Heading towards the News Corp end game
October 25, 2011
Hi everyone,
the end game is approaching at News Corp after the devastating against votes received by a number of directors and the remuneration report at the annual meeting in Los Angeles on Friday.
The Australian Shareholders' Association has just put out the following statement:
ASA calls for News Corp board resignations to start today
Tuesday, October 25, 2011, 5.30pm
The Australian Shareholders' Association today called for immediate resignations from the News Corp board in light of the record protest votes recorded at the annual meeting against a range of directors and the remuneration report.
ASA recommended against five News Corp directors - James Murdoch, Lachlan Murdoch, Andrew Knight, Arthur Siskind and Viet Dinh - and they received 5 of the six largest protest votes.
ASA CEO Vas Kolesnikoff said there is no reason why the long overdue governance reform at News Corp cannot start today with the immediate resignations of Andrew Knight and Arthur Siskind, two long serving directors and former executives of the company.
"ASA calls on lead independent News Corp director Sir Rod Eddington to immediately facilitate the departures of Mr Knight and Mr Siskind, who are both in their 70s and have served on the board for a combined 40 years," Mr Kolesnikoff said.
"Whilst the changes required are far more substantial, these two resignations are obvious initial moves that would signify the board respects the position of the overwhelming majority of independent voting shareholders who voted against their re-election."
"Mr Knight is the long-standing chairman of the remuneration committee, so the 232 million votes against the remuneration report and the 214 million votes against his own re-election are two votes of no confidence from investors."
ASA also raised concerns about the probity and processes surrounding the vote after News Corp monitor Stephen Mayne was repeatedly rebuffed at the annual meeting when requesting timely disclosure of the voting position.
"The independent directors should never have allowed executive chairman Rupert Murdoch to suppress the votes and this action once again demonstrates why News Corp needs a genuinely independent chairman to steer governance reforms," My Mayne said.
"Shareholders should have been able to debate the fact that a record 232 million were voted against James Murdoch's resignation, representing 35% of the total vote and clear majority of the independent vote once the Murdoch family's 317 million voting shares are excluded."
"Instead, James Murdoch didn't say a word at the meeting when he should have been explaining the phone hacking scandal and allowing the independent directors to discuss what the size of the protest vote meant for his ongoing role at the company."
ASA supports Rupert Murdoch remaining as a director of News Corp and notes that his protest vote of 91.8 million was the 9th highest.
ASA also respects the right of the Murdoch family to retain some board representation.
However, this needs to be balance by a more democratic share structure and a clear majority of independent directors who can balance the recent excesses of management in areas such as corporate practices, executive pay and acquisitions.
For these reasons, ASA is seeking the immediate departure of Mr Knight and Mr Siskind. And if Mr Murdoch and the independent directors refuse to fire these directors, then they resign of their own volition in a mark of respect to good governance after a record protest vote.
For further information:
Stephen Mayne: (0412) 106 241
Email: Stephen@maynereport.com
Vas Kolesnikoff: 0421 705 251
Email: vaskolesnikoff@asa.asn.au
ENDS
Separately, I also wrote this piece for Crikey today:
Historic votes against News Corp, now for action
The News Corporation votes are in and the record protest votes have duly been delivered. In spades.
No News Corp director has ever had more than 150 million votes against, so the records were clearly smashed in 2011 with as much as 80% of the independent shareholders voting to remove the Murdoch boys and other compliant or affiliated directors.
The most incredible thing about the votes was the way shareholders so accurately ranked the directors in terms of who should go. From the top, the against votes were as follows:
No doubt Rupert and his supporters will point to the fact that James was re-elected with 433 million votes or 65% in favour. But once you strip out the 317 million votes controlled by the Murdoch family and the 57 million votes held by their great supporter, Saudi Prince Alwaleed bin Talal, there was only 60 million neutral shareholders who supported the re-election of James after the phone hacking scandal.
It is clear that James, Lachlan, Andrew Knight, Arthur Siskind and Natalie Bancroft all would have been removed from the board but for the support of the Murdoch family. And this is before considering the infamous gerrymander which denies a vote to almost 70% of the News Corp shares on issue.
If non-voting shareholders were empowered, these same directors would all probably have been removed even with the Murdochs voting their full 13% economic interest in favour.
When asked repeatedly to reveal the proxies at the AGM in Los Angeles on Friday, executive chairman Rupert Murdoch refused and at one stage even described them as “private”. Later he said they would be released two hours after the AGM, but the board ended up taking 72 hours when they were dropped simultaneously to the SEC and the ASX at about 8.30am this morning.
The scandal of Rupert refusing to reveal the votes — something he has happily done at several previous shareholder meetings — had the effect of denying the AGM an opportunity to discuss the implications of these record protest votes.
The very obvious question to ask lead independent director Sir Rod Eddington would have been as follows: you represent the 87% of News Corp owned by non-Murdoch shareholders, how are you and the independent directors going to respond to as much as 80% of the neutral shareholders voting against certain directors?
Instead, Sir Rod will no doubt be hoping he can remain publicly silent on News Corp matters for another 12 months, just as has been over the previous year following this exchange at the 2010 AGM. But the momentum for change from these votes will probably prove overwhelming.
Rupert's undemocratic, evasive and bunker-like behaviour at the AGM was the best evidence you could ever want for why News Corp should have an independent chairman who can at least get the basics rights around conduct of the AGM and the timely release of voting figures to investors.
These arguments mounted by the Australian Shareholders' Association against James, Lachlan, Siskind, Knight and Dinh are the same arguments which motivated many proxy advisers institutions to target them.
Why should former News Corp group general counsel Siskind remain a Murdoch loyalist on the board pocketing more than $US3 million a year when he is 71 and was supposed to have retired in 2005?
Another former executive, Knight, looks particularly vulnerable because he has chaired the remuneration committee since its inception almost a decade ago and the remuneration report was opposed by 232.1 million shares, fractionally more than the protest James Murdoch received.
It's clear investors are very upset Rupert helped himself to a 47% pay rise to a record $US33.3 million even after the phone hacking scandal shattered the company's reputation and cost shareholders hundreds of millions of dollars.
As has been previously explained, US law is different to Australia because Rupert was able to vote his stake in favour of his own pay packet. The remuneration would have been comfortably defeated if News Corp was still based in Adelaide and the subject of the new two strikes law.
*Stephen Mayne is a director of the Australian Shareholders' Association. He can reached at Stephen@maynereport.com or through Twitter on @maynereport.
Also, here are some other relevent links:
Commentary after the News Corp annual meeting
Record protest votes, now for the resignations
Crikey, Tuesday, October 25, 2011
News Corp AGM: no doddery old men, or flying foam pies
Crikey, Monday, October 24, 2011
Post-AGM analysis of News Corp AGM
ABC website, The Drum, Monday, October 24, 2011
Commentary before the October 21 News Corp annual meeting
The most dramatic News Corp AGM since Robert Maxwell came to town
Crikey, Friday, October 21, 2011
Interview on Lateline Business
ABC1 television, Thursday, October 20, 2011
How to clean up News Corp's governance structure
ABC website, The Drum, Thursday, October 20, 2011
Why Rupert prefers the American say on pay system
Fairfax's Businessday.com.au, Tuesday, October 18, 2011
Inside the News Corp governance campaign
Fairfax's Businessday.com.au, Thursday, September 15, 2011
The killer question to ask James Murdoch
Crikey, Thursday, September 15, 2011
Why isn't anyone reporting Rupert's $US33.3m salary?
Crikey, Tuesday, September 6, 2011
Rupert delivers the profits and analysts dodge the hard questions
ABC website, The Drum, Thursday, August 11
Special email edition to News Corp analysts ahead of earnings conference call
The Mayne Report, Wednesday, August 10, 2011
One last trip to New York for a Rupert AGM show down
Mayne Report, Tuesday, July 19
How to cross-examine Rupert Murdoch
Crikey, Tuesday, July 19
Ranking the 16 News Corp directors for independence
Crikey, Monday, July 18
Rupert's crisis blows up $6 billion in a week
The Drum, July 13, 2011
Some other useful links including historical articles
Transcript of 12 minute exchange at 2010 News Corp AGM
Analysis of executive pay at News Corp over past decade
Letter sent to independent News Corp director on 2011 AGM format
Letter sent to News Corp analysts ahead of last earnings call
A Comsec table analysing the relatively poor performance of News Corp for Australian investors over the past 20 years.
The Nick Davies feature in The Guardian in July 2009 which re-opened the phone hacking scandal.
Former Murdoch loyalist Andrew Neil tells The Guardian it has exposed hugely important material.
The New York Times feature in September 2010 which helped re-fire Scotland Yard's News Corp probe.
Washington Post explains how The Guardian and New York Times collaborated on phone hacking scandal.
Murdoch's biographer Michael Wolff explains News Corp's culture for Adnews.
That's all for now.
Do ya best, Stephen Mayne
* The Mayne Report is a multi-media governance website published by Stephen Mayne with occasional email editions. To unsubscribe from the emails click here.
the end game is approaching at News Corp after the devastating against votes received by a number of directors and the remuneration report at the annual meeting in Los Angeles on Friday.
The Australian Shareholders' Association has just put out the following statement:
ASA calls for News Corp board resignations to start today
Tuesday, October 25, 2011, 5.30pm
The Australian Shareholders' Association today called for immediate resignations from the News Corp board in light of the record protest votes recorded at the annual meeting against a range of directors and the remuneration report.
ASA recommended against five News Corp directors - James Murdoch, Lachlan Murdoch, Andrew Knight, Arthur Siskind and Viet Dinh - and they received 5 of the six largest protest votes.
ASA CEO Vas Kolesnikoff said there is no reason why the long overdue governance reform at News Corp cannot start today with the immediate resignations of Andrew Knight and Arthur Siskind, two long serving directors and former executives of the company.
"ASA calls on lead independent News Corp director Sir Rod Eddington to immediately facilitate the departures of Mr Knight and Mr Siskind, who are both in their 70s and have served on the board for a combined 40 years," Mr Kolesnikoff said.
"Whilst the changes required are far more substantial, these two resignations are obvious initial moves that would signify the board respects the position of the overwhelming majority of independent voting shareholders who voted against their re-election."
"Mr Knight is the long-standing chairman of the remuneration committee, so the 232 million votes against the remuneration report and the 214 million votes against his own re-election are two votes of no confidence from investors."
ASA also raised concerns about the probity and processes surrounding the vote after News Corp monitor Stephen Mayne was repeatedly rebuffed at the annual meeting when requesting timely disclosure of the voting position.
"The independent directors should never have allowed executive chairman Rupert Murdoch to suppress the votes and this action once again demonstrates why News Corp needs a genuinely independent chairman to steer governance reforms," My Mayne said.
"Shareholders should have been able to debate the fact that a record 232 million were voted against James Murdoch's resignation, representing 35% of the total vote and clear majority of the independent vote once the Murdoch family's 317 million voting shares are excluded."
"Instead, James Murdoch didn't say a word at the meeting when he should have been explaining the phone hacking scandal and allowing the independent directors to discuss what the size of the protest vote meant for his ongoing role at the company."
ASA supports Rupert Murdoch remaining as a director of News Corp and notes that his protest vote of 91.8 million was the 9th highest.
ASA also respects the right of the Murdoch family to retain some board representation.
However, this needs to be balance by a more democratic share structure and a clear majority of independent directors who can balance the recent excesses of management in areas such as corporate practices, executive pay and acquisitions.
For these reasons, ASA is seeking the immediate departure of Mr Knight and Mr Siskind. And if Mr Murdoch and the independent directors refuse to fire these directors, then they resign of their own volition in a mark of respect to good governance after a record protest vote.
For further information:
Stephen Mayne: (0412) 106 241
Email: Stephen@maynereport.com
Vas Kolesnikoff: 0421 705 251
Email: vaskolesnikoff@asa.asn.au
ENDS
Separately, I also wrote this piece for Crikey today:
Historic votes against News Corp, now for action
The News Corporation votes are in and the record protest votes have duly been delivered. In spades.
No News Corp director has ever had more than 150 million votes against, so the records were clearly smashed in 2011 with as much as 80% of the independent shareholders voting to remove the Murdoch boys and other compliant or affiliated directors.
The most incredible thing about the votes was the way shareholders so accurately ranked the directors in terms of who should go. From the top, the against votes were as follows:
- James Murdoch: 232 million
- Lachlan Murdoch: 224 million
- Natalie Bancroft: 222.2 million
- Andrew Knight: 214 million
- Arthur Siskind: 200.5 million
- David Devoe: 150.6 million
- Sir Rod Eddington: 111.4 million
- Viet Dinh: 94.8 million
- Rupert Murdoch: 91.8 million
- John Thornton: 82.4 million
- Peter Barnes: 74.5 million
- Jose Maria Aznar: 70.7 million
- Chase Carey: 61.6 million
- Joel Klein: 23.4 million
- James Breyer: 6.8 million
No doubt Rupert and his supporters will point to the fact that James was re-elected with 433 million votes or 65% in favour. But once you strip out the 317 million votes controlled by the Murdoch family and the 57 million votes held by their great supporter, Saudi Prince Alwaleed bin Talal, there was only 60 million neutral shareholders who supported the re-election of James after the phone hacking scandal.
It is clear that James, Lachlan, Andrew Knight, Arthur Siskind and Natalie Bancroft all would have been removed from the board but for the support of the Murdoch family. And this is before considering the infamous gerrymander which denies a vote to almost 70% of the News Corp shares on issue.
If non-voting shareholders were empowered, these same directors would all probably have been removed even with the Murdochs voting their full 13% economic interest in favour.
When asked repeatedly to reveal the proxies at the AGM in Los Angeles on Friday, executive chairman Rupert Murdoch refused and at one stage even described them as “private”. Later he said they would be released two hours after the AGM, but the board ended up taking 72 hours when they were dropped simultaneously to the SEC and the ASX at about 8.30am this morning.
The scandal of Rupert refusing to reveal the votes — something he has happily done at several previous shareholder meetings — had the effect of denying the AGM an opportunity to discuss the implications of these record protest votes.
The very obvious question to ask lead independent director Sir Rod Eddington would have been as follows: you represent the 87% of News Corp owned by non-Murdoch shareholders, how are you and the independent directors going to respond to as much as 80% of the neutral shareholders voting against certain directors?
Instead, Sir Rod will no doubt be hoping he can remain publicly silent on News Corp matters for another 12 months, just as has been over the previous year following this exchange at the 2010 AGM. But the momentum for change from these votes will probably prove overwhelming.
Rupert's undemocratic, evasive and bunker-like behaviour at the AGM was the best evidence you could ever want for why News Corp should have an independent chairman who can at least get the basics rights around conduct of the AGM and the timely release of voting figures to investors.
These arguments mounted by the Australian Shareholders' Association against James, Lachlan, Siskind, Knight and Dinh are the same arguments which motivated many proxy advisers institutions to target them.
Why should former News Corp group general counsel Siskind remain a Murdoch loyalist on the board pocketing more than $US3 million a year when he is 71 and was supposed to have retired in 2005?
Another former executive, Knight, looks particularly vulnerable because he has chaired the remuneration committee since its inception almost a decade ago and the remuneration report was opposed by 232.1 million shares, fractionally more than the protest James Murdoch received.
It's clear investors are very upset Rupert helped himself to a 47% pay rise to a record $US33.3 million even after the phone hacking scandal shattered the company's reputation and cost shareholders hundreds of millions of dollars.
As has been previously explained, US law is different to Australia because Rupert was able to vote his stake in favour of his own pay packet. The remuneration would have been comfortably defeated if News Corp was still based in Adelaide and the subject of the new two strikes law.
*Stephen Mayne is a director of the Australian Shareholders' Association. He can reached at Stephen@maynereport.com or through Twitter on @maynereport.
Also, here are some other relevent links:
Commentary after the News Corp annual meeting
Record protest votes, now for the resignations
Crikey, Tuesday, October 25, 2011
News Corp AGM: no doddery old men, or flying foam pies
Crikey, Monday, October 24, 2011
Post-AGM analysis of News Corp AGM
ABC website, The Drum, Monday, October 24, 2011
Commentary before the October 21 News Corp annual meeting
The most dramatic News Corp AGM since Robert Maxwell came to town
Crikey, Friday, October 21, 2011
Interview on Lateline Business
ABC1 television, Thursday, October 20, 2011
How to clean up News Corp's governance structure
ABC website, The Drum, Thursday, October 20, 2011
Why Rupert prefers the American say on pay system
Fairfax's Businessday.com.au, Tuesday, October 18, 2011
Inside the News Corp governance campaign
Fairfax's Businessday.com.au, Thursday, September 15, 2011
The killer question to ask James Murdoch
Crikey, Thursday, September 15, 2011
Why isn't anyone reporting Rupert's $US33.3m salary?
Crikey, Tuesday, September 6, 2011
Rupert delivers the profits and analysts dodge the hard questions
ABC website, The Drum, Thursday, August 11
Special email edition to News Corp analysts ahead of earnings conference call
The Mayne Report, Wednesday, August 10, 2011
One last trip to New York for a Rupert AGM show down
Mayne Report, Tuesday, July 19
How to cross-examine Rupert Murdoch
Crikey, Tuesday, July 19
Ranking the 16 News Corp directors for independence
Crikey, Monday, July 18
Rupert's crisis blows up $6 billion in a week
The Drum, July 13, 2011
Some other useful links including historical articles
Transcript of 12 minute exchange at 2010 News Corp AGM
Analysis of executive pay at News Corp over past decade
Letter sent to independent News Corp director on 2011 AGM format
Letter sent to News Corp analysts ahead of last earnings call
A Comsec table analysing the relatively poor performance of News Corp for Australian investors over the past 20 years.
The Nick Davies feature in The Guardian in July 2009 which re-opened the phone hacking scandal.
Former Murdoch loyalist Andrew Neil tells The Guardian it has exposed hugely important material.
The New York Times feature in September 2010 which helped re-fire Scotland Yard's News Corp probe.
Washington Post explains how The Guardian and New York Times collaborated on phone hacking scandal.
Murdoch's biographer Michael Wolff explains News Corp's culture for Adnews.
That's all for now.
Do ya best, Stephen Mayne
* The Mayne Report is a multi-media governance website published by Stephen Mayne with occasional email editions. To unsubscribe from the emails click here.