Twenty-First Century Fox Inc. has formed the Fox News Workplace Professionalism and Inclusion Council, the result of a more than year-long engagement with the $202 million Monroe (Mich.) City Employees' Retirement System, one of the company's shareholders.
The council, which will be made up of "workplace and inclusion" experts, "will advise Fox News and its senior management in its ongoing efforts to ensure a proper workplace environment for all employees and guests, strengthen reporting practices for wrongdoing, enhance human resources training on workplace behavior, and further recruitment and advancement of women and minorities," said a Monday news release from Twenty-First Century Fox, Fox News' parent company. Although the majority of council members will come from outside the company, Kevin Lord, Fox News' head of human resources, will serve as chairman. The council will provide written reports to the Twenty-First Century Fox's board of directors, which will be posted on the company's website.
The formation of the council addresses a derivative lawsuit that was filed by the Monroe Employees' Retirement System in Delaware Chancery Court on behalf of Twenty-First Century Fox against the company's CEO and chairman Rupert Murdoch, other members of the board of directors, and the estate of former Fox News Chairman and CEO Roger Ailes for allegedly not taking "steps to address workplace issues such as sexual harassment and racial discrimination" that have "caused damage to the company's reputation and good will, as well as significant financial harm," the lawsuit said. The lawsuit was filed Monday and settled the same day.
A derivative lawsuit typically claims officers and directors of a company failed in their fiduciary duty to the company and its shareholders. Any money recovered goes into the company's coffers rather than to individual investors.
Twenty-First Century Fox will receive a $90 million insurance payment as part of the settlement. The defendants did not admit wrongdoing in agreeing to the settlement.
According to the lawsuit, "public revelations of the toxic culture since July 2016 have led not only to numerous sexual harassment settlements and racial discrimination lawsuits, but to departures of talent and damage to good will." The lawsuit alleges that "the most infamous perpetrator of sexual harassment at Fox News" was Mr. Ailes, who died in May.
The settlement filing reveals that in July 2016, in the wake of the allegations against Mr. Ailes, the city of Monroe pension fund asked for and received thousands of pages of documents concerning the allegations
It is not the first time the Murdochs have had to settle such a suit. Rupert Murdoch's News Corp. received a $139 million insurance payout in response to investor lawsuits claiming directors ignored employee misconduct, including phone hacking. Monday's agreement is one of the largest derivative settlements ever, according to the filing.
"We are pleased to have resolved this matter with 21CF in a constructive way that will drive meaningful benefits for shareholders of 21CF and Fox News employees," said Max Berger, founding partner at Bernstein Litowitz Berger & Grossmann, which represented the pension fund, in the release. "The establishment of a majority independent council with the participation of senior HR executives from the company is a positive result that reflects a shared commitment from both sides to strengthen the workplace at Fox News."
Attorneys for Twenty-First Century Fox and all defendants except the estate of Mr. Ailes could not immediately be reached for comment. An attorney representing the estate of Mr. Ailes said "the settlement speaks for itself."
Bloomberg contributed to this story