Murdoch's Control of Fox Targeted by Investor in Proxy FilingBy
Scandals led group to propose curtailing family voting rights
Nathan Cummings Foundation wants to eliminate stock classes
Fox recommends shareholders oppose the proposal by the Nathan Cummings Foundation, which held 947 voting shares, to eliminate the dual-class stock structure that gives Murdoch control, according to a regulatory filing Thursday. Investors will decide on the nonbinding measure at the annual meeting scheduled for Nov. 15 in Los Angeles.
Despite owning 17 percent of the outstanding shares, Executive Chairman Murdoch controls almost 40 percent of the voting power, according to the filing and a statement by the foundation. The group has unsuccessfully pursued a similar change at another Murdoch company, News Corp., for several years and proposed such a change at Fox in 2013.
“There are a number of reasons, including all of the various high-profile scandals that the company has faced,” said Laura Campos, director of corporate and political accountability at the New York-based foundation. “We have long argued that scandals like these are in large part a result of a capital structure that fosters a lack of accountability.”
Dual-class arrangements, which give one group of stockholders sway over another, “can cause entrenchment because they prevent removal of a controller,” the foundation said. One concern the group raised was the elevation of James Murdoch to chief executive officer, following his resignation a few years ago from News Corp. in the wake of the phone hacking scandal. The foundation said the Fox board “may limit its consideration of non-Murdoch candidates for top executive positions.”
Allegations of sexual harassment at Fox News Channel also “drew our attention back to the company,” Campos said. The group came close to winning a nonbinding vote at News Corp. in 2015, she added.
In response, Fox’s board said the structure was “appropriate and is in the best interest of the company and its stockholders.”
The company added that an independent board overseeing the management and the appointment of a lead director reinforced accountability. The dual-class structure also gave the company financing flexibility by being able to issue non-voting Class A shares, Fox said in the proxy statement. Moreover the structure is common among other media companies such as Comcast Corp. and Viacom Inc., Fox said.