CalSTRS Statement Regarding News Corp. Annual Meeting

Statement Ricardo Duran

While CalSTRS is disappointed with the outcome of today’s News Corp. annual meeting, we are not surprised, given the disenfranchisement of certain shareholders.

However, we are heartened by the strong showing of support for governance changes at the company. The high number of withholds for certain directors demonstrates the strong desire of unaffiliated shareholders, such as CalSTRS, for a more independent board. In addition, the large negative vote on News Corp.’s say-on-pay proposal shows a greater need for alignment of interest between shareholders and management.

Although the resolution offered from the floor to separate the Chairman and CEO positions could not have been enacted at the time, given the advance notice requirements under securities law, CalSTRS’ voice played a part in bringing attention to bear on the situation at News Corp. This action encouraged many shareholders to come to the meeting to support this proposal, which sent a strong signal to News Corp. that their shareholders want serious change.

Trying to effectuate governance changes at News Corp. has been a challenging task for shareholders given the dual-class voting structure and the significant influence of the Murdoch family. However, as News Corp. continues to be a publicly traded company, CalSTRS believes that the company should be held to the same governance standards as other companies in the CalSTRS portfolio. The recent scandal has underscored the need for the highest ethical and governance standards.

Despite the outcome of the meeting, CalSTRS, as a long-term shareholder, will continue to push for governance changes at News Corp.—the kind of changes that produce enduring value for California’s educators.

As of September 30, 2011, CalSTRS holds 6,150,661 shares of Class A, nonvoting stock, worth approximately $95 million. The fund also holds 35,200 shares of Class B, voting stock, worth approximately $548,000. CalSTRS holds about 0.2 percent of outstanding News Corp. stock.