Murdoch’s Roles at Fox Should Be Split, Glass Lewis Says
Rupert Murdoch’s positions as chairman and chief executive officer of 21st Century Fox Inc. (FOXA) should be split, shareholder-advisory firm Glass, Lewis & Co. said today in support of an investor resolution.
Christian Brothers Investment Services and the British Columbia Investment Management Corp., which are pushing for an independent chairman at the media company, said the idea also has been endorsed by other proxy-advisory firms, such as Institutional Shareholder Services Inc. The resolution will be voted on at Fox’s shareholder meeting on Oct. 18.
Backers of the resolution say the board lacks independence with Murdoch holding both the chairman and CEO jobs at the entertainment company, which owns the Fox television network and film studio. They also cited the phone-hacking scandal at the News of the World paper owned by News Corp., which was broken up this year to create 21st Century Fox.
“Fallout from the News of the World phone-hacking scandal in the U.K. continues to plague the company and underscores the need for strong corporate governance guidelines, including independent board leadership,” Christian Brothers and British Columbia Investment Management said today in a statement. “Despite ethical lapses, 21st Century Fox, created as a result of News Corp.’s split in June 2013, retains Rupert Murdoch as joint chair and CEO.”
Glass Lewis and ISS are overlooking reforms that Fox directors have undertaken at the company and the value created for investors, Julie Henderson, a spokeswoman for the New York-based company, said in an e-mail.
“The disproportionate focus that both ISS and Glass Lewis place on historical matters underscores the widening credibility gap between them and our shareholders as their analyses consistently disregard the value we have created for our investors and the significant improvements we have made to our compliance programs,” Henderson said.
Murdoch, who controls Fox, and other holders of voting shares last year rejected a similar proposal, which also gained support from Glass Lewis and ISS. That proposal drew 30 percent of investors’ votes. A proposal to eliminate the company’s dual-class share structure drew 29 percent of votes.
Fox fell 0.8 percent to $33.42 at the close in New York. The stock has gained 48 percent this year, outperforming the 19 percent increase for the Standard & Poor’s 500 Index and the 34 percent rise for an S&P index of 16 media companies.
Julie Tanner, assistant director of socially responsible investing at Christian Brothers, said that while Fox’s board has made improvements, the directors adopted a “poison pill” takeover defense without shareholder approval.
“The board continues to disregard the interests of shareholders,” Tanner said in an e-mail. “It is an unresponsive board.”
The coalition backing the proposal, with 66.2 million nonvoting Class A shares under management, includes F&C Asset Management, Aviva Investors and AP4, Tanner said.
Fox has about 1.51 billion Class A shares outstanding and about 800 million of voting Class B shares, according to data compiled by Bloomberg. The Murdoch family trust holds 314.9 million Class B shares, according to regulatory filings.
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