Murdoch team faces stormy shareholders meeting
Rupert Murdoch and his leaders at News Corp. face a firestorm at Friday’s shareholders meeting amid calls for Murdoch and sons James and Lachlan to be removed from the company’s board.
But given that founder Murdoch, chief executive of the media empire, and his family control about 40 percent of the shares, and billionaire Saudi Prince Alwaleed bin Talal, who supports them, owns an additional 7.0 percent, the calls likely will be unheard.
Still, the shareholder meeting slated for October 21 at Fox Studios in Los Angeles promises to be packed with drama, three months after a July hacking scandal blew up in Britain, forcing News Corp. to close its British tabloid, 168-year-old News of the World.
Tarnishing the reputation of News Corp., the hacking scandal sparked parliamentary and police investigations and led to arrests.
Last week, leading US corporate governance and proxy firm International Shareholder Services recommended that News Corp. shareholders vote against the reelection of 13 members of the 15-member board, a move that would oust Murdoch, 80, and his two sons.
“The company’s phone hacking scandal… has laid bare a striking lack of stewardship and failure of independence by a board whose inability to set a strong tone-at-the-top about unethical business practices has now resulted in enormous costs — financial, legal, regulatory, reputational and opportunity — for the shareholders the board ostensibly serves,” ISS said.
In addition, ISS said shareholders should take aim against Rupert Murdoch’s unusually high pay: an annual base salary of $8.1 million, plus a $12.5 million bonus in the 2011 fiscal year that ended in June.
“Murdoch’s exceptionally high base salary… runs counter to the pay-for-performance concept,” it said.
ISS is among a number of voices worldwide calling for a major shakeup at the powerful globe-spanning news, entertainment and media empire built by the Australian-American.
Two weeks ago, a collective of the biggest Australian pension funds, the Australian Council of Superannuation Investors, urged shareholders to vote against reelecting six board members, including the magnate’s two sons.
In Britain, the Local Authority Pension Fund Forum, which has 100 billion pounds ($158.1 billion) under management, said the News Corp. board “must take responsibility for the hacking scandal and that this would be best achieved by a change to its existing membership and structure.”
LAPFF recommended that shareholders oppose the reelection of Rupert Murdoch, board chairman, and his son James, the chairman of News International, which is at the center of the hacking scandal.
Since August, a US group of religion-oriented investors, the Interfaith Center on Corporate Responsibility, has urged that the two posts held by Rupert Murdoch — chief executive and chairman — be separated.
“The ongoing News Corp. debacle exemplifies how poor governance can and does lead to inadequate corporate practice and disastrous consequences of investors and society at large,” said Laura Berry, ICCR executive director.
The ICCR also seeks the end of the two-class share structure, A shares and B shares, in which the A shares are non-voting.
This week, News Corp. fired back at ISS, saying its “disproportionate focus” on the News of the World scandal is “misguided.”
Besides the potentially fiery annual general meeting, News Corp. is preparing to defend itself against class-action lawsuits for damages incurred by shareholders after the company’s stocks plunged following the hacking scandal.
The company takes “very seriously” the financial risks linked to the litigation, but “our broad, diverse group of businesses across the globe is extremely strong today,” the firm said in a Securities and Exchange Commission filing this week.
Unsurprisingly, the company’s leaders showed no signs of wanting to change the status quo, vaunting to the regulator “the value created for stockholders by News Corporation’s board of directors, members of management and employees around the world.”