CalSTRS, CalPERS Show No Love for the Murdochs in News Corp. Vote

Both mega-funds are getting active, backing a shareholder proposal to split Rupert Murdoch's Chairman/CEO role into two, and CalSTRS is pushing to oust him from both.

(October 15, 2012) – The United States’ two largest public pension funds have refused to back Rupert, James, and Lachan Murdoch’s reelection to News Corporation’s board of directors. 

The $152.5 billion California State Teachers’ Retirement System (CalSTRS) voted by proxy against all fourteen directors up for reelection, including Rupert, James, and Lachlan Murdoch, despite all of them being recommended by management. CalSTRS also voted ‘nay’ to the executive compensation package, while supporting a shareholder proposal for an independent board chairman. Rupert Murdoch is currently both the chairman and chief executive officer of the media conglomerate, which has a $57.7 billion market capitalization. 

Taking a slightly more moderate position, the $243 billion California Public Employees’ Retirement System (CalPERS) chose to withhold its proxy vote on key members’ reelection to News Corps’ board of directors. 

CalPERS is withholding its vote from non-independent director nominees Rupert Murdoch, James Murdoch, and Lachlan Murdoch,” the fund explained in its published proxy-voting explanation. “There is concern with the dual class voting structure at the company and we believe independent board leadership must be emphasized to ensure the protection of minority shareowner interests. CalPERS expects the board to continue efforts in rejuvenating the News Corporation board with new independent directors.” 

As with CalSTRS, CalPERS stood against the compensation package, citing “concerns that the company has not adequately linked pay with performance.” Likewise, the pension system backed the proposition for an independent board chairman. “CalPERS believes if the Chairman is not the CEO the board may be able to exercise stronger oversight of management,” the fund said. 

Others in the industry are taking an even stronger stand against the octogenarian News Corp. boss and his board. Ian Greenwood, chairman of the United Kingdom’s Local Authority Pension Fund Forum (LAPPFF), has flown to Los Angeles to speak in support of an independent chair at the company’s annual general meeting. The in-person vote will take place October 16, 2012. 

In response to the LAPPFF and others’ call to split News Corp’s chairman and CEO roles, the company stated that “an Independent Chair is not warranted since:” 

1) The company has strong governance practices; 

2) The lack of conclusive data on the impact of independent board leadership on stockholder value; 

3) The current board leadership structure is flexible and strong and would be weakened with a separate Chair and CEO; 

 4) The board is independent and led by an Independent Lead Director. 

News Corp. could not be reached for further comment.