Media conglomerate News Corporation is facing increasing pressure to reform its board, with another influential investor consulting firm recommending that shareholders vote against the re-election of many of the current directors, including Rupert Murdoch and his sons.
Institutional Shareholders Services (ISS), a US-based proxy firm that advises institutional investors on shareholder votes, said on 10 October that the phone-hacking scandal “has laid bare a striking lack of stewardship and failure of independence” by the board.
This led to “enormous” financial and reputational costs for the company and its shareholders, it added.
ISS recommended that Rupert, chairman and chief executive of the company, and his sons James, deputy chief operating officer, and Lachlan should be voted off the News Corp board, along with 10 other directors at this year's annual general meeting on 21 October.
Only Joel Klein and James Breyer, both new directors, received ISS’s approval.
However, it seems unlikely that the incumbent directors will face a majority vote against their re-election, as the Murdoch family controls about 40% of the company’s voting rights.
Prince Alwaleed bin Talal, who is News Corp’s second biggest shareholder with about 7% of the company’s voting shares, publicly backed Rupert and James Murdoch’s handling of the crisis in July.
ISS also advised a vote against the executive compensation plan and in particular Rupert Murdoch’s cash bonus of $12.5 million (€9 million) in 2011, after the illegal practices at the London-based, now defunct, newspaper News of the World were revealed this summer.
ISS is not the only investor advisory group that spoke out against News Corp’s current board. In September, UK-based PIRC called on New Corp investors to vote against the re-election of the vast majority of the board, including Rupert, James and Lachlan.
The Australian Council of Superannuation Investors also said 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”.