Board members of Fairfax Media are reportedly seeking an agreement with majority shareholder Gina Rinehart that she won't sue company directors if granted a board seat.
According to reports in Fairfax and News Limited papers, the Fairfax board is insisting Rinehart agree to certain conditions before she is given board representation, including an understanding she will not launch legal action against fellow directors.
There is speculation the board's demands are a result of concerns around Rinehart's recent courtroom battle with three of her four children, who want access to their 23.4% stake in the multi-billion dollar Hancock Prospecting.
The board is worried about the current directors' insurance terms because coverage doesn't apply if a director which holds more than 15% of the company sues another company director. The board wants a waiver of these terms from Rinehart, who owns 18.7% of the media company, or an agreement she will not launch legal action.
Rinehart has reportedly demanded two seats on the board be reserved for her nominees, including Jack Cowin, her fellow director at Ten Network Holdings. She has apparently also requested to be appointed deputy chairman with rights to interfere editorially and hire and fire editors.
A mutual understanding on Fairfax's Charter of Editorial Independence is being demanded by the board, who are reportedly willing to offer Rinehart two seats.
Federal Communications Minister Stephen Conroy, Treasurer Wayne Swan and journalists have called for Rinehart to sign the Charter of Editorial Independence
“The Fairfax Board will not be bullied,” an inside source told AdNews. “We are resolute that Mrs. Rinehart must agree that Fairfax's journalists maintain their 171-year history of editorial independence and excellent reporting.”
The board stoush follows the publisher's announcement on Monday it will axe 1900 jobs over three years as part of measures introduced to save $235 million annually by 2015.
As part of the plan, Fairfax's metro mastheads The Sydney Morning Herald and The Age will be downsized from broadsheets to tabloid size while paywalls will be erected across Fairfax's digital assets.
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