Director’s Compensation Project: News Corp.

This post is part of an ongoing series that examines the way stock exchange independence rules influence director compensation.  We are including companies from 2011's Fortune 500 and using information found in their 2011 proxy statements.  In addition to state standards and the requirements of SOX, the stock exchanges each have their own standards for independence.  While substantially the same, there are some minor differences between NYSE and NASDAQ rules that are worth noting.  

NYSE Rule 303A.01, requires that each listed company’s board of directors be comprised of a majority of independent directors. A director is considered independent under NYSE Rule 303A.02(b)(ii) if the director received less than $120,000 in direct compensation, other than director’s fees, in any one year period over the last three years. The NYSE “direct compensation” standard is less restrictive than the corresponding NASDAQ Rule, 5605(a)(2)(B), which includes "any compensation."  In addition, NYSE Rule 303A.06 requires a listed company’s audit committee members to comport with the requirements of Rule 10A-3 (C.F.R. §240.10A-3). 

Independent directors are compensated for their service on the board.  The amount of compensation can be seen from examining the director compensation table from the News Corporation (NYSE:NWS) 2011 proxy statement.  According to the proxy statement, the company paid the directors the following amounts:

Name	Fees Earned or Paid in Cash ($)	Stock Awards ($)	Option Awards ($)	All Other Compensation ($)	Total ($)
José María Aznar	100,000	130,000	0	0	230,000
Natalie Bancroft	100,000	130,000	0	0	230,000
Peter L. Barnes	116,000	130,000	0	0	246,000
Kenneth E. Cowley*	111,000	130,000	0	0	241,000
Viet Dinh	138,000	130,000	0	0	268,000
Sir Roderick I. Eddington	154,000	130,000	0	0	284,000
Mark Hurd	32,376	37,917	0	0	70,293
Joel Klein	0	0	0	3,000,000	3,000,000
Andrew S.B. Knight	162,072	130,000	0	0	292,072
Lachlan K. Murdoch	100,000	130,000	0	274,000	504,000
Thomas J. Perkins*	138,000	130,000	0	0	268,000
Arthur M. Siskind	0	1,200,000	0	1,426,754	3,322,454
John L. Thornton	122,000	130,000	0	0	252,000

*Not nominated for re-election

According to the proxy statement, "the Board affirmatively determined that Sir Roderick Eddington, Ms. Bancroft and Messrs. Aznar, Barnes, Breyer, Dinh, Knight, and Thornton are independent of the Company and its management under the standards adopted by the Company and set forth in the NASDAQ listing rules." 

Director Compensation.  During fiscal year 2011, News Corporation held 6 Board of Directors meetings and 17 Board Committee meetings.  Each director attended at least 75% of the aggregate number of meetings of the Board of Directors and meetings of the Board Committees on which he or she served.  Each Director was paid an annual retainer of $100,000 and was given an annual grant of $130,000 in deferred stock units.  Directors who were executives of News Corporation were not paid separately for performance of their duties as director. 

Director Tenure.  K. Rupert Murdoch holds the longest tenure as a director, he was elected Chief Executive Officer in 1979 and Chairman of the Board in 1991.  Mr. Klein is the newest member of the board, elected in 2011.  Mr. Aznar served as the President of Spain from the 1996 to 2004.  Several directors also sit on other boards.  Mr Breyer is Chief Executive Officer of Breyer Capital and sits on the boards of Wal-Mart Stores, Inc., Dell Inc., Facebook, Brightcove, and Legendary Pictures. Mr. Thornton sits on the boards of Ford Motor Company, China Unicom (Hong Kong) Limited, and HSBC Group Holdings. 

CEO Compensation.  K. Rupert Murdoch, who currently serves as News Corporation’s Chairman of the Board and Chief Executive Officer, earned $ 33,292,753 in total compensation in fiscal year 2011.  Mr. Murdoch’s compensation included $8,100,000 in salary, $ 12,500,000 in bonuses, $8,527,321 in stock based grants, $287,070 in personal use of corporate aircraft, and $8,575 in retirement plan contributions.  Chase Carey, New Corporation’s Deputy Chairman, President, and Chief Operating Officer and the second highest paid officer, earned $30,150,485 in total compensation, including $15,243,303 in stock based grants.