The California Public Employees' Retirement System (hereafter CalPERS) has long been on the cutting edge of activist investing, using its tremendous market power (at over $240 billion, it's the largest public pension fund in the United States) as an engine to force social and political change. Among its past interventions: pushing for reforms to executive compensation, advocating national standards for cuts in greenhouse gas emissions, and joining the coalition that booted Michael Eisner out of the Disney boardroom. Now CalPERS has set its sights on a new target: Rupert Murdoch and his News Corp. empire.
As Pensions and Investments reports:
Under News Corp.'s corporate governance structure, the 1.8 billion class A shares have no vote; only the 798 million class B shares have voting power. The Murdoch Family Trust, Reno, Nev., owns 38.4% of the class B shares.
... Anne Simpson, senior portfolio manager-global equities, at the $241.3 billion Sacramento-based California Public Employees' Retirement System, said in a statement, "News Corp. does not have one-share/one-vote. This is a corruption of the governance system. Power should reflect capital at risk. CalPERS sees the voting structure in a company as critical. The situation is very serious and we're considering our options. We don't intend to be spectators -- we're owners."CalPERS has long been criticized for excessive politicization in its investment decisions and that looks to be the case here (notice this didn't become an issue until after the recent News of the World scandal). As shareholders, of course, the organization's representatives have every right to make their opinions known. What they don't have, however, is the right to a vote. That would require class A shares -- a fact that they were well aware of as they purchased nearly 6.9 million of the class B variety. If the CalPERS brass are upset, they have no one to blame but themselves.