The following comments were made by Julie Tanner, Assistant Director of Socially Responsible Investing at CBIS, at the News Corp Annual Meeting, held in Los Angeles on October 16, 2012:
|Good morning Mr. Murdoch, members of the News Corp board, staff, and fellow shareholders.
The resolution co-filed by Christian Brothers Investment Services and members of the Local Authority Pension Fund Forum requests the board of directors adopt a policy that the Chairman be an independent director.
We believe that having a CEO serve as Chair presents a conflict of interest and is an impediment to a strong, independent board, whose primary job is to monitor management on behalf of all shareholders.
More specifically, this reform is absolutely necessary at News Corp. The failure of internal controls has had real and lasting repercussions. It has shuttered a newspaper, launched criminal investigations, cancelled the BSkyB acquisition, eroded public trust, and tarnished the company’s reputation.
That these revelations took years to uncover and address strongly suggests the need to rebalance the power sharing structure among investors, directors and management to enhance long term shareholder value. We hold firm that separation would provide greater accountability of management to shareholders and greater independent oversight of management, including the CEO, by the board.
We are not alone in our conviction. Our resolution is backed by a broad range of influential shareholders around the globe and by leading proxy-voting advisory firms Glass Lewis and ISS.
In its opposition to this resolution, the board states it is aware of investor concerns but little has changed since last year when non-Murdoch shareholders cast majority votes against five News Corp directors, three of whom stand for reelection today. The pay package was also widely criticized, yet it still includes more than $100 million in total annual compensation to the top Executive Officers and one of the highest levels of base pay among the S&P 500.
The new Standards of Business Conduct is a good first step, however it is unclear what oversight mechanisms are in place to monitor its implementation or when shareholders will receive a report on its effectiveness. And while we commend the appointment of two new independent directors, it is unclear how their experience can help to improve ethical oversight on the board.
But the fact is, these are timid steps, and indicative of the News Corp board’s attitudes toward its shareholders. Shareholders should not viewed adversaries, but as allies who can provide insight and advice into the path the company is pursuing.
Until the changes instituted at the company are structural, not cosmetic, these scandals will continue to cloud the company for the foreseeable future.
News Corp.'s board has been promising sweeping changes since the scandal first broke. True sweeping change should start with the appointment of an independent Chair and with truly independent voices on the board.
We recommend shareholders vote in favor of this proposal. Thank you.