Dissidents on News Corp. ballot


When shareholders of News Corporation hold their annual meeting October 19th, they’ll be voting on some routine items, plus two proposals that are opposed by Rupert Murdoch and the company’s board. One would dramatically dilute Murdoch’s voting power, but it is not considered likely to pass, despite a key endorsement.

Proposal No. 4 on the shareholder ballot would switch the company from having two classes of stock to only one – with all shareholders having equal voting rights. News Corporation currently has voting stock designated as Class B and non-voting shares designated Class A. In a statement supporting his proposal, shareholder Stephen Mayne of Australia cleverly notes that News Corporation discovered the difficulties of two-tiered voting schemes this year. "As News Corporation discovered when it first approached Dow Jones & Company, a two tier voting system can appear highly undemocratic and discourage attractive takeover bids. News Corp’s suite of strategic assets would be highly attractive to private equity bidders, yet the two-tier voting structure discourages their interest," Mayne stated. While Mayne personally owns only 150 voting shares, he got a boost recently when Institutional Shareholder Services advised its big money clients to vote "yes," saying proportional voting is always preferable, in its view, to dual-class structures. But even with ISS support, the proposal is given little chance of passing.
The other dissident proposal on the News Corporation ballot comes from Evelyn Davis, an activist shareholder well known to many a corporate CEO who’s been treated to a tongue-lashing from her at the open microphone of an annual shareholders’ meeting. She wants News Corporation to switch from staggered terms to electing all directors every year, as do most public companies. "I have absolutely NO connection with John Malone, and/or Liberty Cos." Davis notes in her supporting statement, and says annual elections would make all directors more accountable to all shareholders each year. She notes that the same proposal on last year’s ballot was supported by about a third of the votes cast. It also has ISS backing.

RBR observation: What is unusual about News Corporation is that there is actually at least a theoretical possibility that these measures could pass. In many companies with dual voting structures, CBS, Emmis and Radio One to name a few examples, one shareholder has majority voting control by virtue of their super-charged shares and can effectively veto any idea they don’t like. But while Rupert Murdoch and his family members own the biggest chunk of News Corporation’s voting stock, that still only amounts to 39% voting power. Should Mayne’s proposal pass, that would be reduced to under 15%.