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Legal & General, Hermes press Murdoch’s Twenty-First Century Fox on dual share structure

Legal & General Pensions Management has co-filed a proposal calling for Twenty-First Century Fox, the media group controlled by Rupert Murdoch, to ditch its dual share class structure.

The cable, broadcast, film, pay-TV and satellite company separated from media conglomerate News Corp. on June 28.

L&G, on behalf of its client, the BT Pension Scheme-owned Hermes Equity Ownership Services, has teamed up with the $415m Nathan Cummings Foundation on the resolution.

The New York based foundation, endowed by the founder of what is known today as the Sara Lee Corporation, is one of the institutional investors represented by the Shareholder Rights Project at Harvard University.

The investors argue that chairman and CEO Murdoch, despite owning only about 14% of outstanding shares, controls nearly 40% of the voting power of the company “allowing him outsized power in determining the outcome of shareholder votes”. The investors are calling for a “one-share/one-vote” arrangement.

The motion will be voted on at the company’s annual general meeting on October 18 in Los Angeles.The company argues that the share structure helps it develop long-range strategy.

The company will also face another governance proposal at the meeting, filed by Christian Brothers Investment Services. CBIS said a similar resolution in 2012 – in the wake of the phone hacking scandal – had strong investor support given that it gained a total 31% backing and 66% of non-Murdoch family shareholders supported it.

“Given the dual-class share structure, the level of family control, and the influence this may bring to the impending reorganization, it is particularly important for the Company to have an Independent Chair who is empowered to challenge management and to foster a culture of accountability,” CBIS says.

The company is recommending its shareholders reject the CBIS proposal, although it does say its board is aware of investor concerns on its leadership and that it will “continue to consider the pros and cons” of separating or combining the Chairman and CEO positions. Fox proxy