Murdochs ride out shareholder revoltNovember 2011
Pressure mounts on News Corp as a shareholder-led campaign seeking the removal of key board members prompted a huge protest vote at the company’s AGM.
Head of News International James Murdoch and his brother Lachlan were the subject of floor motions led by non-vote shareholders, including the Church of England and Calpers. When Rupert Murdoch’s controlling shares were subtracted, two-thirds of the votes called for the Murdoch sons to be removed. Some other directors were broadly unchallenged, while others received votes against of a similar magnitude.
James Murdoch, who is due to reappear before the UK parliament next month, is thought at risk of removal, despite surviving the vote thanks to his father’s controlling share in the company.
Rupert Murdoch, News Corp chairman and chief executive officer, was backed by 86% of investors in what was essentially a vote of confidence in the company’s leadership, although shareholders representing 12m votes abstained.
The unprecedented ballot also attacked News Corp executives’ pay deals and is seen as symbolic in itself. The overwhelming majority of shareholder support for a motion could not dislodge unpopular News Corp board members because of the firm’s ‘dual stock classes’, which concentrate power with the Murdoch family even though they own just 12% of the company.
One investor, Christian Brothers Investment Services, which called for Rupert Murdoch’s removal, said “shareholders are saying loud and clear that this board has failed”.
Meanwhile, News Corp has made a list of the world’s ten worst-governed corporations. GovernanceMetrics included News Corp on its risk list after the phone-tapping scandal, which it said “has brought additional scrutiny of the company’s journalistic standards and ethics, as well as its relationship with various government agencies”.
It added: “There is little indication that the quality of the company’s governance is improving – particularly in the crucial area of the relationship between the board and Murdoch.”
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