Press Room

Letter to Peter Barnes on meeting

September 14, 2011

This email was sent to Peter Barnes on September 8.

Mr Peter Barnes
Independent News Corp director

Hi Peter,

firstly thanks for agreeing to a meeting with the Australian Shareholders' Association regarding the forthcoming News Corp AGM in Los Angeles on October 21.

I understand you will be in Melbourne next week and would be available to meet on Thursday, September 15, if that is convenient.

Seeing as News Corp's lead independent director, Sir Rod Eddington, is also based in Melbourne, it would be beneficial if he was also able to attend the meeting, if available.

I may bring a colleague from the ASA and will advise closer to the time.

In terms of your request for details on the topics for discussion, ASA has adopted a position that it would like to see News Corp move towards the following governance arrangements:

* Genuine review of the phone hacking issues independent of management;

* Separation of the chairman and CEO role;

* Move to a clear majority of genuinely independent directors; and

* a plan to transition away from the dual class voting system

In light of events at the recent Metcash AGM and past practice at previous News Corp AGMs, I'd also like to spend some time on the format of the AGM at Fox Studios.

Firstly, it would be preferable to have the CEO's address at the beginning of the meeting before any formal business is dealt with. Rupert usually likes to do this at the end of the meeting, which is a very unusual practice.

It would also be good to hear from an independent director, presumably either Viet Dinh or Sir Rod Eddington, on the phone hacking issues and governance concerns more broadly at News Corp before any debate begins.

After these introductory presentations over 20-30 minutes, the chairman should then invite general discussion and questions which should be facilitated for at least an hour, assuming questions continue to come from the floor.

Once this general debate is concluded, the chairman should then move onto the formal business of the meeting and deal with each item separately, asking for questions on every Proposal.

In Australia, director elections are usually dealt with on an individual basis and candidates often speak to their nomination before the chair calls for questions.

With all 15 directors up for election at News Corp this would not be practical.

However, before the debate or ballot is conducted on director elections, it would be good to hear a 2-5 minute speech from each of the following independent committee chairs:

Sir Rod Eddington, Audit committee chair
Viet Dinh, Nominating and Corporate Governance committee chair
Andrew Knight, Remuneration committee chair

This would help identify the relevant directors for what should be an open and wide-ranging debate with shareholders about the election of directors. Shareholders should be given ample opportunity to quiz the independent directors in a discrete section of the AGM.

This discussion should not be dominated by the executive chairman or cut short in any way, as has occurred at previous News Corp AGMs. Allocating up to one hour to deal with the director elections would be reasonable.

Before shareholders cast their votes on the director elections, it would also be helpful if the company displayed the complete proxy position on the screen for shareholders to consider. This obviously did not happen at the recent Metcash AGM on the remuneration report.

Once the director elections are dealt with, the chairman could then move to Proposals 2, 3 and 4, asking for questions on each occasion and displaying the proxy position as we go.

All up, this format would give a good opportunity for shareholders to engage with both the board and senior management and also see proceedings concluded in approximately 3 hours.

Considering that financial analysts usually enjoy 2-3 hours of question and answer sessions with senior management each year, it is not unreasonable to commit the board to a longer period of discussion at this year's AGM, especially considering the events of the past 2 months and the debate-limiting tactics of Mr Murdoch at previous News Corp AGMs.

The appointment and election of directors is the most important power that shareholders have over a public company.

With 87% of News Corp's stock held by independent shareholders, it is vital that we are given ample opportunity to engage with the independent directors at the AGM.

I appreciate that you recognise this role, as demonstrated by your agreement to a pre-AGM meeting, and look forward to discussing these issues with you (and possibly Sir Rod) if an agreeable time can be found when you are in Melbourne next week.

Stephen Mayne
News Corp shareholder
Director and News Corp monitor, Australian Shareholders' Association