Fund Management Lions Tame Murdoch

08 October 2004

News Corporation is unaccustomed to bending to shareholder pressure – witness its successful stand against an onslaught of criticism from institutional shareholders when Rupert Murdoch decided to shoehorn son James into the ceo's seat at UK satellite broadcaster BSkyB.

But even a tycoon as resolute as Murdoch senior can read the writing on the wall and has heeded the moving finger.

Following a tsunami of censure from major fund managers in Australia, the UK and Holland [WAMN 06-Oct-04], NewsCorp has agreed to enshrine Australian listing rules in its new corporate by-laws before reincorporating the group in the less demanding climes of Delaware, USA.

The protestors are concerned that the balmy Delaware business climate nurtures executive power at the expense of shareholder interests (ask Lord Black) and have threatened to vote against the move from Australia to America's east coast.

Given that under Australian corporate law such a move requires 75% shareholder approval – and that the legislation also bars the principal shareholder (the Murdoch family with 30%) from voting on the issue – a combined anti vote of institutional shareholder could defeat the proposal.

NewsCorp has accordingly agreed that a company board committee will consider corporate governance recommendations including new standards for measuring the independence of directors; disclosures on succession planning; procedures to consider shareholder proposals; and potential annual boardroom elections.

In addition, the company promised not to issue any new super voting shares; also that any investor with more than 20% of the voting shares can in future call a special shareholder meeting.

Said Murdoch major: "With the changes we have adopted today, that regime will be even stronger and reflect the company's ongoing commitment to maintaining the highest standards of corporate governance."

Data sourced from Financial Times Online; additional content by WARC staff