Rupert Murdoch has narrowly seen off a significant revolt by New Corp shareholders against the voting structure that ensures his family retains an iron grip on the publisher of the Wall Street Journal, the Sun and the Australian.
News Corp’s dual-class share structure gives the Murdoch family 39.4% control of voting power, despite owning only 14% of the company, which means independent shareholders have little influence.
A shareholder proposal to scrap the structure and replace it with a one share, one vote system was narrowly defeated at the company’s annual general meeting last week. The proposal received 79 million shares voted in favour versus 87.6 million against.
At the meeting Bill Dempsey, chief financial officer of News Corp independent shareholder the Nathan Cummings Foundation, which sponsored the motion, said the dual-class structure gave the Murdochs an unhealthy level of control.
“This kind of governance structure may be what we would expect in Cuba or North Korea but it is at odds with good governance practices [in the US],” he said. “The dual-class structure provides control without a corresponding economic stake and that this is not in the best interests of shareholders.”
Another investor at the meeting said that the share structure was “fundamentally undemocratic”.
The former Spanish prime minister José Maria Aznar, the News Corp president and independent director, defended the system, saying it promoted stability in management and allowed the company “flexibility” in its executive remuneration plans.
Investor advisory services ISS and Glass Lewis had both issues notes in favour of cutting the Murdochs’ voting power.
Rupert Murdoch opened the meeting, with a glowing endorsement of his eldest son Lachlan, regarded by many to be the heir apparent to the Murdoch business empire.
“I’m particularly proud today to be sharing the stage with my eldest son Lachlan, who is co-chairman,” said Murdoch. “[He] has proven himself to be a talented and successful executive in his own right here and in Australia and will lead us to a very prosperous, bright future. And I’m confident as you get to know him better you will share mine and the board’s belief you could not find a more passionate and committed co-chairman.”
Lachlan was appointed non-executive co-chairman of News Corp, the newspaper and book publishing business, and 21st Century Fox, its sister TV, film and entertainment company, in March.
The promotion marked a return to the fold for Rupert Murdoch’s eldest son, who quit his father’s business in 2005 to return to Australia and set up his own media investment company, Illyria.
News Corp’s 2014 AGM was held on Thursday in the Zanuck Theater at Fox Studios in Los Angeles.
