A big revolt by institutional investors against the current New Corporation board is likely, according to a shareholders advisory group, but the Murdoch family is still expected to retain its prominent position at the media conglomerate.
London-based PIRC’s Tom Powdrill told CampdenFB that he believed a number of large institutional investors would speak out against News Corp’s current board over the next few weeks, following the phone-hacking scandal in the UK, which raised concerns about corporate governance and the Murdoch family’s running of company.
News International, the UK division of News Corp, “has admitted that it carried out illegal activities and gave inaccurate statements to the British parliament”, he said.
“The hacking scandal raised big ethical questions about the board,” he added. “Responsibility for it went up high – right to James Murdoch.”
Members of the board need to take responsibility for this, Powdrill reckons, just as BP’s former chief executive, Tony Hayward, had to following the Gulf of Mexico oil spill.
PIRC, which advises shareholders on corporate governance issues, called on New Corp investors to vote against the re-election of Rupert, James and Lachlan Murdoch, as well as a number of other directors, at the upcoming annual meeting.
The Australian Council of Superannuation Investors echoed this on 29 September, saying there was a need for “the appointment of a genuinely independent chair and for the board to replace family members, affiliated or longstanding directors with credible, skilled outside directors”.
Currently, the Murdoch family controls about 40% of the voting rights at the media company, meaning there is little prospect of any of the incumbent directors facing a majority vote against their re-election.
“If all non-Murdoch shareholders voted the same way, then board changes would be possible,” said Powdrill, although he admits any big changes are unlikely. “How some of the big institutional investors vote will be important.”
Both the PIRC and the ACSI argue that a message needs to be sent to the board that its current make-up is not acceptable.
“In a situation where there are dual classes of shares, minority investors rely on the independent directors to protect their interests and rights - therefore the skill and independence requirements are vital,” said the ACSI in a statement.
When contacted, a spokeswoman for News Corp declined to comment.
PIRC opposes the election or re-election of 11 directors of News Corp’s 16-member board at the annual meeting on October 21st, while the ACSI has recommended its pension funds vote against the election of Andrew Knight, Arthur Siskind, David De Voe and Natalie Bancroft, as well as James and Lachlan Murdoch, but not Rupert.