Upstart activist Stephen Mayne didn’t win his battle on Friday to upturn News Corporation’s dual-class voting structure. Some might dismiss him and his Crikey.com website as a fringe operator, bordering on the fanatic, but he has garnered strong (if minority) support amongst independent News Corp shareholders.
Will Mayne now retire back into the shadows? Don’t bet on it.
Here are the activist’s post-AGM thoughts and threats, specially for FT Alphaville:
Rupert Murdoch played a pretty tough game at the News Corporation annual meeting on Friday in New York, severely limiting debate and even banning the video camera operator I’d hired to continue my Youtube campaign for greater shareholder accountability.
And no wonder Murdoch was keen to limit debate when $4.3bn worth of News Corp stock actually voted to end the company’s dual-class voting structure and diminish his control over the world’s most powerful media empire.
After working as a journalist for Murdoch for seven years in the 1990s, I’ve subsequently taken him on at eight of the last nine News Corp annual meetings - but what happened at New York’s historic Hudson Theatre was easily the biggest hit so far.
The Guardian and Associated Press both provide good summaries of what happened.
Sure, only 22.9 per cent of the votes cast supported my resolution to end the dual-class voting system. But this was after the Murdoch trusts and John Malone’s Liberty Media - of course - voted their combined 495 million shares against the proposal to abolish a system that denies nearly 70 per cent of the shares on issue a vote.
This means only 126m neutral shares backed the Murdoch-friendly board, compared with the 184m that supported the resolution - 59.35 per cent of the independents.
So what next? The real battle will come when I put up the same resolution next year - when Murdoch won’t have Liberty Media backing him, because Malone will be off the register as part of a $13bn peace deal.
Even Murdoch would have to admit: this was quite a revolt, aided hugely by support from powerful proxy advisory firm Institutional Shareholder Services and what is clearly growing dislike among institutional investors of corporate gerrymanders.
Why am I bothering? These small campaigns can ultimately have an impact. Consider the two-year campaign by activist Morgan Stanley fund manager Hassan Almasr against the dual-class voting structure at The New York Times Company. Although he folded his cards by selling his 7.2 per cent stake last week, the controlling Ochs-Sulzberger families have suffered quite a hit and the Times share price continues to slide.
Whilst a dual-class voting structure wasn’t enough to save the Bancroft family from losing control of Dow Jones, there is a certain irony in their predator, News Corp, now being subjected to a similar campaign.
Murdoch’s defence is that “everyone knows what you get when you buy News Corp shares”, and that the voting structure has provided management stability that allowed the board to take bigger risks.
It may have been so in the past, but these undemocratic structures are on the way out and Murdoch is now 76, having served 55 years, making him the world’s longest-serving CEO of a major public company.
Essentially, controlling 31 per cent of votes through just 11 per cent of the shares is just unfair. Murdoch should stand on his remarkable record rather than hide behind an undemocratic gerrymander.
Meanwhile, it was very surprising that Murdoch’s new prize newspaper, The Wall Street Journal, failed to report this shareholder revolt online or in the paper edition. Let’s hope this is not a sign of things to come.
Here is a written summary of the arguments I presented to the meeting about how having democracy would make all shareholders richer.
It’s an argument I’ll present every year until Murdoch finally yields.
