So, after all the fighting, the News Corp directors were re-elected as expected. But what we still don't know is exactly what the results of the meeting were. According to an official statement bunged out on Friday PM, the results won't be made available until Monday.
Obviously the company knows the result, and will have known it for a few days. Delaying the release of the actual results suggests that we might have had some high votes against some directors. As one journo I spoke to yesterday pointed out, it's an odd PR move as this creates another story on Monday. Could be very interesting.
Meanwhile attention will turn to the BSkyB AGM, which is rapidly approaching. I am now of the view that if non-News Corp shareholders re-elect the current chair they will have made a major mistake. I would just about argue that there is a fiduciary issue here. There is enough information in the public domain to raise big questions about his continued position on the board (see Julian Pike testimony to DCMS committee for latest twist). Voting to re-elect him as chair must in turn put the spotlight on whether investors have really done their homework.
Saturday, 22 October 2011
Tuesday, 18 October 2011
Where News Corp goes next
Though its AGM is fast approaching, I think we can safely say that what happens to News Corp will largely not be determined by its (non-Murdoch) shareholders. Not directly at least. As is well known, despite holding an minority smallish chunk of News Corp's shares, Murdoch Snr has the whip hand in terms of voting rights. Add in some friendly faces, and knowing the passivity of many asset managers, and no-one really expects any directors to lose their seats on Friday.
The global shareholder opposition to the existing News Corp board is truly impressive, and a rarity. I know from experience how difficult it is to get investors both on the same page, and willing to take a public position on the need for reform. In that sense I struggle to think of a similar case to the forthcoming AGM. There will be some very big votes against News Corp directors and, if I were a betting man, I would say that James Murdoch will take the biggest hit (he is the one director everyone seems to be voting against).
But let's be clear how we got here, and where things are likely to go. Essentially News Corp has been undone by the efforts of investigative journalism, a few key politicians and some celebrities. Shareholders have come late to the party and many don't seem to have followed developments closely (hence I think a few have been very shocked and, no doubt, will be again in future). Shareholder pressure has developed as a further source of pain for News Corp once the initial blows had been landed.
Looking ahead, I suspect that the key players in deciding News Corp's fate will be a mixture of politicians, regulators, rival media, whistleblowers and law firms. Post-AGM shareholders will probably find they exercise the most influence via the last group, but I suspect they will largely play a supporting role. So let's examine who might cause problems for News Corp and why.
1. Politicians. There are a number of political interests here. First up the Coalition knows that allowing a revised News Corp bid for BSkyB to go through would look rather bad. So they don't have much to gain by letting News Corp have an easy ride. Add to this that, so far, Ed's one major success has been the way he called the hacking scandal and you can bet he will continue to try and push Cameron hard on this. And let's not forget the DCMS committee. At some point it's going to publish a report on hacking. That is bound to include some commentary on News Corp's governance, and some of the key individuals who are still there. A critical perspective could put an awful lot of pressure on.
2. Ofcom. It essentially has a watching brief on 'fit and proper' as it applies to BSkyB's licence which can include taking account of the behaviour of News Corp. So if the DCMS committee report comes out very critical this could be an important factor. The role of the current BSkyB chair sticks out like a sore thumb I think.
3. I would keep watching The Guardian and, increasingly, The Indie. Both have turned up a lot of info that has fed investigations into hacking. Last week's Nick Davies' piece on the WSJ pumping up its circulation figures shows that they are starting to look at whether other parts of the Murdoch empire are infected. I imagine that computer hacking, which a) a lot of people expect to be the next element of the scandal and b) is the subject of its own police investigation, will be the subject of some coverage.
4. Whistleblowers (though perhaps this is too grand a term). As Tom Crone and Colin Myler's decision to openly and publicly contradict James Murdoch's version of events shows, there are some disaffected former employees now on the prowl. Some clearly feel they have been let down by the company they worked for, and as such News Corp can no longer rely on them to keep quiet. This could result in further damaging revelations.
5. Law firms. Add wrongdoing to cover-up to misleading public statements and legal firms who work on behalf of shareholders will get interested. This could be quite a big deal.
So in all of this shareholder pressure may play a relatively minor part. I make this point for a couple of reasons. First because what has happened at News International for sure, and perhaps elsewhere in News Corp, represents a major scandal. If shareholders can't really make much headway in a case like this (in part because of the way News Corp's share ownership is structured) don't get your hopes up about the prospects for shareholder engagement where the rights and wrongs are less clear cut.
Second, because in reality it has always been like this. In the real world holding companies to account for poor behaviour has always required a range of stakeholders putting on pressure - shareholders cannot usually do it alone. This is important when thinking about shareholder engagement in a public policy context, where it is sometimes held out as a non-statist 'solution' to various problems of corporate behaviour. Or to look at it from the other direction the primacy granted to shareholders in governance is sometimes held out (mainly by the Right) as a reason why government/regulators etc should not and need not stick their noses in.
Therefore my conclusion from my experience to date with News Corp is that it demonstrates the need to try and form effective coalitions, but coalitions that go beyond the investor community alone.
The global shareholder opposition to the existing News Corp board is truly impressive, and a rarity. I know from experience how difficult it is to get investors both on the same page, and willing to take a public position on the need for reform. In that sense I struggle to think of a similar case to the forthcoming AGM. There will be some very big votes against News Corp directors and, if I were a betting man, I would say that James Murdoch will take the biggest hit (he is the one director everyone seems to be voting against).
But let's be clear how we got here, and where things are likely to go. Essentially News Corp has been undone by the efforts of investigative journalism, a few key politicians and some celebrities. Shareholders have come late to the party and many don't seem to have followed developments closely (hence I think a few have been very shocked and, no doubt, will be again in future). Shareholder pressure has developed as a further source of pain for News Corp once the initial blows had been landed.
Looking ahead, I suspect that the key players in deciding News Corp's fate will be a mixture of politicians, regulators, rival media, whistleblowers and law firms. Post-AGM shareholders will probably find they exercise the most influence via the last group, but I suspect they will largely play a supporting role. So let's examine who might cause problems for News Corp and why.
1. Politicians. There are a number of political interests here. First up the Coalition knows that allowing a revised News Corp bid for BSkyB to go through would look rather bad. So they don't have much to gain by letting News Corp have an easy ride. Add to this that, so far, Ed's one major success has been the way he called the hacking scandal and you can bet he will continue to try and push Cameron hard on this. And let's not forget the DCMS committee. At some point it's going to publish a report on hacking. That is bound to include some commentary on News Corp's governance, and some of the key individuals who are still there. A critical perspective could put an awful lot of pressure on.
2. Ofcom. It essentially has a watching brief on 'fit and proper' as it applies to BSkyB's licence which can include taking account of the behaviour of News Corp. So if the DCMS committee report comes out very critical this could be an important factor. The role of the current BSkyB chair sticks out like a sore thumb I think.
3. I would keep watching The Guardian and, increasingly, The Indie. Both have turned up a lot of info that has fed investigations into hacking. Last week's Nick Davies' piece on the WSJ pumping up its circulation figures shows that they are starting to look at whether other parts of the Murdoch empire are infected. I imagine that computer hacking, which a) a lot of people expect to be the next element of the scandal and b) is the subject of its own police investigation, will be the subject of some coverage.
4. Whistleblowers (though perhaps this is too grand a term). As Tom Crone and Colin Myler's decision to openly and publicly contradict James Murdoch's version of events shows, there are some disaffected former employees now on the prowl. Some clearly feel they have been let down by the company they worked for, and as such News Corp can no longer rely on them to keep quiet. This could result in further damaging revelations.
5. Law firms. Add wrongdoing to cover-up to misleading public statements and legal firms who work on behalf of shareholders will get interested. This could be quite a big deal.
So in all of this shareholder pressure may play a relatively minor part. I make this point for a couple of reasons. First because what has happened at News International for sure, and perhaps elsewhere in News Corp, represents a major scandal. If shareholders can't really make much headway in a case like this (in part because of the way News Corp's share ownership is structured) don't get your hopes up about the prospects for shareholder engagement where the rights and wrongs are less clear cut.
Second, because in reality it has always been like this. In the real world holding companies to account for poor behaviour has always required a range of stakeholders putting on pressure - shareholders cannot usually do it alone. This is important when thinking about shareholder engagement in a public policy context, where it is sometimes held out as a non-statist 'solution' to various problems of corporate behaviour. Or to look at it from the other direction the primacy granted to shareholders in governance is sometimes held out (mainly by the Right) as a reason why government/regulators etc should not and need not stick their noses in.
Therefore my conclusion from my experience to date with News Corp is that it demonstrates the need to try and form effective coalitions, but coalitions that go beyond the investor community alone.
Sunday, 16 October 2011
OccupyPeckham!!!
Only kidding, but I thought I should contribute some wordage on the 'Occupy' movement. It is safe to say that the attitude of most Labour supporters is cautious, if not hostile. Cautious in the sense that lots of people with long memories will have seen similar 'popular' movements come and go without any lasting impact. Cautious too because it is clear that, unlike much of the anti-cuts 'movement', such as it is, these 'Occupy' types seem to come from a bit of the Left that doesn't have much faith in Labour.
Clearly some Labour supporters are more than cautious, they actively dislike the 'Occupy' movement. This, I think, is principally a fear of contagion from associating with what looks like it might be a 'far Left' protest. Plus they don't like the idea of Labour being linked with anything that looks 'anti-rich'. Sadly, there is a strain of "protests are a waste of time" thinking lurking in there too. I'm a bit of a pessimist myself, but find the fact that we apparently have such low expectations of politics outside the official channels a bit depressing.
If I'm honest, I share a lot of the scepticism I hear from other Labour supporters. This looks a bit too much like the wave of anti-globalisation protests in the 90s and early 2000s for my liking. Not just the incoherence in terms of objectives, but also the make-up of the movement. And yet, despite all this, I think there is something worthwhile here.
Incoherent they may be, but the movement has articulated points that surely most of us Labour supporters believe. The finance sector does have too much political power, and it is unaccountable, and the public at large is having to pay for the failures of this part of the private sector. This all comes with huge caveats - clearly very few people in the finance sector caused the financial crisis, entire bits of it were not culpable. Equally, we can't overlook the fact that politicians, even our own mob, have their fingerprints on this mess too. But the core idea that motivates these protests is seems to me basically not a bad one.
This is an era when our opponents on the radical Right are trying to reframe the financial crisis as a failure, even crime, of the state and/or politicians. I have heard senior people in the investment industry - the sort of people whose views carry weight in my corner of the world - come out with a version of the financial crisis where almost all the blame lies with politicians and regulators. Therefore to me it seems tactically stupid to not at least offer some words of encouragement to those who tell what, I think, is a more truthful version of events.
Plenty of folks on the Left have openly pondered why there has been no populist left-of-centre reaction to the financial crisis, instead it seems to have benefited the Right. What we are seeing with 'Occupy' looks like an attempt to kick off such a populist campaign, yet we seem to be uncomfortable with what we are looking at, perhaps in part because they are not 'our kind of Left'*. Perhaps the protests will fizzle out, my own view is that they probably will, but then I thought the US protests would have evaporated by now. But if the movement does blow away with the next wind perhaps that will be because people who basically share the same underlying concerns, but are suspicious of those articulating them, stand aloof.
Let's be honest about our own lack of knowledge too. There will be people within Labour who argue against the 'Occupy' protests as 'unrealistic' or 'ill-informed' or whatever, who have no greater knowledge of the City than those camped out at St Pauls. There are plenty of people who actually work in the City whose views about it are significantly more radical than moderate Labour types. It's partly because they know where the bodies are buried, no doubt, but it's a useful corrective nonetheless. There is a lot to be critical of and what needs changing is not necessarily easy to articulate, so perhaps exactly what we need right now is a simplistic populist message that gets the right basic point across.
You won't find me up at Paternoster Square any time soon. Quite apart from the fact that I think it's a slightly silly target (why the stockmarket? and few people even know what the 'new' stock exchange building looks like), I don't have the free time to camp out at a protest and, to be honest, I am put off by the fact that it looks a bit green/crusty/anti-globalisation so far. But in my heart of hearts I can't help but hope this message begins cut through because, basically, I think it needs to be heard.
* It appears that the original idea may have come from the Adbusters group.
Clearly some Labour supporters are more than cautious, they actively dislike the 'Occupy' movement. This, I think, is principally a fear of contagion from associating with what looks like it might be a 'far Left' protest. Plus they don't like the idea of Labour being linked with anything that looks 'anti-rich'. Sadly, there is a strain of "protests are a waste of time" thinking lurking in there too. I'm a bit of a pessimist myself, but find the fact that we apparently have such low expectations of politics outside the official channels a bit depressing.
If I'm honest, I share a lot of the scepticism I hear from other Labour supporters. This looks a bit too much like the wave of anti-globalisation protests in the 90s and early 2000s for my liking. Not just the incoherence in terms of objectives, but also the make-up of the movement. And yet, despite all this, I think there is something worthwhile here.
Incoherent they may be, but the movement has articulated points that surely most of us Labour supporters believe. The finance sector does have too much political power, and it is unaccountable, and the public at large is having to pay for the failures of this part of the private sector. This all comes with huge caveats - clearly very few people in the finance sector caused the financial crisis, entire bits of it were not culpable. Equally, we can't overlook the fact that politicians, even our own mob, have their fingerprints on this mess too. But the core idea that motivates these protests is seems to me basically not a bad one.
This is an era when our opponents on the radical Right are trying to reframe the financial crisis as a failure, even crime, of the state and/or politicians. I have heard senior people in the investment industry - the sort of people whose views carry weight in my corner of the world - come out with a version of the financial crisis where almost all the blame lies with politicians and regulators. Therefore to me it seems tactically stupid to not at least offer some words of encouragement to those who tell what, I think, is a more truthful version of events.
Plenty of folks on the Left have openly pondered why there has been no populist left-of-centre reaction to the financial crisis, instead it seems to have benefited the Right. What we are seeing with 'Occupy' looks like an attempt to kick off such a populist campaign, yet we seem to be uncomfortable with what we are looking at, perhaps in part because they are not 'our kind of Left'*. Perhaps the protests will fizzle out, my own view is that they probably will, but then I thought the US protests would have evaporated by now. But if the movement does blow away with the next wind perhaps that will be because people who basically share the same underlying concerns, but are suspicious of those articulating them, stand aloof.
Let's be honest about our own lack of knowledge too. There will be people within Labour who argue against the 'Occupy' protests as 'unrealistic' or 'ill-informed' or whatever, who have no greater knowledge of the City than those camped out at St Pauls. There are plenty of people who actually work in the City whose views about it are significantly more radical than moderate Labour types. It's partly because they know where the bodies are buried, no doubt, but it's a useful corrective nonetheless. There is a lot to be critical of and what needs changing is not necessarily easy to articulate, so perhaps exactly what we need right now is a simplistic populist message that gets the right basic point across.
You won't find me up at Paternoster Square any time soon. Quite apart from the fact that I think it's a slightly silly target (why the stockmarket? and few people even know what the 'new' stock exchange building looks like), I don't have the free time to camp out at a protest and, to be honest, I am put off by the fact that it looks a bit green/crusty/anti-globalisation so far. But in my heart of hearts I can't help but hope this message begins cut through because, basically, I think it needs to be heard.
* It appears that the original idea may have come from the Adbusters group.
News Corp news - Calpers
It's pretty much a clean sweep from investors so far. Any more to come? European public funds perhaps? Anyway, here's Calpers:
(Reuters) - Calpers, the biggest U.S. public pension fund, said on Friday it would withhold its votes for the reelection of Rupert Murdoch and sons James and Lachlan to the News Corp board of directors.
The California Public Employees' Retirement System, best known as Calpers, also said in a statement that it would withhold votes for Arthur Siskind and Andrew Knight in protest of the dual class voting structure at the company.
The pension fund said it aims to "rejuvenate" the News Corp board with new independent directors.
Calpers owns approximately 1.45 million News Corp shares.
Also on Friday, Hermes Equity Ownership Services, the shareholder advisory service affiliated with Britain's largest pension fund, urged investors to vote against the reelection of all Murdoch family members, Siskind and Knight.
The annual general meeting of the media group, under fire for a phone hacking scandal, is scheduled for on October 21.
Friday, 14 October 2011
News Corp news - Hermes opposes Murdochs
Good round-up from The Grauniad here. Bit on Hermes position below.
Hermes Equity Ownership Services (Hermes EOS) is the latest shareholder advisory service to advise its clients not to support all the members of the News Corp board at the annual meeting on 21 October in Los Angeles.
Hermes EOS, linked to the old BT pension fund, said on Friday it had stepped up its discussions – or "engagement" as it is known in the corporate governance world – with the media company since the phone-hacking allegations.
Explaining Hermes EOS's decision to withhold support from five directors - Rupert Murdoch, James Murdoch, Lachlan Murdoch, Arthur Siskind and Andrew Knight - Jennifer Walmsley, director of Hermes EOS, said:
News Corp has not reacted with sufficient urgency to investor concerns about its board composition and corporate culture. The time is right for the company to appoint an independent chairman to rebuild trust, help correct the governance discount, and ensure that the interests of all investors are properly represented.
Wednesday, 12 October 2011
Misys remuneration revolt
Dunno how I missed this (pdf). I'm always a bit sceptical when larger companies' RNS statements on AGM results simply say that 'all resolutions put to the meeting were passed', and this is a good example why. Technically 100% accurate, but disguises a 37.5% vote against the remuneration report, which will put the company amongst this year's outliers.
UPDATE: Actually to be fair, having checked, Misys took the same approach to their AGM statement last year.
UPDATE: Actually to be fair, having checked, Misys took the same approach to their AGM statement last year.
Monday, 10 October 2011
News Corp news - ISS recommendations
And it's not getting any better for News Corp...
Investor adviser Institutional Shareholder Services said owners of News Corp. stock should vote against 13 of the media company’s 15 directors, including CEO Rupert Murdoch and his sons, in light of the phone-hacking scandal at the company’s former News of the World tabloid.
ISS, which advises institutional shareholders on corporate-voting matters, said the phone-hacking scandal “laid bare a striking lack of stewardship and failure of independence” of News Corp.’s board, according to an executive summary of the report released Monday by ISS.
News Corp. owns The Wall Street Journal.
The company said it “strongly disagrees” with the ISS voting recommendations. “The company takes the issues surrounding News of the World seriously and is working hard to resolve them, however ISS’s disproportionate focus on these issues is misguided and a disservice to our stockholders,” News Corp. said in a statement.
News Corp.’s 15 directors are standing for election at a shareholder meeting Oct. 21 in Los Angeles. The two News Corp. directors that received ISS’s support are Joel Klein, a News Corp. executive, and venture capitalist Jim Breyer. They are newly appointed to the board.
Amid questions about the oversight of News Corp.’s board, Rupert Murdoch in August said the media-and-entertainment company’s board is “very strong.”
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