Events leading to the closure of News Corporation’s News of the World operations in 2011 have raised investor concerns about the cost—in jobs, reputation, market position, and enterprise value—of inadequate oversight and maintenance of corporate culture within the company and its subsidiaries.
This pervasive and continuing scandal has led to an erosion of public confidence, helped to scuttle a critical business acquisition, and threatened the journalistic reputation and viability of News Corporation’s UK publications. It also has made clear the need for independent board leadership to steer the company through a process of reform.
That these revelations took years to uncover and are only now being addressed suggest a lax ethical culture and a lack of effective board oversight.
Shareholder discontent with the current board structure is evidenced by the results at News Corporation’s 2011 shareholder meeting:
To address shareholder concerns, we call for an Independent Chair to improve board oversight of management, business risk, and the interests of all shareholders.
- Votes of at least 31% against the reappointment of four board members.
- Support from proxy voting firm Glass Lewis and prominent investors with over $400 billion in assets under management, including: CalPERS, the Church of England, and the Local Authority Pension Fund Forum, for a floor resolution calling for an Independent Chair.
Given the dual-class share structure and level of family control, it is particularly important for News Corporation to have an Independent Chair who is empowered to challenge management, to foster a culture of accountability, and to reflect the interests of the wider shareholder body.
An Independent Chair can also provide the Board with the appropriate corporate governance structure to enable a decision on succession that benefits all shareholders.
An Independent Chair provides an important layer of checks and balances and could improve board oversight. By naming an Independent Chair, the company can create greater independence and objectivity on the board, begin to rebuild the public confidence and trust that is critical to a major news organization, and assure shareholders that governance failures are being addressed.
THEREFORE, BE IT RESOLVED: That stockholders of News Corporation (the “Company”) ask the Board of Directors to adopt a policy that the Board’s Chairman be an independent director according to the definition set forth in NASDAQ listing standards, unless Company common stock ceases being listed there and is listed on another exchange, at which point, that exchange’s independence standard should apply. If the Board determines that a Chairman who was independent when selected is no longer independent, the Board shall promptly select a new Chairman who satisfies this independence requirement. Compliance with this requirement may be excused if no director who qualifies as independent is elected by shareholders or if no independent director is willing to serve as Chairman. This independence requirement shall apply prospectively so as not to violate any Company contractual obligation at the time this resolution is adopted.