Narrow win for Fox shows restlessness with dual-class shares
A shareholder proposal calling for Twenty-First Century Fox Inc
Fifty-seven percent of votes cast sided with the position of Fox`s board, which argued that the current share structure provided flexibility and enhanced the company`s ability to focus on long-term results, a Fox regulatory filing said.
The majority of Fox shares traded publicly are class A shares
Critics argue that the current set-up concentrates too much power with the Murdoch family. Forty-three percent of votes cast were in favour of eliminating the two classes of shares and giving all shares a vote. The vote was advisory, so passage would not have forced any changes at the company.
Even so, it was noteworthy that more than half of shareholders outside of the Murdoch`s control voted in favour, said Paul Hodgson, an independent governance consultant. In addition to the family stake, 6.7 percent of the voting shares are held by ValueAct Capital, whose chief executive, Jeff Ubben, is also a Fox director.
"The message the public shareholders are sending management is get rid of the dual voting class of shares," Hodgson said. The measure`s supporters may use the results to try to persuade Fox management to meet with them to discuss the issue, he added.
Kevin McManus, a vice president of proxy adviser Egan Jones, said the number of people voting against the dual voting class marked "a very significant percentage and puts pressure on the company."
Laura Campos, a director at the reform measure`s sponsor, the Nathan Cummings Foundation, said Fox`s structure made change unlikely despite the result.
"At many companies, 43 percent would be more than enough to prompt serious action from the board. At a company with a dual-class capital structure, it’s less likely that we’ll see any sort of substantive response from the board," she said via email.
Asked about the result, a Fox spokesman sent remarks by director Viet Dinh, who said at the company`s annual meeting that the board believed the current structure was valued by shareholders.
"The board believes that many are attracted to our stock by the dual class structure and stability and leadership provided by the Murdoch family, both of which have contributed to the long-term success of the company," Dinh said.
Major mutual fund firms have been pushing the importance of equal voting rights as a way to improve the way companies are run.
Fund executives worry about cases like technology initial public offerings such as Snap Inc
At a 26-minute annual meeting on Fox`s movie and television studio lot in Los Angeles, shareholders on Wednesday also easily re-elected Rupert Murdoch and his two sons to the company`s board, suggesting continued support for the family even as its Fox News division is recovering from a series of costly sexual harassment settlements.
That issue has slowed Britain`s regulatory review of the company`s bid to take over broadcaster Sky Plc
Fox also has recently talked to Walt Disney Co
"We have the required scale to continue to execute on our aggressive growth strategy," Lachlan Murdoch said.
The proposed new voting structure is aimed at beefing up investor oversight over Murdoch and his sons Lachlan and James, who are all Fox board members.
"This structure leaves some shareholders with disproportionate voting power and others with none at all. We think eliminating it would benefit the shareholders and the company," said Roxana Tynan, speaking on behalf of the foundation.
The current structure, she said, "can create corporate cultures with no accountability."
On another advisory measure, 78 percent of votes cast were in support of Fox executives` annual compensation.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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