After the world’s most powerful proxy advisory firm, ISS, came out with its stunning recommendation to vote against 13 of the 15 News Corp directors at Friday’s AGM, Rupert Murdoch’s hand-picked board and management team responded with the following statement to the Australian and US stockmarkets.

News Corp said it “vehemently disagreed” with ISS and central to the defence was this claim:

“News Corp’s one year Total Shareholder Return (TSR) was 49.47% compared to Comcast (32.96%), The Walt Disney Company (21.85%), CBS (37.39%), DISH Network (-5.34%) and Omnicom Group (19.39%).”

This is all true but, unfortunately for Rupert, it is also a case of lies, damn lies and statistics. The short-term performance might look OK, but a longer-term horizon tells a very different story.

It is very easy to announce a $US5 billion buyback and send the share price soaring. Indeed, after spending $US1.62 billion on A class shares since the buyback was launched on August 16, the non-voting stock has on some days traded at a premium to the B class voting shares for the first since they were introduced in the mid-1990s.

The buyback of 100 million shares so far also means that the Murdoch family’s overall economic interest in News Corp has crept up from 12.65% to 13.1%. Applying some basic principles of democracy, such an interest should entitle the family to two of the 15 board seats at News Corp. However, management control is something different altogether because News Corp’s relative performance has been absolutely woeful ever since the family’s gerrymandered control was introduced shortly after the 1991 debt crisis.

For instance, if you take a starting point of August 1992, one long-time News Corp analyst has calculated that Australian shareholders in the media giant have suffered a massive 75% underperformance. Other than those shareholders who bought in the midst of the GFC, anyone who bought a News Corp share since 1998 is actually under water and the 10-year performance is negative 30.4%.

So why have the independent News Corp directors approved salary payments and bonuses to Rupert of more than $US250 million over the past 13 years?

There has been no greater example of excessive pay for poor performance in the Australian market, yet News Corp media outlets refuse to ever report this and continue to slam the pay arrangements of others. Look no further than Australia’s biggest selling paper and the Murdoch family’s spiritual home, the Herald & Weekly Times.

“Littered with fat cats” was the Herald Sun’s page 5 lead today. It opened up as follows:

“More than 230 federal fat cats now take home more pay than the elected head of our nation. A Herald Sun investigation has found 236 “super-crats” shared more than $110 million in taxpayer-funded salaries in 2010.”

The story had attracted 36 feisty comments by 11am and was backed up by this strong editorial condemning “expanding salary packages paid to fat-cat bureaucrats”. I posted the following comment on the Herald Sun website and look forward to receiving an email notification confirming that it has been published:

It’s a bit rich of the Herald Sun to attack anyone else’s salary when News Corp executive chairman Rupert Murdoch enjoyed a 47% pay rise to a record $US33.3 million in 2010-11.

If  236 people sharing $110 million in a single year — an average of $466,000 — is a scandal what do Herald Sun readers think about one person, Rupert Murdoch, pocketing $135.6 million over the past 5 years?

And it’s not as if News Corp shareholders have been enjoying stellar returns. A Comsec analysis reveals that the company has been the 4th worst performer in the ASX50 over the past decade, delivering a negative return of 30.4%.

The really sad thing about all this is the failure of News Corp outlets around the world to ever properly report these facts.

Andrew Bolt claims News Corp is a champion of free speech, yet his colleague Terry McCrann never criticises these outrageous salaries and terrible returns.

Stephen Mayne
Manningham

The same applies to The Australian’s John Durie, who is the highest paid commentator in the nation. Durie regularly writes about corporate governance issues but self censors on the News Corp governance questions.

When Rupert Murdoch comes to Australia for the News Awards in Sydney on November 5, there really should be a gong for self-censorship and subservience during the company’s current governance crisis.

The shortlist would be very long indeed. The low point will probably be coverage of Friday’s AGM at Fox Studios in Los Angeles when record protest votes will be recorded against the directors and the remuneration report.

The AGM starts at 4am AEST on Saturday, so there will be plenty of time for News Ltd’s Sunday tabloids to pull together comprehensive coverage for their millions of readers. Let’s hope we don’t instead get loads of inaccurate spin about News Corp somehow being a great investment for shareholders.

*Disclosure: Stephen Mayne is a director of the Australian Shareholders’ Association, where he is company monitor for News Corp. He will be attending the AGM. Follow him on Twitter @maynereport or email Stephen@maynereport.com.