NEW YORK – April 3, 2012 – Christian Brothers Investment Services (CBIS), a leader in socially responsible investing, has filed a shareholder resolution at News Corporation calling for the establishment of an independent chair of the board in order to improve oversight of management, business risk and the interests of all shareholders.
“Given inaction by the board to implement needed reforms over the past nine months since the hacking scandal came to light, the history of poor corporate governance practices, and continued revelations that put shareholder value at risk, we find it necessary to file this proposal,” explains Julie Tanner, Assistant Director of Socially Responsible Investing at CBIS. “Considering that many large institutional investors support this reform at News Corporation, it is imperative that swift and definitive action be taken by the board to demonstrate responsiveness to shareholder concerns and a commitment to the highest standards of corporate behavior.”
“Although the deadline for filing shareholder resolutions is not until May 5, CBIS has chosen to file in hopes that that board will take immediate steps in this direction,” she says. “We are willing to withdraw the resolution if the Board commits to the appointment of a truly independent chair. Given the current situation, we don’t feel we can settle for anything less.”
The desire by shareholders for independent board members became apparent at the October 21, 2011 annual general meeting in Los Angeles when more than 30% of the votes were cast against the election of current directors Andrew Knight, Lachlan Murdoch, James Murdoch, Natalie Bancroft and Arthur Siskind, all of whom may be under consideration again in 2012.
While appointing an independent chair is of primary importance, CBIS has called on the board to implement five additional reforms to greatly improve News Corporation’s corporate governance:
- develop and implement a substantive Code of Ethics that includes strengthened editorial standards and monitoring mechanisms;
- disclose on the company’s website information related to the structure and substance of the board’s internal investigation and a date by which recommendations to strengthen policies and practices will be released to shareholders;
- appoint truly independent directors to ensure proper oversight of management and the CEO;
- reduce excessive executive compensation; and
- eliminate the dual class stock structure.
“Given the dual-class share structure and level of family control, where Rupert Murdoch’s family controls almost 40% of the voting rights,it is particularly important for News Corporation to have an independent chair who is empowered to challenge management in order to foster a culture of accountability, and to reflect the interests of the wider shareholder body,” Ms. Tanner concludes. “It’s time for News Corporation to be run for the benefit of all the shareholders, not just the Murdoch family.”
In 2011, CBIS filed a floor resolution calling for the appointment of an independent chair at News Corporation’s general shareholders meeting, following the revelation of events leading to the closure of News Corporation’s News of the World operations. The deadline for filing resolutions within the SEC process had passed when the first substantial allegations of unethical behavior came to light, but the issues raised were too important to ignore. According to the terms of a floor filing, only those present at the annual shareholders meeting are able to vote on it. Although it was ultimately defeated, the resolution drew support from prominent investors with over $400 million in AUM, including the California Pension Employee Retirement System (CalPERS), the Church of England, Hermes Equity Ownership and the UK’s Local Authority Pension Fund Forum, as well as Glass Lewis & Co., a leading international governance analysis and proxy voting firm that advises firms with $15 trillion of investments.
With this year’s filing CBIS’s resolution will be presented for a vote to all holders of Class B voting shares, regardless of their attendance at the actual meeting. The date and location of the 2012 meeting have not yet been disclosed.
For the full text of the resolution, click here.