At the end of News Corp.’s combative shareholders meeting, the titan of old media, Rupert Murdoch, was asked a new media question that seemed to catch him off guard.
Please explain a message you sent on Twitter, one shareholder representative asked Murdoch Tuesday during the international media company’s annual meeting of investors at the 20th Century Fox lot in Los Angeles.
“Oh, please!” Murdoch said, swatting his right hand in the air dismissively.
Murdoch has taken to Twitter and in the last few days unleashed a barrage of his political opinions, accusing the White House of lying and the Federal Reserve of inviting inflation. He was asked about a tweet in which he encouraged News Corp. investors to “take profits and sell” if they didn’t like his management style.
“There are plenty of media stocks,” Murdoch explained Tuesday to the questioner, Laura Campos, director of shareholder activities with the Nathan Cummings Foundation, which advocates socially responsible investing.
“So when you buy the stock, you know what the company is,” Murdoch said. “And if you don’t like it, then you don’t buy the stock.”
Shareholders received that message loud and clear. During the 80-minute meeting, a dozen of them protested what they said was News Corp.’s insufficient progress in giving more investors a voice in the company’s management.
In fact, News Corp. board members announced that three proposed reforms on the ballot had been defeated -- an hour before the voting closed, and before the advocates could present their arguments.
Nearly all the ballots, received by mail, had been tabulated before Tuesday’s meeting. What’s more, the company’s two classes of stock give Murdoch and his family nearly 40% voting control even though they own less than 15% of the company’s equity. That, according to governance experts, makes it nearly impossible for disaffected shareholders to mount an effective campaign against Murdoch.
Murdoch, however, bristled when Campos suggested that the corporate structure of News Corp. effectively put the interests of the Murdoch family ahead of those of ordinary shareholders.
“I can assure you that the interests of the Murdoch family are the exact same as all shareholders -- and that is to build a great company,” Murdoch said.
Tuesday, Murdoch and others who voted in alignment with him defeated the three reform measures. One that would have forced Murdoch to relinquish his role as board chairman was defeated by about 69% of the ballots. A second measure, to collapse non-voting Class A and voting Class B shares into one group, was rejected by more than 70% of ballots. The third proposal, to adopt a simple majority vote, lost by about 88% of the vote.
“These issues are not going to go away,” Julie Tanner, assistant director of socially responsible investing at Christian Brothers Investment Services, which owns shares of the company's stock, said after the meeting. “Shareholders are going to continue to call for robust and substantive changes to the company.”
During the meeting, Tanner presented her case to approve the reforms.
“These reforms are absolutely necessary at News Corp.," Tanner said. "The failure of internal controls has had real and lasting repercussions, resulting in shuttering a newspaper, criminal investigations ... and the tarnishing of the company's reputation."
Still, News Corp. shares have increased about 45% this year, in part because the company announced plans to spin off its newspapers and other publishing assets into a separate company. News Corp. shares closed Tuesday at $24.77, up 41 cents.
Murdoch, and 13 other board members, including his sons Lachlan and James Murdoch, were elected to the board. The eldest Murdoch received 487.5 million votes in favor of his reelection, and 18.4 million against, according to a regulatory filing later Tuesday. Chief Operating Officer Chase Carey received 503.3 million votes in favor of his return, and 8.6 million against.
Murdoch’s oldest son, Lachlan, who is no longer involved in News Corp. management, received the highest vote total against his reelection -- 406.3 million votes in favor of his reelection, and 107.2 million votes against.
James Murdoch fared slightly better, despite being criticized for his lack of oversight of News Corp.’s British newspapers during a phone hacking scandal that led to the closing of the century-old News of the World tabloid and has cost the company more than $224 million in legal fees. James Murdoch received 423.4 million votes in favor his reelection with 86.3 million against.
Two new directors were elected to the News Corp. board, including former Secretary of Labor (and former Fox News Channel contributor) Elaine L. Chao. She also is the wife of Senate Minority Leader Mitch McConnell (R-Ky.).
Alvaro Uribe, the former president of Colombia, was also elected, even though several shareholders alleged that close associates of his in Colombia have been accused of illegal wire-tapping.
Despite that, Uribe received more votes than any other director on the ballot: 509.8 million in support of his election.
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