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Murdoch survives as chairman of 21st Century Fox

Rupert Murdoch has been reelected as chairman of the board for entertainment company 21st Century Fox, despite opposition from several shareholder groups and a top proxy advisory firm.
Rupert Murdoch
Ian West/PA Wire/Press Association Images

Rupert Murdoch has been reelected as chairman of the board for entertainment company 21st Century Fox, despite opposition from several shareholder groups and a top proxy advisory firm.

His sons, Lachlan and James, were also reelected to the 12-person board.

The vote was made last Friday at the first shareholder meeting of the company, which was separated from the publishing arm of Murdoch's News Corp in June this year.

Shareholders in Murdoch's newly-formed entertainment company 21st Century Fox had been advised to vote against the re-election of Murdoch and his sons, ahead of the company's meeting.

According to Reuters, shareholders Christian Brothers Investment Services and the British Columbia Investment Management Corporation proposed the appointment of an independent chair, criticising the existing level of family control, and the influence this might have on reorganisation of the company.

Proxy advisory firm International Shareholder Services was critical of the board's decision in May to implement a poison pill without a shareholder vote. It said any member that had previously been a director to the old News Corp, from which 21st Century Fox was formed, should have been voted off the board, as a result.

But 21st Century Fox said Murdoch had “unique insight and strategic vision” in his role as chief executive and chairman, and said the current board had delivered good returns for shareholders.

Murdoch’s companies were split to protect the profits of 21st Century Fox from the burden of News Corp's struggling newspapers and publishing companies.

The poison pill, which makes it difficult for a shareholder to buy more than a 15% stake, has been put in place for one year to prevent a hostile takeover of the family business. If a new investor did manage to buy a stake above this limit, existing shareholders would be able to buy any newly issued shares at half the price of the new shareholder.

The strategy has allowed Murdoch to maintain his 40% of the voting shares in both News Corp and 21st Century Fox at the lower rate, but ISS had said the poison pill had shifted the balance of power between the board and the shareholders.

Although it was in favour of a clear out of members who had previously sat on the board of the old News Corp, ISS supported newly-appointed board members, including LVMH next-gen Delphine Arnault.

It also said the former News Corp's slow response to the phone hacking scandal at UK newspaper the News of the World in 2011 may concern some 21st Century Fox shareholders.

ISS's recommendations had been a change of heart from last year, when it supported the re-election of Murdoch as chairman of the board, even though the storm caused by the phone hacking affaire had already erupted.

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