The News Corp. vote earlier in October in favor of the re-election of its directors was a major defeat for shareholder activists, although not for the appropriateness of their cause.
Discontent among some major shareholders about the extension in August of a poison pill anti-takeover defense wasn't enough to inspire a large "withhold" vote; a majority vote was unlikely because 29.9% of the shares are controlled by K. Rupert Murdoch, chairman and CEO, and not all investors were sympathetic to the activists.
The activist shareholders sought to withhold votes because the company's board had promised to drop its poison pill after a year, in exchange for shareholder consent for its re-incorporation to Delaware from Australia, which because effective last November.
Activists now can hope they can win in a lawsuit filed in Delaware Chancery Court, asking to hold directors accountable for a ban on the extension.
"This case is about a promise broken — plain and simple," said Stuart Grant, attorney with Grant & Eisenhofer, which is representing the shareholder group, including several U.S. and European pension funds.