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News Corp. has defeated a shareholder proposal to adopt a recapitalization plan to eliminate News Corp’s dual-class capital structure that includes regular shares and super-voting share, most of which are owned by the Murdoch family.
At the annual meeting today, a majority of votes cast on the measure supported the company to leave the current share structure in place, against shareholder Starboard, which doesn’t believe control should passes from generation to generation, especially now as Rupert Murdoch and his children appear to disagree on who should inherit control the family business.
At issue is the fact that James, Elisabeth, Prudence and Lachlan Murdoch, who is the sole chair of News Corp. as well as CEO of Fox, would split control of the business equally under the terms of an irrevocable trust. But they may not -– and indications are that they will not — agree on how to run the family business. That creates uncertainty, which “represents a risk to shareholders,” activist investor Starboard said in a September letter.
Murdoch has been fighting in a Nevada probate court to change the trust, which it is possible to do in certain cases, so Lachlan will have control. Elisabeth, James and Prudence are said to heartily disagree (only Lachlan attended the mogul’s latest wedding this summer). It’s not clear where thing stands on that fight since the judge ruled that all hearings and documents are closed to the public.
“The super voting stock that allows the family to control News Corp. with a relatively small economic stake is not in the best interests of average stockholders and certainly not something that should be transferred,” Starboard said.
News Corp. insists that the super-voting stock has ensured stability.
Also at the annual meeting, shareholders elected the company’s full slate of directors and voted with the Board’s recommendations on all other proposals. In a statement this afternoon, News Corp said it “actively solicits feedback from its investors throughout the year, and values the ongoing dialogue generated by these extensive outreach efforts.”
“We are pleased stockholders once again convincingly supported the company and the Board of Directors on all matters. Amidst a period of significant industry disruption, News Corp has thrived through a combination of smart organic reinvestment, strategic acquisitions and divestments and disciplined cost management programs,” it said, noting that News Corp’s stock price has risen 45% over the past year.
“But the company is by no means complacent. The Board and management are dedicated to driving sustained results, continuing the company’s ongoing transformation and actively shaping the future of news and information in the AI era,” it said.
