News Corp shareholder fails to make the cut

June 4, 2009

Today’s important lesson for shareholders: If you want to try to change the way things work at News Corp, you’d better make sure your paperwork is in order.

News Corp publicized in a government filing on Thursday an effort by investor Kenneth Steiner to force the media conglomerate to change the way it counts shareholder votes. Steiner outlined the proposal in a letter to News Corp that asked that his proposal be included. Here is what he said:

RESOLVED, Shareholders request that our board take the steps necessary so that each shareholder voting requirement in our charter and bylaws that calls for a greater than simple majority vote be changed to a majority of the votes cast for and against related proposals in compliance with applicable laws. This includes each 65% shareholder voting provision in our charter and/or bylaws.

Why?

Currently, a 1%-minority can frustrate the will of our 64%-shareholder majority. Our supermajority vote requirements can be almost impossible to obtain when one considers abstentions and broker non-votes. For example, a Goodyear management proposal for annual election of each director failed to pass even though 90% of votes cast were yes-votes. Supermajority requirements are arguably most often used to block initiatives supported by most shareowners but opposed by management.

Steiner provided a number of pieces of evidence showing what he said was evidence of News Corp’s chummy board and potential conflicts of interest, all geared toward giving Chairman and Chief Executive Rupert Murdoch carte blanche to do what he wants with the company — shareholders be damned.

There’s only one problem, News Corp and its outside counsel, Hogan & Hartson said in the correspondence that it filed with the Securities and Exchange Commission:

Repeated letters sent to Steiner and his proxy, John Chevedden, asking Steiner to prove that he owned enough shares for a long enough time ($2,000 in market value or 1 percent of shares, owned for at least a year before submitting the proposal)  to be eligible to submit proposals went unreturned. News Corp then reminded Steiner and Chevedden that failing to furnish that evidence within 14 days of submitting the proposal would mean News Corp could toss it aside.

I called Chevedden and asked what happened. He told me that they determined that Steiner hadn’t owned his shares long enough.

Oh well; maybe next year.

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