Pub: Australian Financial Review Pubdate: Saturday 15th of September 2007

Rupert's rundown cronies stand to make a killing

Rupert Murdoch may complain that the media treats him like a genocidal tyrant, but as the News Corp proxy statement shows, even a genocidal tyrants gotta live. The Murdoch clan struggled by last year on $US38 million in dividends from their $US8.7 billion shareholding in News Corp - the six Murdoch children each pick up $US523,000 a year in divs from shares they were given in January - while Rupert's pay packet was worth another $US32 million. That's almost as much as the $US34 million earned by News Corp president Peter Chernin. That's mostly bonuses, which are a pretty neat arrangement based on rises in adjusted earnings per share. The on-market share buyback has helped keep EPS growth rattling along, and this year the $US12 billion buyback of John Malone's stock should really give the bonuses a shove along. Even if EPS drops by 12 per cent, Murdoch and Chernin will still trouser a $US4 million bonus each. But the real test of a principality is the succession plan. Investors ask, what would happen if Rupert Murdoch fell under a bus? Not that Murdoch would be the only casualty. He travels in a group, and one has to assume that his close advisors - Chernin, chief financial officer David DeVoe, legal counsel Lawrence Jacobs and Fox News founder Roger Ailes - would end up alongside him in intensive care. These men's work is their passion . . . a $US92.8 million passion last year. But some things are priceless. Let the Macquarie Banks of this world worry about golden handcuffs. At News Corp we're talking golden pyjamas. As the fine detail on their contracts spell out, this could be the most expensive bus accident in history, triggering retirement and termination payments of up to $US256 million. That's the worst-case scenario, with the Murdoch lieutenants surviving but disabled, or having to be retired involuntarily. Death benefits are more modest. Let's be frank, it's an $US81 million saving. If these men were in an accident, News Corp shareholders would be calling for the bus to reverse back over them to be sure. It's harsh, but these men are true believers. It's what they would want. That doesn't include Rupert Murdoch of course, who has a $US60 million retirement scheme but a termination payout of only $US1.4 million. It's clearly in shareholders' interests to keep him alive and running News Corp forever. Cryogenics anyone?