Fox Shareholders Raise Whether To Tie Exec Compensation To Legal Exposure

Questions emerged during Fox Corp.’s annual meeting today about whether its top executives’ compensation provides incentives that would help guard against future legal issues similar in nature to the Dominion Voting Systems and Smartmatic suits. Shareholders also asked about the performance of Fox’s FAST streaming platform, Tubi.

The annual meeting, which took place on the Fox Studio lot in Los Angeles, began with a tribute to company founder Rupert Murdoch, who has stepped down from his role as chairman to become chairman emeritus.

In recorded remarks, Rupert Murdoch said, “I’d like to be remembered as a catalyst of change for the good.”

In speaking of the company’s latest successes, his son Lachlan Murdoch, executive chair and CEO, said: “Fox News continues to lead as the most-watched cable news network, beating CNN and MSNBC in total viewers and in the key demo for both primetime and total day.” He added that October viewership was up “from the first quarter with over 30% growth in the key demo.” The first fiscal quarter ended on Sept. 30.

Lachlan Murdoch went on to say: “With the national and local political races heating up, we expect the 2024 election season to drive strong results across our news properties and local stations. At Fox Sports, we are looking forward to the strongest matchups of our NFL season yet to come.”

Fox shareholders voted on three matters: electing seven directors, ratifying the selection of Ernst & Young LLP as the company’s independent registered public accounting firm for the fiscal year ending June 30, 2024; and executive compensation. Results will be announced after the close of the stock market today.

The company’s proxy statement shows the compensation under consideration includes a base salary for Rupert Murdoch of $5 million. Lachlan Murdoch’s is $3 million; COO John Nallen’s is $2 million, chief legal and policy officer Viet Dinh’s is $3 million; and CFO Steven Tomsic’s is $1.75 million. The incentive compensation based on quantitative and qualitative performance range from about $4.45 million each for Rupert and Lachlan Murdoch to $1.85 million for Tomsic.

Fox board member Chase Carey addressed repeated questions from one shareholder regarding whether the executives’ incentives would help to prevent a recurrence of the Dominion Voting System lawsuit, which was settled for $787.5 million, or Smartmatic’s $2.7 billion defamation suit, which is now in progress.

Carey, who serves on the Fox board compensation committee, explained: “In the area you’re touching on, the qualitative factors as well as, obviously to some degree, the quantitative ones, do capture issues like that.” When he was further questioned about how the terms of compensation differ from previous years, Carey said there had been “refinements” without specifying exactly what they were.

The shareholder was directed to examine the company’s disclosures for further illumination on the topic.

Another speaker asked for more information about the performance of Tubi, the FAST platform, and in particular its international expansion. “[International] is one of the next things we need to address. As you mentioned, Tubi has launched in a number of markets in South and Central America, Mexico, Australia. It’s very early days of our international expansion,” said Lachlan Murdoch. “We want to grow it in a in a positive way, but we’ll be disciplined with how much we invest and in which markets.”

In the U.S. “the engagement of Tubi and the total viewing time that we have and the number of users that we have continues to grow, quarter on quarter, month on month, and week on week,” Murdoch said, adding that advertising revenue has grown along with the viewership.