21st Century Fox Inc. investors not affiliated with Rupert Murdoch and his family supported a proposal to create an independent chairman of the film and television company by about a 2-1 margin.
Shareholders representing almost 147 million Class B voting shares backed the plan, according to a filing yesterday by New York-based Fox after the company’s annual meeting in Los Angeles. Votes opposing totaled 361.7 million, including about 280 million cast by Murdoch, 82, and his family trust.
With the vote, investors are keeping up the pressure to split the roles of chairman and chief executive officer, both held by Murdoch. The tally suggests Fox will continue to face calls for reform. Murdoch son Lachlan wouldn’t have been re-elected to the board without his father’s votes. Last year, unaffiliated investors voted 2-1 to split the jobs at News Corp., which was separated into two separate publishing and entertainment businesses in June.
“The level of family control -- Mr. Murdoch owns 40 percent of voting shares -- and the dual-class share structure which denies voting rights to Class A shareholders, were engineered to keep power in the hands of Mr. Murdoch,” said Julie Tanner of Christian Brothers Investment Services. “While it is virtually impossible for a shareholder resolution to ‘pass,’ a high vote result should send a clear signal to the board that change is needed.”
Christian Brothers, which proposed the independent chairman and was joined by British Columbia Investment Management Corp., said Fox’s board lacks independence with Murdoch holding both posts. They cited the phone-hacking scandal that led to the closing of News Corp.’s News of the World newspaper and derailed plans to buy the part of British Sky Broadcasting Group that the company doesn’t already own.
Proxy advisers Institutional Shareholder Services Inc. and Glass, Lewis & Co. supported separating the roles. ISS also opposed the election of some board members, including Murdoch and his sons, over the company’s decision to adopt a “poison pill” takeover defense in June.
Murdoch and Viet Dinh, a director who spoke on behalf of the board, defended the combined roles. Dinh said most of the biggest U.S. companies combine the roles of chairman and CEO.
“Our CEO is best suited to serve as chairman,” Dinh said at the meeting. “He facilitates communication between the board and senior management.”
Fox called off voting on an investor proposal to end the company’s dual-class capital structure, under which only Class B shares have voting rights, after the backers failed to appear at the meeting.
The company has about 1.51 billion Class A shares outstanding and about 800 million Class B voting shares, according to data compiled by Bloomberg. The Murdoch family holds 314.9 million Class B shares, according to filings. Because shares held by foreign owners can’t vote, the Murdochs reduced their participation in the balloting to maintain their percentage of the lower total.
Fox, owner of the namesake broadcast network, fell 0.2 percent to $34.26 yesterday in New York. The shares have outperformed those of film-and-TV competitors, gaining 52 percent this year, compared with 35 percent for Walt Disney Co. and more than 44 percent at Time Warner Inc. Disney investors in March rejected a similar call to split Chairman and CEO Robert Iger’s duties.
Fox has repurchased $7.73 billion of its shares under the most recent buyback authorization, according to an Oct. 16 regulatory filing.
All 12 of the company’s board nominees were elected, including James Murdoch, who led News Corp.’s international publishing business during a probe of the phone-hacking scandal.