There are a couple of charming oddities in the 21st Century Fox proxy statement for the November annual meeting — no, I don’t mean the pay packets of Rupert, James and Lachlan Murdoch. After all, it is a family company and they are entitled to pay themselves whatever goes, or rather, whatever the board agrees to.

No, the oddities are in the retirement pension and termination packages set by the board’s various committees for Rupert and James — but not for senior executives like Chase Carey. He’s a real employee, and entitled to some sort of formal deal that sets out his rights and pay should he be sacked unfairly by the board, or should he retire.

But Rupert and James are Murdochs, and they dominate the company. Their “will” counts, no matter what you say about independent board members and good corporate governance. Fox is “their” company, for better or worse. But the thought of them being sacked by the board “without good cause” — as the annual report so charmingly puts it — is, well, fanciable in the extreme. Can anyone really conceive of a set of circumstances where the 38% voting control of the company held by Rupert and his sons wouldn’t outweigh any board vote?

If Rupe is “terminated without good reason” he stands to receive US$18 million in health and equity benefits. Rupert gets the same amount whether he dies (his estate then), is disabled, or is sacked (with or without cause). James will be paid between US$20 and US$24 million, depending on the reason. Chase Carey can receive US$36 million as a minimum and US$60 million if the company flicks him without good reason (or if he flicks the company with good reason). And then there’s the question of a retirement package for Rupert, James and presumably Lachlan, but we haven’t details of his deal yet. But no doubt it will be the same as for dad and brother James.

The second oddity, or rather the second fiction is that the Murdochs need a retirement/pension package. The question has to be: why? They have a 38% voting stake in Fox, which is equal to around 14% of the voting and non-voting shares. That is worth around US$10 billion, which sounds like a nice fat gold watch to me.

According to the proxy statement, if he retires right now, Rupert is set to get a modest US$82.1 million, including US$76.4 million in his Individual Retirement Plan (Rupert has been at News/Fox for decades). James stands to get his hands on (at the moment), around US$10 million, but he hasn’t been at Fox as long as dad. Chase Carey would get around US$22 million.

As they say in the infomercials: “But wait! There’s more”. Rupert, James  and Carey have tens of millions of dollars in extra shares that have yet to vest. For Chase Carey, his package is the normal sort seen in many big US companies. After all, he is the most senior non-Murdoch executive of Fox. But why do Rupe and James need all the trappings of being senior executives when they control the company?

After all, the Murdoch clan controls 306.6 million voting shares, on which a dividend of US13 cents a share is currently paid. That’s worth almost US$40 million a year. That should be enough to keep the Murdochs in the style they are accustomed to, without the additional need for pension plans or termination packages.

And of course, they control 14% of News Corp’s US$9.6 billion market cap, or around US$1.3 billion, but no dividend. That’s peanuts compared to the value of the Fox stake, but a billion isn’t to be sneezed at, even for a family well set on making sure it lacks none of life’s creature comforts in retirement.

Peter Fray

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