Crikey is running for the News Corp board at the AGM in Adelaide on October 9 so let’s take a look at the exchange of letters, the platform of editorial independence, the corporate governance issues arising from this year’s annual report and our account of last year’s AGM.

Murdoch censors Crikey platform

It is worth having a look at the full News Corp notice of meeting for this year’s AGM on October 9 in Adelaide and don’t worry about any virus warning: click here for notice of meeting

The Murdochs have clearly learnt precisely nothing from the current debate about executive options. This executive dominated company drags the share price of preferred stock down from $13.50 to about $8 over the past year and then the executives line up for 2.52 million options at $8.05 a share this year with precisely no performance hurdles. It is beyond Crikey’s comprehension why the two Murdoch sons, Lachlan and James, need to receive 500,000 options between them. Isn’t an interest in $8 billion worth of shares incentive enough?

And Murdoch continues to give a two fingered salute to notions of good corporate governance as the non-executive directors are all lining up for another 12,000 options over preferred shares at market prices with no performance hurdles.

Murdoch’s papers often rail against unfair practices when it comes to political elections but don’t expect to see any of them complain now that Rupert has censored Crikey’s platform and is allowing his shareholders to vote in a vacuum.

Even the Lowys allowed a short description of each candidate. Murdoch has banned any mention. The Chinese would be proud of him.

Rupert’s appalling corporate governance

A few delegates at the industry funds conference last week were making noises about finally getting up at some AGMs and having a go. Crikey gave them the good oil on Rupert’s bad practices and Rupert has now given them every reason to get angry this year at the News Corp AGM in Adelaide on October 9.

As the proud owner of 53 News Corp shares, the annual report turned up in the PO Box this morning and a quick glance reveals that Rupert is making very slow progress on this corporate governance question.

You’d think a company that boasted the chairman of Worldcom, Mr Bert Roberts, as a director until only last month would lift its game in this area.

To start with, the newly formed compensation committee of the board did not meet once for the entire year. So who decided that the company’s top 5 executives should collect $56 million in a year when the company lost a record $12 billion and its share price fell by 35 per cent?

And if you have a compensation committee, why the need for a separate “share options committee”, which also failed to meet for the year. Executives should not be deciding executive options packages but only Rupert and his general counsel Arthur Siskind sit on this committee.

And isn’t it wonderful to see that Rupert has been joined by an independent director on the board nomination committee. Previously it was just Rupert and his general counsel Arthur Siskind. But it’s hard to call Andrew Knight independent when he’s a former executive who has made about $200 million out of Rupert’s generosity. Besides, the nomination committee didn’t meet once for the entire year and as a candidate for the board, I’m still to hear from any of them.

The other strange feature of the annual report is the decision to support the re-election of recently departed executive Chase Carey. Shareholders paid him a $10 million “separation payment” when he walked out after the Sky Global Networks spin-off fell over and Lachlan Murdoch took over some of his responsibilities. But he’s not really gone as shareholders will be voting to re-elect him as a non-executive director for the next three years.

Should shareholders such as the Queensland Investment Corporation really be risking $650 million (QIC owns 67 million shares having sold 3 million over the past year) of money set aside for retiring public servants when News Corp refuses to acknowledge basic corporate governance principles?

Finally, a subscriber has recommended we try to take action about the censorship used by Rupert in this year’s first ever contested News Corp election:

“Stephen

I refer to the report below that News Corp is publishing no candidate information. This seems very strange. Have they published it in the past? If so, what is reason for not doing it this time? If not, this seems pretty much unprecedented, as just about all the companies I have interests in include director information/statement so one can vote with some knowledge about the candidates. I imagine the supervisory body (AISC?) would feel it is a breach of intention of fair elections for boards, if not the exact letter. In that context, I suggest you complain to such a body about it.

Name withheld”

Crikey’s nomination letter

This letter was faxed, emailed and snail mailed to News Corp on August 19

Mr Keith Brodie

Company Secretary

The News Corporation Ltd

2 Holt St

Surry Hills 2010

By fax: (02) 9288 3292

August 19, 2002

Dear Keith,

Please accept this letter as my consent to nominate for the board of News Corporation at the upcoming AGM in Adelaide on October 9. A shareholder will be contacting you separately supporting the nomination. I am also an owner of News Corp ordinary shares at the registered address of PO Box 318, Sth Melb 3205. My HIN with ComSec is 123456789.

Please include the following CV and platform to be printed in the notice of meeting and distributed to shareholders.

“Stephen Mayne, age 33. Bcom (Melb). Stephen is the publisher of www.crikey.com.au and has been a business journalist for 13 years with a range of Australian papers. He won the Walkley Award for business journalism in 1999 for a 16-part series from the perspective of an active shareholder when he was business editor of News Corp’s “The Daily Telegraph” in Sydney. Stephen worked for News Corporation newspapers for 7 years as a business reporter, business editor and chief of staff. He believes the company needs an experienced journalist on its board to complement the strong business focus of the existing directors and to promote the concept of editorial independence from the company’s commercial operations. As a campaigner for good corporate governance, Stephen also believes a third independent Australian-based director would be good for the company.”

I trust that the position on the notice paper will be determined by ballot and would also request that you consult with me before editing the proposed CV and platform summary to be distributed to shareholders. I would also request that all of the directors up for re-election speak to the motion and that I be given up to five minutes to address the meeting. A photograph can be supplied on request.

Could you please confirm your receipt and acceptance of this nomination by email to [email protected] or by phone to (0412) 136 243 or fax to (03) 9696 0452. If there are any outstanding qualification issues pursuant to your constitution could you please inform me of those before the deadline for nominations close. A request for details of these requirements last year met with no response from the company.

Yours Sincerely

Stephen Mayne

And I’m indebted to a subscriber for sending the following supporting nomination letter which I’m hoping will satisfy the nomination requirements by tomorrow’s deadline:

Mr Keith Brodie

Company Secretary

The News Corporation Ltd

2 Holt St

Surry Hills 2010

Monday, August 19, 2002

Dear Mr Brodie,

This letter is my formal consent to nominate Stephen Mayne to stand for the board of The News Corporation Ltd at the upcoming 2002 annual general meeting in October.

I am the registered owner of 2,000 News Corp shares. My HIN number is: (withheld)

My registered address for the shareholding is:

(details withheld)

Stephen is separately sending you his letter of nomination. If you need to contact me regarding Stephen’s nomination I can be reached on (numbers withheld).

Could you please confirm your receipt of this letter and the acceptance of Stephen’s candidacy.

Yours Sincerely

Stephen (withheld)

If anyone else fancies doing likewise today in the same format it would be appreciated as News Corp snuck out of last year’s nomination with some dodgy tactics. A fax should be sufficient.

ends

We then sent the following around to subscribers on August 20 after a very prompt response from Rupert’s company secretary confirming out tilt was on.

Rupert gives the nod to Crikey board tilt

The following letter from News Corp rolled off the fax this morning:

ANNUAL GENERAL MEETING 2002

Dear Mr Mayne,

I refer to your letter of 19 August 2002 and advise that the Company has received a nomination for your election as a Director at the forthcoming Annual General Meeting from a shareholder, Mr Stephen (name withheld).

I confirm receipt of your consent to nominate and that your name will be included along with the others directors standing for re-election on the Notice of Meeting.

Note that the resolution for your election is an ordinary resolution and requires a simple majority of those present and entitled to vote. As the election process is not a contest, no ballot is required and your name will appear on the Notice of Meeting in alphabetical order.

Yours Sincerely

Keith D Brodie

Company Secretary

CRIKEY: Now what is interesting about this is that the world’s most powerful man has not pulled the stunt that so many other companies have done when facing a Crikey tilt by claiming there was no vacancy. ASX Ltd, AGL, Commonwealth Bank, John Fairfax, Westfield Holdings, National Australia Bank, AMP, NRMA and David Jones and have done the highly inappropriate “sorry, there’s no vacancy so please only vote for 3 of the 4 candidates and the top 3 will be elected”. Given that incumbents traditionally get about 98 per cent of the vote, you have to get 99 per cent to get elected which is patently ridiculous. Rupert obviously feels comfortable that his 30 per cent of the voting stock will ensure that I finish below 50 per cent. However, there is 70 per cent of the shares out there and if I could get 31 per cent of them to vote in favour, I’d be on the News Corp board.

In other words, I’ve got a much better chance than for all the other companies listed above because it only requires 50.1 per cent of the vote rather than 99 per cent. Rupert has control over the ballot paper so it will be interesting to see if he censors my platform of if he urges shareholders to vote against election.

Rupert has been running News Corp for 50 years and over that period not a single shareholder resolution has been defeated. This will change if Rupert votes against my election. The trick will be to woo plenty of shareholders to ensure the resolution is passed on a show of hands at the meeting, so that at least it is then forced to a poll and Rupert will have to rely on his shares to defeat the tilt.

ends

Why we need a charter of editorial independence

There are numerous examples from around the world of how the Murdochs use their editorial resources to further their commercial interests. Let’s just look at one example. Back in July 1998 I was the business editor of The Daily Telegraph. The senate had just passed the controversial digital television legislation and News Ltd CEO Lachlan Murdoch put out a press release which opened with a challenge to the free to air networks to compete or get out of the industry.

Telegraph editor Col Allan called me into his office and expressed displeasure at the concept of Canberra-based journalist Kate Hannon writing the story. He told me to do it and suggested I lead the story with Lachlan’s challenge.

I decided that the actual passage of the legislation was a more geniune news lead than the comments of one industry player and submitted the story as follows, which was published in the first edition of the paper on Saturday, July 4, 1998.

Green light for digital TV

By Stephen Mayne and Kate Hannon

Daily Telegraph 1st edition July 4, 1998

THE controversial Digital TV Bill finally passed in the Senate yesterday after a compromise deal that clears the way for pictures of “startling cinema clarity” from January 2001.

The Federal Government has set out a timetable for digital TV but has agreed to leave definition and extent of datacasting, multi-channelling and enhanced services to a series of statutory reviews over the next 18 months.

But Communications Minister Richard Alston had to cut by two years to 2006 a planned 10-year prohibition against new competition for the three commercial television networks after amendments by the Opposition and lobbying by the print media companies and consumer groups.

News Limited chairman and chief executive Lachlan Murdoch yesterday welcomed the Opposition amendments and commended the Government for accepting them. “The Senate’s decision today to change the Digital TV Bill provides new hope that commonsense may eventually find its way into Australia’s archaic media laws,” he said.

Mr Murdoch attacked as “spurious” a complaint by the commercial networks that Senator Alston’s backdown would cut local program investment and challenged them to either compete or get out of the industry.

“If they feel they cannot honour their licence obligations, maybe they should make way for competitors who can,” he said.

Mr Murdoch was also critical of Australia’s “archaic” media laws which had failed to keep pace with the convergence of modern multimedia technology.

He said the allocation of new commercial TV licences after 2006 meant greater choice for viewers, more outlets for actors and production houses and competition for extra advertising dollars.

The commercial networks, with Kerry Packer’s Nine Network at the fore, had pushed for a 10-year competition ban until 2008 on the grounds they would have to invest up to $500 million on studio conversion, new equipment and replacement transmission towers.

Network Ten chief executive John McAlpine is pleased the Senate passed the bill but said the competition ban was too short.

“Considering it was for 10 years and we ended up with eight, it was a compromise the minister had to make,” he said.

The Digital TV Bill receives final assent after it passes the House of Representatives next week.

Commercial networks believe most Australians would have digital TV at home within five years.

Senator Alston said viewers would not need to buy a full High Definition-capable TV in order to receive digital TV signals or datacasting services.

Viewers will need a HDTV set for the cinema-quality picture but could buy a digital-compatible set or set-top box to convert late model analogue TVs for digital signals.

ends

CRIKEY: At around 10pm on July 3 Telegraph backbencher Brett McCarthy wondered over and said Tele editor Col Allan has just given him a bollocking because the first edition story had not appeared with the first paragraph of the story the same as the first paragraph of Lachlan Murdoch’s press release. I was instructed to rewrite the story in accordance with his explicit instruction even though it was blatantly pushing the company’s line and did not reflect any sensible assessment of what the news of the day actually was. This is what appeared in the second edition and you be the judge as to whether this is what a responsible public interest publisher would serve up to readers::

Murdoch attacks TV networks

By Stephen Mayne and Kate Hannon

Daily Telegraph 2nd edition July 4, 1998

NEWS Ltd chairman and chief executive Lachlan Murdoch last night challenged the three commercial television networks to honour their licence obligations or get out of the industry, after the Senate finally passed the controversial Digital TV Bill.

Mr Murdoch rejected as “spurious” claims by the networks that a reduction in their monopoly over digital television from 2008 to 2006 would reduce investment in local programming -a licence requirement.

“If they feel they cannot honour their licence obligation maybe they should make way for competitors who can,” Mr Murdoch said in a statement.

Senate approval of the bill yesterday clears the way for pictures of “startling cinema clarity” from January 2001.

The Federal Government has set out a timetable for digital TV but has agreed to leave definition and extent of datacasting, multi-channelling and enhanced services to a series of statutory reviews over the next 18 months.

Communications Minister Richard Alston had to cut the proposed 10-year monopoly for the commercial networks after amendments by the Opposition and lobbying by the print media companies and consumer groups.

Mr Murdoch welcomed the Opposition amendments and commended the Government for accepting them.

“The Senate’s decision today to change the Digital TV Bill provides new hope that commonsense may eventually find its way into Australia’s archaic media laws,” he said. Mr Murdoch said the present laws had failed to keep pace with the convergence of modern multimedia technology.

He said the allocation of new commercial TV licences after 2006 meant greater choice for viewers, more outlets for actors and production houses and competition for extra advertising dollars.

The commercial networks had pushed for the 10-year monopoly on the grounds they would have to invest up to $500 million on studio conversion, new equipment and replacement transmission towers.

Network Ten chief executive John McAlpine is pleased the Senate passed the bill but said the competition ban was too short.

“Considering it was for 10 years and we ended up with eight, it was a compromise the minister had to make,” he said.

The Digital TV Bill receives final assent after it passes the House of Representatives next week.

Commercial networks believe most Australians would have digital TV at home within five years.

Senator Alston said viewers would not need to buy a full High Definition-capable TV in order to receive digital TV signals or datacasting services.

Viewers will need a HDTV set for the cinema-quality picture but could buy a digital-compatible set or set-top box to convert late model analogue TVs for digital signals.

ends

Feedback on the News Corp tilt

Stephen,

Like most lazy shareholders, I have a quick read of the annual report then chuck the Proxy Form into the bin.

This year, having just read that you’re running for the board, I’ve completed and returned the News Corp form, “Against” Resolutions One through Five and “For” Resolution Six.

I doubt you’ll get up, but good luck.

Nick

Finally, let’s take a look at Crikey’s account of last year’s News Corp AGM:

News Corp AGM 2001

By Stephen Mayne

News Corp shareholder

Rupert Murdoch, the world’s most powerful businessman, literally provided so much material last Thursday that it will be very difficult for anyone to really get across all the detail and colour. After all the excitement of the AGM, Rupert then gave a controversial speech at Crown casino really beating up on Australia’s education effort.

Crikey was in the thick of it at the AGM and the key tactic was opening up new flanks with a variety of different speakers. Last year I handed out suggested questions to about 50 shareholders and none of them got up and spoke. This year, I didn’t hand out any questions accept to the bloke who happened to sit next me – retired Mitsubishi executive Mike Stacey – who was more than willing to have a go.

PATHETIC DIVIDEND PAYOUTS

Mike bristled when he read the suggested questions on Rupert’s pathetic 1.5c half yearly dividend so he agreed to open proceedings with the question on this point.

When he suggested Rupert’s shareholdings were pre-1985 and therefore free of capital gains tax the great man interjected with “I wish” so we’d be interested to hear from a tax expert to clear this one up.

This was the question: “The company has been paying a paulty 3c a year in dividends for as long as I can remember. Why can’t we be like conventional companies and pay a consistent proportion of profit as dividends rather than a fixed amount which is less than only about 15 per cent of average profits over the past 5 years. I know that capital gains on your shares are probably tax free so you prefer share appreciation to dividend flow but the shareholders who own the other 82 per cent of the shares would probably like a bigger dividend. Any chance that could happen?”

Rupert said in response: “In these uncertain times, we are leaning heavily to a policy of retaining our cash reserves at the safest possible level, so I wouldn’t want to encourage any immediate expectations of an increase in dividend.”

He also reminded everyone that News Corp had delivered cumulative capital growth of 25 per cent a year for 30 years which was unparalleled with the exception of “one or two” other Australian stocks.

The truth be known, only Frank Lowy’s Westfield Holdings has performed better and how ironic was it that the showbag for News Corp shareholders included the Harper Collins biography of Frank by Fin Review journalist Jill Margo.

If Rupert is so keen to conserve cash, it beats me why he keeps doing these cash-draining share buybacks. May as well pay some of that cash back to shareholders in dividends but this wouldn’t suit Rupert’s tax position so he doesn’t do it.

CRIKEY OPENS WITH THE DEBT QUESTION

I got up next and first asked Rupert to clarify when he wanted general questions on the business because he was trying his usual trick of sprinting through the formal business and then delivering his chairman’s address at the end once he’d closed down formalities.

Most normal chairman open with an address that shareholders can then respond to but Rupert does his best to avoid scrutiny.

Unlike the previous two years, Rupert said that all questions should be asked on the resolution dealing with the accounts so I opened up with a question on the company’s debt levels, which hit a record high of $18.8 billion as at June 30.

The question went along these lines: “Total company debt is at a record high of $18.8 billion as at June 30 although this is easily covered by $84.9 billion in assets and we have also reduced debt by about $5 billion with the just-completed sale of Fox Family to Disney. We’ve seen total debt rise in each of the past 5 years. What is our target level of debt and is this trend likely to continue. Also, what is the breakdown between bank debt and bond debt because it was the banks that caused all the trouble during the liquidity crisis that coincided with the Gulf War in 1990 when our total debts were only about $10 billion.”

Rupert opened with a correction pointing out that the Fox Family sale only reduced debt by $3 billion and then said that the weak Australian dollar exaggerated the debt figure and he preferred looking at the lower figure of net debt. But his hatred of banks after the 1990 debt crisis remains strong as he was keen to stress that “we have no bank debt at all and our average maturity date on our debt is now well past 10 years, more like 20 years.”

He also claimed that the company strived to retain its investment grade credit rating but as Geoff Transom pointed out on Investorweb: “Their debt is rated in the “high yield” (otherwise known as “high default risk” or “junk” end of the credit spectrum).”

FALONG GONG AND RAPPERS

At this point the two metre tall Falong Gong spokesman John Deller stood up and asked if this was an appropriate time to comment on James Murdoch’s re-election.

I’d encouraged John to come across from Sydney for the meeting and arranged his proxy. We met for coffee before the meeting and talked tactics. Rupert politely told him it was the wrong time to discuss this so he sat down and Melbourne-based black rapper Dwayne Armstrong, resplendent in a bright red top, put his hand up and took the microphone.

Dwayne had a two verse rap to perform and had 5 people in the room secretly filming. John Safran came up with the words which revolved around the theme “You call that a dividend, I call that a dis.”

Unfortunately, Dwayne was not a shareholder so Rupert instantly responded after the first verse with words to the effect of “seeing as you’re not a shareholder the dividend should not be a concern for you”.

There was a few laughs while Dwayne performed with his mate standing behind him providing support and Lachlan Murdoch was smiling away. Despite not getting the second verse out it won’t matter because they’ve got enough footage to play the audio of the whole song in John Safran’s Music Jamboree on SBS next year.

POSITIVE QUESTION ON FOX NEWS

I then threw in the most positive question for the day about Fox News. It went as follows:

“Fox News has been an unqualified success which must be very satisfying given that CNN founder Ted Turner said he was going to “squash us like a bug” when it was launched 5 years ago. How much profit did it make last year and how much have we invested in the business over 5 years? Could it ever become as valuable as Fox Family and how much profit are we hoping to make from it this year?”

Rupert lamented the fact that September 11 has blown out the costs at Fox News and said the profits last year and this year will not be much but he was very happy to point out that Mr Turner has now lost his job. He also predicted Fox News could become worth more than Fox Family ($10bn) which would be great because News Corp owns 100 per cent. Advertising rates have been doubled of late and he also observed that whilst CNN was made by the Gulf War, Fox News was made by US Presidential election and both were benefiting from the latest war.

ANSETT DISASTER

Rupert was showing no serious signs of question fatigue at this point so I got up again and asked this one about Ansett:

“Ansett was in our books at $340m and we announced the sale of our 50 per cent to Air New Zealand for $580m in cash and an expected additional $100m in June 2002 based on 10% of Air New Zealand’s then market capitalisation. How did we account for the proceeds at the time and what prospect is there of recovering any of the additional proceeds now that the NZ government has bailed it out? Also, News Corp has been widely criticised for allegedly starving Ansett of capital and leaving it with the second oldest fleet of any airline in the world. Is this a fair criticism?”

This one actually generated some news because few people had cottoned onto this receivable in the News Corp accounts which was originally booked at $100 million. Rupert conceded it has since been written down to $65 million but now said the residual value would plunge to about $10 million. The idea of Rupert getting any more cash out of Air New Zealand is really quite appalling given the disaster he foisted on Air New Zealand.

He seemed genuine in lamenting the demise of Ansett but absolved himself of blame by saying that after taking management control, News Corp hired current British Airways CEO Rod Eddington, who he described as the finest airline executive in the world. Eddington made plenty of changes but then Rupert launched an extraordinary attack on Air New Zealand claiming that they wanted to expand the airline but the Kiwis blocked them all the way.

THE ONE.TEL WRITE-OFF

The retired Mitsubishi executive leapt into action next asking this next question about One.Tel in two parts:

“Note 5 of the accounts reveal a $576m write down of our 24 % stake in One.Tel. What lessons have we learnt from this and how much advertising revenue did we receive from One.Tel before it collapsed. What prospect is there of us having to return the $49m of pre-paid advertising from One.Tel that we still hold and the One.Tel administrator wants to pay out worker’s entitlements and unsecured creditors.”

Rupert was clearly ready for this one and launched a spirited attack on himself and defence of eldest son Lachlan Murdoch about all this “misinformation about One.Tel” and said point blank that “you have to blame me and nobody else”.

However he did point out that “more than 5 directors visited the company” and even conceded that he paid a personal visit to One.Tel’s main supplier Lucent Technologies, which told him One.Tel had the best reseller model in the world.

The problem with this is that One.Tel went broke trying not be a reseller as it was the decision to pay $523 million for 3G spectrum and then commit to building their own $1.1 billion network through Lucent that caused all the problems.

OWNING ALL THE SPORT

With just one shot left in the locker on general questions, I opted to leave the New York media and Col Allan question out and went for the following about Australian sport:

“How did our investment in 50% of the National Rugby League and ongoing underwriting of the competition perform in financial terms in 2000-01. What was the profit or loss? Does the $100m a year deal to buy the AFL TV rights reflect on the future of our commitment to the NRL. Can we really own the two rugbys and AFL and keep everyone happy and how our negotiations progressing with Telstra and PBL over the future of Foxtel.”

Rupert correctly observed that “there were several questions in that” and basically said they could accommodate the lot and that they were really just an “intermediary” for Nine, Ten an Foxtel with the $100 million a year AFL swoop.

Predictably, he said “we see no conflict between the NRL and AFL” and he appears to have stemmed the Super League red ink saying that the ARL had “no financial impact of any significance”.

RE-ELECTING DIRECTORS

It was pretty poor that News Corp has a 16-member board but only four turned up – Rupert and Lachlan and the two Australians, Ken Cowley and newcomer Graham Kraehe. I presumed Rupert would treat it as one resolution and take questions in one block but when Falun Gong spokesman John Deller asked if now was the time to deal with James Murdoch, Rupert again knocked him back and dealt with the 5 resolutions individually.

This was a good thing but I didn’t comment on Geoffrey Bible’s opening re-election even though he is the world’s biggest drug pusher as chairman of Philip Morris, the world’s biggest tobacco company. And Geoffrey has been in his native Australia for the past week yet still failed to make the trip to Adelaide.

The next cab off the rank was 66 year old Ken Cowley who I have long argued should be thrown off all boards and told the AGM he’d overseen the disastrous performance of PMP, was the executive most responsible for Super League, was chairman of Ansett for some of the dark years and also was closely involved in the $100 million loss suffered by the investors in Qantas New Zealand.

“By giving Ken Cowley another 3 years you are sending the wrong message to other executives about accountability,” Crikey told Rupert.

But Rupert is nothing if not loyal and he launched a spirited defence of Cowley pointing out that he joined the company in 1964 and has contributed in an “outstanding” way to the development of the company over the years.

Institutional shareholders have yet again demonstrated how pathetic they are when voting for directors as Cowley only received 1.72 million votes against his re-election compared with 1.208 billion in favour. Even if you strip out Rupert’s personal holding of about 620 million shares, Cowley’s yes vote was more than 99.5 per cent.

The no votes for the other directors ranged between 906,161 for finance director David Devoe to 1,010,996 for James Murdoch.

How bad does Ken Cowley have to be for institutions to actually vote against his re-election? Afterall, he quit the PMP and Commonwealth Bank boards in March so why does he want to hang around News Corp. Is it because the law requires Rupert to have two Australian-based directors and he wants compliant Ken?

AT LAST, THE JAMES MURDOCH RESOLUTION

After the Cowley exchange, David Devoe, Bert Roberts and Graeme Kraehe were waved through without any comment and then the Falun Gong man finally got his moment in the sun.

John Deller has written a separate piece for Crikey explaining how the Falon Gong works but he made his case well in criticising James Murdoch for his comments to a Milkin Institute forum in Los Angeles that the Falon Gong was “dangerous and apocalyptic cult”.

Rupert admitted he was in the audience at the time and, without criticising James directly, he did label the comments “undiplomatic”. We’ll have more on this later.

PAID MORE THAN THE PACKERS

Both Crikey and the Australian Shareholders’ Association spoke against the 12,000 options to non-executive directors and truck-load of options being offered to executive directors. This was the question I asked:

“Kerry and James Packer gloat that they do not draw $1 in salary from PBL because they own $3 billion worth of shares and that is incentive enough. Given that the Murdoch family owns more than $10 billion worth of News Corp shares, why did Rupert, Lachlan and James need to be paid a combined $21m in cash for the year, especially when you consider that the family received about $50m in dividend payments?”

Rupert doubted that the dividend payment was that high and then proceeded to strongly support James and Lachlan saying: “My sons are very valuable executives, they are paid less than people of equal standing (in other companies) and deserve every penny.” For the record, James Murdoch’s salary package was $3.06 million in 2001while his brother Lachlan took home $2.59 million. Shareholders approved the allotment of 160,000 options for James and 260,000 for Lachlan at an exercise price of $14.03 but the no vote topped 20 per cent.

SOME BITS AND PIECES

You should know that I’ve got some good shots of Rupert’s 737 at Adelaide Airport and that Rupert personally promised the Falun Gong spokesman that he would read his material on the plane back to Melbourne and also pass on all of his comments to James Murdoch.

Rupert did have a dip at one stage pointing out that I was not a shareholder and “you use proxies to get publicity for your website.”

But on the whole he was pretty good last Thursday. He gave a detailed press conference to about 40 hacks, who were then locked out of the tea and bickies and had to leave the Hyatt Regency through the basement kitchen. Some things never change.

Peter Fray

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