Murdochs hit by revolt
Shareholders want the family off the board, writes Ruth Williams.
Shareholders want the family off the board, writes Ruth Williams. NEWS Corporation shareholders have delivered a loud rebuke to the media giant's board, posting a historic protest vote against James Murdoch and other directors in the wake of the damaging British phone hacking scandal.Shareholder groups said the scale of the revolt placed News Corp directors under compelling pressure to reduce the Murdoch family's presence and influence on the board, and raised questions about the future of UK operations chief James Murdoch, who attracted the biggest protest vote and whose handling of the phone hacking revelations has come under fire.Voting tallies from the company's annual meeting in Los Angeles on Friday, released yesterday, revealed that 34 per cent and 33 per cent of eligible votes respectively were "withheld" or cast against the re-election of James Murdoch and his brother Lachlan.Three other directors Natalie Bancroft, Andrew Knight and Arthur Siskind also attracted protest votes of close to 30 per cent or more, while 14 per cent of votes were cast against Rupert Murdoch, whose dual role of chairman and chief executive was targeted at the annual meeting.The size of the protest vote was significant, given that the Murdoch family controls about 40 per cent of News Corp's voting shares, and another 7 per cent is held by Saudi Prince Al-Waleed bin Talal, who has backed the Murdochs.When these shares were stripped out, about 75 per cent of votes counted were cast against James Murdoch who will reappear next month before a British parliamentary committee probing the phone hacking scandal and about 72 per cent against Lachlan Murdoch.The result follows a vocal campaign by investors and proxy advisers around the world, including the Australian Council of Superannuation Investors, which said yesterday it would be seeking talks with News Corp's independent directors to ask "what the board is going to do about such a significant vote"."It has sent a message that can't be ignored," said ACSI chief executive Ann Byrne. "Shareholders are really trying to make the point that . . . there do not need to be so many family members on the board."We will now start to engage with the independent directors . . . we will ask them about the board's composition and ask that they move to have an independent board."Ms Byrne said the size of the vote against James "cast doubt on shareholders' views of him", and questioned whether the "dissatisfaction" could carry over to his role as chairman of British pay TV operator BSkyB, which holds its annual meeting on November 29. News Corp owns 39 per cent of BSkyB, and had hoped to fully acquire it, but was forced to withdraw after revelations that its News of the World tabloid hacked the phone of a murdered schoolgirl and many other people.Julie Tanner, from Christian Brothers Investment Services which put forward a defeated motion at the AGM for the roles of chairman and chief executive to be separated questioned how the board could not be compelled to appoint more non-executive directors. "When you back out Rupert's shares, with more than two-thirds voting against James, what must the board think?" she said.Shareholder activist Stephen Mayne, the News Corp monitor for the Australian Shareholders Association, said the vote was a "pivotal" moment in the history of News Corp. The ASA called for Mr Knight and Mr Siskind both 20-year veterans of the board to resign immediately, in the wake of the "devastating" vote."I think it's very clear that shareholders around the world have rounded on the Murdochs and their compliant directors," Mr Mayne said. Mr Mayne, who attended the meeting in LA, was particularly critical of the board's decision not to display the proxy votes at the meeting thus preventing discussion of the results.The phone hacking scandal, which broke in July, has already forced multiple resignations at UK subsidiary News International, arrests of former News Corp staff and the closure of the News of the World .A News Corp spokesman did not return calls yesterday.
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