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Big Investor Wants to Rein in Rupert Murdoch's Voting Power at News Corp.

Rupert Murdoch
Ben Stansall/AFP/Getty Images

The California Public Employees' Retirement System, the largest U.S. public pension fund, wants to end the dual stock structure at the conglomerate.

NEW YORK - The California Public Employees' Retirement System, the largest U.S. public pension fund and a big institutional investor, has taken the latest shot at the dual stock structure of News Corp., which gives the Murdoch family, led by chairman and CEO Rupert Murdoch, bigger voting control.

The Murdochs own a 12 percent economic stake in the company, but thanks to their ownership of Class B stock, they control 40 percent of the vote. Critics have often assailed the dual share structure.

CalPERS, which according to a spokesman owned nearly 6.9 million News Corp. shares as of June 30, including about 1.38 million Class B shares, seems to try and use the current phone hacking scandal to do away with the Class B stock to give investors more say. News Corp. has 1.8 billion Class A and nearly 800 million Class B shares, according to Bloomberg.

"News Corp. does not have one share/one vote. This is a corruption of the governance system," said Anne Simpson, senior portfolio manager at CalPERS Global Equity and corporate governance chief, in a statement as first reported by the Guardian. "Power should reflect capital at risk...Dual class voting is one way to pervert the alignment of ownership and control."
 
Simpson also said: "The situation is very serious, and we're considering our options. We don't intend to be spectators – we're owners." And she added: "The serious situation is the hacking scandal, and the market reaction shows how seriously this is being taken. I can't say what the options are at the moment, but we have strong experience in governance reform."

Asked about possible next steps, the CalPERS spokesman said: "We can't comment on this time about what action CalPERS would or would not take were the one share/one vote standard in place at News Corp. We are still considering our options otherwise."

A News Corp. spokeswoman declined comment.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai