A powerful US investment body has called for Rupert Murdoch’s dual role as chairman and chief executive of family-controlled News Corporation to be split, in a bid to address the media conglomerate’s “lax ethical culture” and “lack of effective board oversight”.
Christian Brothers Investment Services wants an independent chairman to be appointed to improve governance and represent “the interests of all shareholders”, not just the Murdoch family.
“Given the dual-class share structure and level of family control, it is particularly important for News Corporation to have an independent chair who is empowered to challenge management, to foster a culture of accountability, and to reflect the interests of the wider shareholder body,” it said in the petition.
The institutional investor, which manages about $4 billion (€2.99 billion), mainly for Catholic institutional clients, filed the resolution on 2 April, long before News Corp’s annual general meeting is to take place in October.
But the move puts Murdoch’s position firmly back in the spotlight. Last year, a number of groups, including Institutional Shareholders Services, a US-based proxy firm that advises institutional investors on shareholder votes, called for Murdoch and his sons, James and Lachlan, to be voted off the board.
However, because of the company's dual-class share system, it was always unlikely that this would happen – despite owning little of News Corp's ordinary shares, the family controls about 40% of the company’s voting rights.
The Murdochs also have the support of Prince Alwaleed bin Talal, who controls about 7% of the voting shares.
But CBIS said the company needs to reassess its board and boost public confidence in its governance, following the phone-hacking scandal at News Corp’s British division, News International.
“By naming an independent chair, the company can create greater independence and objectivity on the board, begin to rebuild the public confidence and trust that is critical to a major news organisation, and assure shareholders that governance failures are being addressed,” it added.
CBIS has been influential in changing other boards in the past – last year, it got Goldman Sachs Group to make its presiding director role more powerful.
Update (2 April, 13:55 BST): James Murdoch is to step down as the chairman of BSkyB, the British broadcaster that News Corp holds a 40% stake in. He will remain on the board.