman only through the 40 percent voting stake controlled by Chairman and Chief Executive Officer Rupert Murdoch.
Excluding family holdings, investors at the annual meeting yesterday overwhelmingly backed a proposal for an independent director as chairman, according to totals in a regulatory filing. Unaffiliated voters also backed a plan to eliminate a special class of voting stock held by the Murdoch family, according to filings and data compiled by Bloomberg.
The vote means management will continue to face calls for governance changes as News Corp. advances plans to split into separate publishing and entertainment companies. Murdoch controls his 50-year-old media company through Class B voting shares that represent less than 15 percent of the ownership.
“As they move toward a split, we plan to pressure them to align the shares accordingly,” Ian Greenwood of the Local Authority Pension Fund Forum in West Yorkshire, U.K., said in an interview. “They must move toward a more appropriate governance model.”
Dan Berger, a News Corp. (NWSA) spokesman, declined to comment on the vote.
The vote to create an independent chairman lost by a margin of 356.7 million to 156.6 million. Excluding about 276 million Murdoch votes, the proposal would have passed by almost two to one. The tally was similar on the proposal to eliminate the dual classes of stock.
Murdoch, 81, defended his dual titles at the meeting, which was held in Los Angeles. While the positions are often separate in the U.K., he said it is standard for chairman and CEO roles to be combined in the U.S. The company will offer details about the management and board structures of the new companies by the end of the year, he said.
“We always consider what shareholders have to say,” Murdoch said. “There are plenty of U.S. media stocks to buy if you don’t like this one.”
The company elected two new directors, Álvaro Uribe, the former President of Colombia, and Elaine L. Chao, the former U.S. Secretary of Labor. The rest were re-elected. Just over 20 percent of votes cast opposed Lachlan Murdoch, 41, and Natalie Bancroft, who joined News Corp.’s board after the 2007 acquisition of Dow Jones & Co. Each would have won re-election without the Murdoch votes.
Murdoch’s family didn’t vote all of its shares. News Corp.’s foreign investors are barred from voting some stock because the company owns U.S. broadcast licenses. The family agreed to cap the votes it cast at 40 percent of the shares eligible to participate, or 276.4 million of the 696.1 million.
The company, owner of Fox Broadcasting and the Twentieth Century Fox film studio, has about 2.37 billion shares outstanding. Of those, the 798.5 million Class B shares have voting rights.
Murdoch has faced criticism over his handling of a phone- hacking scandal that erupted at the company’s U.K. newspapers. Investors had mounted a new campaign to separate the chairman and CEO roles to increase accountability.
Those efforts were also unsuccessful at last year’s meeting, where majorities of non-Murdoch votes went against Lachlan and Deputy Chief Operating Officer James Murdoch, 39.
“This reform is absolutely necessary,” said Julie Tanner, assistant director of socially responsible investing at Christian Brothers Investment Services, which backs the split. “The lack of internal controls at the company has had real and lasting repercussions. It has resulted in shuttering a newspaper, criminal investigations, the canceled BSkyB acquisition, eroded public trust, and it has tarnished the company’s reputation.”
News Corp. is embroiled in multiple police investigations for hacking into mobile phones and computers, as well as bribing public officials. U.K. authorities also are considering whether to bring corporate charges against News Corp.’s board for the alleged crimes.
At least 60 people have been arrested since police began the probes last year. The company was forced to call off its acquisition of British Sky Broadcasting Plc. (BSY)
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