Monday, April 22, 2013
Shine settlement and News Corp Governance Changes
In 2011, we blogged about the derivative litigation in Delaware challenging News Corp's acquisition of Shine ("I just bought my daughter's company", and "More troubles for Murdoch") and now that case has been settled. It's not often these days that you get litigation challenging actions by the buyer's boards. Typically, it's sellers' boards who are going to be on the hook. This case, though, provided a nice opportunity for plaintiffs to chase a big fish while also have the burdens of proof on their side.
You'll remember, the acquisition of Shine Group Ltd involved the acquisition of Mr. Murdoch's daughter's production company for $675 million. Sure, why not? Except there are public shareholders. Oh, them...
Now, the case has been settled (Settlement MOU). Here's what the plaintiffs got:
1. a $139 million settlement payment (including attorney fees)
2. Corporate governance and compliance enhancements as follows, including
- Creation of a Compliance Steering Committee for the corporation
- The independent directors will approve the hiring of a Chief Compliance Officer for the corporation
- Creation of an anonymous whistleblowing hotline
- Annual public disclosure of direct political contributions made to candidates, parties, or PACs
- Designation of a lead independent director
- Reforms to board nomination process
- Adoption of specific policies with respect to related party transactions [Really? They didn't have that already!? I'm shocked.]
- Board appointment of CEO, CFO, COO, and GC
I wonder which of these is going to hurt more? The cash or the governance changes? One question and I suppose it's already been contemplated by the parties, do they have to disclose the cash equivalent value of FoxNews as a political contribution? I guess not.