Letter Agreement- James R. Murdoch



 Exhibit 10.4 
 News Corporation 
 August 2, 2010 

James R. Murdoch 
 Chairman and Chief Executive,
Europe and Asia 
 News Corporation 

1211 Avenue of the Americas 
 New York, NY 10036

  

	Re:	Notification of Annual Bonus and Performance-Based Bonus Opportunities 

 Dear James: 
 The purpose of this letter (the “Agreement”) is to advise you that the
Compensation Committee (the “Compensation Committee”) of the Board of Directors (the “Board”) of News Corporation (the “Company”) approved new criteria pursuant to which it would base its determination to pay annual
bonus and long-term incentive awards to you. This Agreement also sets forth the terms and conditions applicable to the annual bonus and long-term incentive awards. 
 Annual Bonus 
 Beginning for the fiscal year ending June 30, 2011 and until further
action by the Compensation Committee, you will be eligible to receive an annual bonus, two-thirds of which will be based on financial and operating performance as compared to the Company’s annual budget, taking into account a range of factors
without pre-determined weights on these factors, and one-third of which will be based on qualitative factors, including, but not limited to, individual and group contributions to the Company’s financial and non-financial objectives (the
“Annual Bonus”). The Annual Bonus will be paid in cash. The payment of the Annual Bonus to you is conditioned upon the funding of a bonus pool based on the attainment of one or more pre-established objective performance measures that shall
be determined by the Compensation Committee within the 90 day period after the beginning of the fiscal year (the “Annual Bonus Condition”). If the Annual Bonus Condition is met, you shall be entitled to receive an Annual Bonus based on the
Compensation Committee’s assessment of the factors described above. 
 The Annual Bonus will be subject to the following provisions upon
any event of termination: 
 Termination due to death or Disability (as defined below)—You shall be entitled to
receive any Annual Bonus payable but not yet paid in respect of any fiscal year prior to 







 
the date such termination occurs and a pro rata portion of the Annual Bonus you would have earned for the fiscal year of such termination had no termination occurred. Such pro rata portion shall
be calculated based on your target opportunity and based on the number of days you were employed by the Company in the fiscal year during which your employment terminated compared to the total number of days in such fiscal year. 

Termination for any reason other than death or Disability (as defined below)—You shall be entitled to receive any Annual Bonus
payable but not yet paid in respect of any fiscal year prior to the date such termination occurs and a pro rata portion of the Annual Bonus you would have earned for the fiscal year of such termination had no termination occurred. Such pro rata
portion shall be calculated based solely on the Compensation Committee’s assessment of Company financial and operational performance as compared to the Company’s annual budget established in connection with the Annual Bonus described
herein, provided that any threshold criteria established by the Compensation Committee as a condition of the payment of the Annual Bonus is satisfied. 
 For the Annual Bonus for fiscal 2011, the Compensation Committee approved a target opportunity of $6.0 million and a maximum bonus opportunity of $12.0 million. Target opportunities for the Annual Bonus
for future years will be communicated to you upon determination. 
 Performance-Based LTIP 

In addition, beginning for the fiscal year ending June 30, 2011 and until further action by the Compensation Committee, you shall be eligible to
participate in the News Corporation Executive Officer Performance-Based Long-Term Incentive Program (“Performance-Based LTIP”). Each Performance-Based LTIP represents the right to receive the U.S. dollar value of one share of News
Corporation’s Class A common stock, par value $0.01 per share (“Class A Common Stock”) in cash. The Performance-Based LTIP awards shall be awarded under the Company’s 2005 Long-Term Incentive Plan (the “LTIP”). The
Performance-Based LTIP will be paid in cash after the completion of the three-year performance period (the “Performance Period”), subject to the satisfaction of one or more pre-established objective performance measures that shall be
determined by the Compensation Committee within the 90 day period after the beginning of the fiscal year (the “PSU Performance Condition”). If the Performance Condition is met, the actual number of Performance-Based LTIP awards to be
awarded to you shall be the number of Performance-Based LTIP awards payable based on the achievement of the following performance metrics compared to performance targets established by the Compensation Committee within the 90 day period after the
beginning of the fiscal year: (i) average year over year adjusted earnings per share growth (“EPS”), (ii) average year over year adjusted free cash flow growth (“FCF”) and (iii) the Company’s 3-year total
shareholder return (“TSR”) compared with the 3-year TSR of the companies that comprise the S&P 500 (excluding financial and energy sector companies). These performance-based metrics will be evaluated and certified by the Compensation
Committee at the end of the three year performance period. 







  
 The terms and conditions for the
Performance-Based LTIP awards (the “Terms and Conditions”) are attached as Exhibit A to this Agreement. 
 In addition, your
Performance-Based LTIP will be subject to the following provisions upon any event of termination: 
 Any type of termination
on or prior to the last day of the first fiscal year of the Performance Period—The entire award will be forfeited. 

Termination due to death or Disability (as defined below), by the Company without Cause (as defined below) or by you with Good Reason
(as defined below) or due to Retirement (as defined below) that occurs within the second or third fiscal years of the applicable Performance Period—You shall be entitled to receive the full value of any award which will be calculated at the
end of the Performance Period as if no termination had occurred and such award shall be payable when such award would have been paid had no termination occurred. 
 Termination by the Company for Cause (as defined below) or by you without Good Reason that occurs within the second or third fiscal years of the applicable Performance Period—The pro rata
value of any award which will be calculated at the end of the Performance Period based on (a) the Final PSU Credits (as defined in the Terms and Conditions) that you would have received if no termination had occurred multiplied by (b)(1) the
number of days you were employed by the Company during the Performance Period divided by (2) the total number of days in such Performance Period. 
 For purposes of this Agreement: 
 “Disability” shall mean if you are
unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

 “Retirement” shall mean your resignation or termination of employment after attainment of age 60 with ten years of
service with the Company or any of its affiliates so long as you are not then employed by another company. 
 “Cause”
shall mean (a) a deliberate and material breach by you of your duties and responsibilities that results in material harm to the Company and its affiliates which breach is committed without reasonable belief that such breach is in, or not
contrary to, the best interests of the Company, and is not remedied within 30 days after receipt of written notice from the Company specifying such breach, (b) your plea of guilty or nolo contendere to, or nonappealable conviction of, a felony,
which conviction or plea causes material damage to the reputation or financial position of the Company, or (c) your addiction to drugs or alcohol that results in a material breach of your duties and responsibilities and that results in material
harm to the Company and its affiliates, which addiction is not remedied within 30 days after receipt of written notice from the Company specifying such breach. 







  
 “Good Reason”
shall mean the occurrence of any of the following without your express written consent: (a) the assignment to you of any duties inconsistent with your positions, duties, responsibilities and status with the Company, a change in your reporting
responsibilities, title or offices, or any removal of you from or failure to elect or re-elect you to any position with the Company (including membership on the Board of Directors of the Company, but only to the extent that the Company does not use
its best efforts to maintain your membership on its Board) except in connection with your promotion or a termination of employment for Cause; (b) a reduction in your base salary, as such base salary may be increased from time to time
thereafter; (c) a material reduction in your benefits under any employee benefit plan (unless failure to reduce such benefits would constitute a violation of applicable law); (d) any relocation of your work location outside of London or
New York City; (e) any material reduction in fringe benefits and perquisites provided to you (unless failure to reduce such benefits would constitute a violation of applicable law); (f) any material breach by the Company or of any
provision of this Agreement; or (g) failure by any successor to the Company expressly to assume all obligations of the Company under this Agreement; provided, however, that an event specified in (a), (b), (c), (e) or
(f) herein that has occurred inadvertently and in good faith shall not constitute “Good Reason” if it is remedied within 30 days after receipt of written notice from you specifying such event. 

For the fiscal 2011-2013 performance period, the Compensation Committee approved a target PSU opportunity (a “PSU Target Value”) of $6.0
million and a PSU Target Number (as defined below) of 456,621. Target opportunities for the Performance-Based LTIP for future years will communicated to you upon determination. 
 In addition, the maximum PSU opportunity (the “PSU Maximum Opportunity”) shall be no greater than 150% of the PSU Target Number where the “PSU Target Number” is determined by dividing
the PSU Target Value by the 20 trading day average closing price of the Company’s Class A common stock, par value $0.01 per share, ending on the June 30 of the prior fiscal year provided that such PSU Maximum Opportunity shall also be
subject to the limitations set forth in the LTIP 
 The Annual Bonus Condition, PSU performance metrics and performance condition shall be
communicated to you upon determination by the Compensation Committee. 
  

			
	Sincerely,
	
	 /s/ Lawrence A. Jacobs

	By:	 	Lawrence A. Jacobs
	Title:	 	 Senior Executive Vice President and
 Group General Counsel

	News Corporation









  
 Exhibit A

 NEWS CORPORATION 
 EXECUTIVE OFFICER PERFORMANCE-BASED LONG-TERM INCENTIVE PROGRAM 
 SUMMARY OF TERMS
AND CONDITIONS OF PERFORMANCE STOCK UNIT 
  

											
	Eligible Persons	  	Persons who may be designated from time to time by the Compensation Committee (the “Compensation Committee”) of the Board of Directors of News
Corporation	   
		
	Award	  	An award of News Corporation Performance Stock Units (“PSUs”), with each representing the right to receive the U.S. dollar value of one share of News
Corporation’s Class A common stock, par value $0.01 per share (“Class A Common Stock”) in cash. The PSUs will be granted under the News Corporation 2005 Long-Term Incentive Plan (the “LTIP”).	     
		
	 Performance

Period
	  	3-Year Performance Period	  
				
	 Performance
 Metrics (Target
Performance,
 Maximum

Performance and

Limitation

Adjustment)
	  	 Performance Metric
	  	Target
Performance	 	 	Maximum
Performance	 
	  	  
 Earnings Per Share (“EPS”) Growth—Average
Adjusted EPS growth per fiscal year measured by the sum of the year over year annual growth in each of the three fiscal years of the performance period, divided by 3 versus a pre-established target
	  	 	40	% 	 	 	80	% 
	  	  
 Free Cash Flow (“FCF”) Growth—Average Adjusted
Free Cash Flow growth per fiscal year measured by the sum of the year over year annual growth in each of the three fiscal years of the performance, divided by 3 versus a pre-established target
	  	 	40	% 	 	 	80	% 
	  	  
 Total Shareholder Return (“TSR”)—News
Corporation’s 3-year TSR compared with the 3-year TSR of the companies comprising the S&P 500 Index (excluding Financial and Energy sector companies) at the end of the Performance Period
	  	 	20	% 	 	 	40	% 
				
		  	Subtotal	  	 	100	% 	 	 	200	%** 
		  	  
 **
However, in no event may a payout exceed 150% of the PSU Target Number (defined below) the Eligible Person has the opportunity to earn.
	    









  

			
		 	 The EPS and FCF performance metrics are determined as the percentage growth from News Corporation’s prior year end consolidated
results. The TSR performance metric is determined by a measurement at the end of the Performance Period.
  
 Limitation Adjustment—A “limitation adjustment” may be required in some cases to cap the maximum payout at 150% of the PSU Target Number (defined below).

		
	 Target

Determinations
	 	Within 90 days of the beginning of each Performance Period, the Compensation Committee will establish, for each of the performance metrics, performance ranges and payout ranges
for the Performance Period. At such time, unless already set forth in an applicable employment agreement, the Compensation Committee will determine the target opportunity for each Eligible Person expressed as a dollar value (the “PSU Target
Value”). The PSU Target Value will be converted into a target number of PSUs based on the 20 trading day average closing price of the Class A Common Stock ending on the June 30 of the prior year (the “PSU Target Number”). Such
performance metrics’ performance ranges, payout ranges, and PSU Target Value will be conveyed in writing to each applicable Eligible Person within 90 days of the beginning of each Performance Period.
		
	 Performance

Determination
	 	 •   As soon as practicable following the end of the Performance Period,
the Compensation Committee will compute the average of the annual EPS and FCF performance metrics for each of the three applicable fiscal years and determine the final performance metric for each of the three performance metrics, which, because of
the Limitation Adjustment described above, cannot exceed 150% of the PSU Target Number (the “Final Performance Metric”). The Compensation Committee will then certify the achievement of the results for the Performance Period.

 
 •   All performance
metrics may be adjusted at the sole discretion of the Compensation Committee as it deems appropriate (i) to exclude the effect of extraordinary, unusual and/or non-recurring items, discontinued operations and accounting charges and (ii) to reflect
such other facts as the Compensation Committee deems appropriate so as to reflect the performance metric and not distort the calculation of the performance metric.

		
	Payment	 	Subject to the Condition to Payment of PSUs described below, at the end of the Performance Period, each Eligible Person will be credited with the number of PSUs determined by
multiplying the PSU Target Number by the Final Performance Metric (the “Final PSU Credits”).








  

			
		  	Each Eligible Person will then receive a payment equal to the Final PSU Credits multiplied by the closing price of the Company’s Class A Common Stock on the last trading day
immediately prior to the Payment Date, subject to the limitations set forth in the LTIP. The “Payment Date” shall be August 15 or the business day closest to August 15. Thus, the Final PSU Credits reflect, for each Eligible Person, both
Company performance and any change in the value of the Company’s Class A Common Stock over the three-year Performance Period.
		
	 Condition to
 Payment
of PSUs
	  	The Payment of PSUs to each Eligible Person is subject to the attainment of one or more pre-established objective performance measures that shall be determined by the
Compensation Committee within the 90 day period after the beginning of the fiscal year (the “PSU Performance Condition”). If the PSU Performance Condition is met, the actual number of PSUs to be awarded shall be determined by multiplying
the PSU Target Number by the Final Performance Metric as described herein subject to the maximum limitation contained in the 2005 Long-Term Incentive Plan.
		
	 Impact of

Termination During
 a
Performance
 Period
	  	 Unless set forth in an applicable employment agreement or otherwise provided by the Compensation Committee, in its sole discretion,
the following provisions shall apply to the PSUs:
  
 Upon any type of
termination on or prior to the last day of the first fiscal year of the applicable Performance Period, the entire Award will be forfeited.
  

Upon termination that occurs within the second or third fiscal years of the applicable Performance Period, the following terms and conditions shall
apply:
  
 In the event of termination by the Company for
Cause (as may be defined in an applicable employment agreement) or termination by an Eligible Person without Good Reason (as may be defined in an applicable employment agreement), the entire Award will be forfeited.

 
 In the event of termination by the Company without Cause (as may
be defined in an applicable employment agreement), including by a non-renewal of the Eligible Person’s employment agreement, termination by the Eligible Person with Good Reason (as may be defined in an applicable employment agreement) or upon
retirement, an Eligible Person shall be entitled to receive a pro-rata portion of any Award that would have been paid had no termination occurred based on the number of days the Eligible Person was employed by the Company during the Performance
Period.









  

			
		  	 In the event of death or Disability (as defined below), an Eligible Person shall be entitled to receive the full
value of any Award at the end of the Performance Period as if no termination had occurred and such Award shall be payable when such Award would have been paid had no termination occurred.

 
 “Disability” shall mean an Eligible Person is unable to
engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

 
 “Retirement” shall mean the resignation or termination
of employment by the Eligible Person after attainment of age 60 with ten years of service with the Company or any of its affiliates so long as the Eligible Person is not then employed by another company.

		
	Definitions	  	 “Adjusted Net Income” shall be determined by adjusting Net Income by eliminating the effect on Net Income of the following
items, which will apply equally to income and losses from “Associated Entities” (as that term is used in News Corporation’s audited consolidated financial statement (the “Financial Statements”) included in Net Income (the
“ Adjustments “) - (i) non-cash intangible asset impairment charges and writedowns on investments to realizable values; (ii) gains or losses on the sale or other disposition of businesses or investments; (iii) items classified as
Extraordinary Items (or a similar classification); (iv) the impact of changes in accounting in the fiscal year of such change (with the intent being to measure Adjusted Net Income in each Fiscal Year on the same bases of accounting); (v) costs of
material business restructurings, reorganizations and relocations (includes severances, shut down, asset writeoffs—whether immediately recognized or the incremental impact of accelerated charges over the restructuring period); and (vi) gains
and losses from capital and debt issuances and retirements. The determination may reflect such other adjustments as the Compensation Committee deems appropriate to reflect the performance metric so as to not distort the calculation of the
performance metric.
  
 “Earnings Per Share” is calculated by
dividing Adjusted Net Income by the number of shares of stock (or stock equivalents) of the combined classes of News Corporation’s common stock utilized in the Financial Statements for the respective fiscal year in determining diluted earnings
per share, after adjusting for new share issuances and the effect of corporate reorganizations such as stock splits.
  
 “Free Cash Flow” is defined as operating income before depreciation and amortization, less cash interest, operating taxes paid, working










			
		  	 capital requirements and capital expenditures, plus distributions/dividends received and non-cash compensation expense, all
determined from continuing operations. Comparable adjustments made to Net Income in accordance with the definition of Adjusted Net Income will be made to Free Cash Flow to the extent they impact Free Cash Flow.

 
 “Net Income” for each fiscal year shall be determined in accordance with
United States generally accepted accounting principles and will be such amount reported as Net Income in the Financial Statements.
  

“Total Shareholder Return” is calculated as the change in value of the Company’s weighted average of the share price of the Company’s
Class A Common Stock and Class B common stock, par value $0.01 per share, as quoted on The NASDAQ Stock Market over the Performance Period .
  

Weighted Average TSR = (Weighted Class A TSR plus Weighted Class B TSR)
  

Weighted Class A TSR = (((share price of the Class A Common Stock at the end of the 3-year Performance Period minus the share price of the Class A Common
Stock at the beginning of the three-year Performance Period) plus dividends reinvested) divided by the share price of the Class A Common Stock at the beginning of the three-year Performance Period) multiplied by the percentage of shares outstanding
of the Class A Common Stock to total shares outstanding.
  
 Weighted Class B
TSR = (((share price of the Class B Common Stock at the end of the 3-year Performance Period minus the share price of the Class B Common Stock at the beginning of the three-year Performance Period) plus dividends reinvested) divided by the share
price of the Class B Common Stock at the beginning of the three-year Performance Period) multiplied by the percentage of shares outstanding of the Class B Common Stock to total shares outstanding.

 
 Share price is determined using the 20 trading day average closing price up to the
last trading day on or prior to June 30. Shares outstanding is determined on the last trading day on or prior to June 30 at the end of the Performance Period.