Crikey has long theorised that Rupert Murdoch decided to quit Australia after the humiliation of having his Australian institutional shareholders reject this proposal at the 2003 AGM to issue obscenely generous options with no hurdles to a range of News Corp executives, including sons Lachlan and James Murdoch. This was the first time in 50 years that Rupert had been rebuffed by his shareholders. Check out Crikey’s coverage of that momentous event here.

Lo and behold, the Sun King has now trotted out this far more generous scheme that will almost certainly be passed now that News Corp is domiciled in shareholder unfriendly Delaware and many of the Australian institutions have sold out.

The News Corp board approved a new long-term compensation plan on 17 May, 2005, and have now decided to spend millions to hold an extraodinary shareholders meeting in New York on 30 June to rush the approval through. News Corp says the new scheme is “designed to better reflect US company practices with regard to structuring equity compensation rewards.” Too right it is.

The new plan provides for up to 165 million non-voting shares to be issued to the nine management directors at News Corp. The maximum issue is $US25 million a year per executive, or 3 million shares each, and the initial fair value price is a miserable $US15.57, well below the $US18 when the move to America was first announced more than 12 months ago, although there is no initial proposal to issue shares at this price.

The scheme runs until 2015 and requires options to be issued at market prices unless a discount is required as compensation for some other bonus. But there is no mention of any performance hurdles, which is now standard practice in most Australian companies and something Rupert and his executives could never stomach. News Corp currently has 136 million options outstanding at an average price $US16.61 a share (only US30c below Friday night’s close of $US16.91 in New York) and the old scheme has provision for another 54.8 million options to be issued.

It’s surprising that the media has largely ignored Friday’s “notice & proxy statement” because it also includes great detail on the senior executive contracts on pages 16 to 20. Rupert’s deputy, Peter Chernin, is on an amazing five-year contract which includes a guaranteed $US40 million payout if he’s fired for no good reason.

Those who argued that Rupert should be trusted and the move to America was fine now have egg on their face. Rupert started by giving Peter Chernin an outrageously generous new contact, he then swallowed a poison pill to fend off John Malone when such a move would be illegal in Australia, and now we’ve got the gravy-style executive options. Even worse, the much-promised re-rating of the share price hasn’t materialised and shareholders are materially worse off.

Meanwhile, there’s a nice irony in this story about sacked Daily Mirror editor Piers Morgan buying the Press Gazette, a British trade magazine for newspapers. Who’s funding him? None other than Rupert’s son-in-law Matthew Freud, the great grandson of Sigmund.