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News < Back Sarbanes Oxley : Governance Institutional Shareholders Gain Major Corporate Governance Settlement with News Corp Company agrees to put proposed extension of pill defense to shareholder vote at annual meeting in October
As part of the settlement, News Corp. has agreed to put forth a special proposal at its annual meeting this October, allowing shareholders to vote on whether to extend the poison pill for two years. This concession by News Corp will give its shareholders the voting rights they sought to enforce in the litigation. The proposal would also allow News Corp to extend the pill for one additional year (until October 2009), but only if necessary to address concerns over possible moves by Liberty Media in acquiring a controlling interest in News Corp. If this proposal is approved, shareholders will have the right to vote on subsequent poison pill provisions for the next 20 years, a major outcome that assures investor participation on a key aspect of News Corp?s corporate strategy. The investor group ? comprised of pension funds in the U.S., U.K., Australia and the Netherlands ? brought their suit last October, seeking to compel the giant media company to stand behind an earlier pledge not to extend its poison pill provision beyond a 12-month period without express shareholder approval. That pledge was made to secure shareholder support for the company?s reincorporation from Australia to Delaware in 2004. The settlement now assures that the shareholders will receive the benefit of that promise. ?We are very proud of the resolution reached with News Corp,? said Stuart Grant, whose firm Grant & Eisenhofer is counsel for the shareholder group. ?From Day One, we have consistently said that this case was not about the poison pill, but was about securing the shareholders? right to vote on the matter, as promised by News Corp when the provision was negotiated as part of the company?s change in incorporation in 2004,? Mr. Grant continued. ?Through the settlement, shareholders have the guaranteed right to vote on the poison pill now, and on subsequent poison pills for the next twenty years. This is a great victory for shareholder rights.? Mr. Grant noted that final resolution of the case is still subject to documentation and court approval. However, the two sides have announced their agreement to Chancellor William Chandler III, chief judge of the Chancery Court. The case has now been taken off the Court?s trial calendar. Mr. Grant noted that while the investor group was fully prepared to proceed to trial starting on April 24th, a settlement was able to be reached following the depositions of the principal negotiators of the contract that was in dispute ? Michael O?Sullivan, chairman of the Australian Council of Super Investors (ACSI), and Ian Philip, the chief legal officer for News Corp?s Australian operations. ACSI represents a group of Australian public pension fund investors who were a major block of the plaintiffs? group. The settlement was reached before the deposition of News Corp. chairman Rupert Murdoch, which was scheduled for early April. Mr. Murdoch and his family still control some 30% of News Corp. common shares. ?While we cannot predict how each investor will vote with the exception of the Murdoch interests, the settlement with News Corporation is a tangible step toward rebuilding our trust on governance issues with the company,? said Mr. O?Sullivan of ACSI. ?Perhaps the major achievement for shareholders is the demonstration that international co-operation between institutional investors gets results.? A large coalition of international investors came together as plaintiffs in this case, reflecting its importance as a major litmus test on corporate governance. Among the shareholders are two American retirement system funds: Connecticut Retirement Plans and Trust Funds and Board of Trustees of the Clinton Township Police and Fire Retirement System, a defined benefit plan serving retired employees of Clinton Township, Michigan police and fire departments. The U.S. funds were joined by an assortment of international institutional holders of News Corp. stock, including seven Australian superannuation (pension) funds; two funds managed by Hermes Investment Management, Ltd., which manages more than $80 billion in assets; Universities Superannuation Scheme Limited, one of the largest pension funds in the U.K.; and Stichting Pensioenfonds ABP, the world?s largest pension fund, serving the employers and employees of the Dutch government and educational system, with more than 2.6 million members. Wilmington, DE and New York-based based Grant & Eisenhofer represents institutional investors in securities litigation. The firm has recovered more than $2 billion for shareholders in the last five years and is currently lead counsel in securities actions against Global Crossing, Tyco, Parmalat, Refco, Delphi, Pfizer, Able Laboratories, Stone & Webster, Redback Networks and Marsh & McLennan. The National Law Journal cited Grant & Eisenhofer as one of the country?s leading plaintiff?s law firms in 2005. For more on the firm, go to www.gelaw.com. 
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