Rupert Murdoch should be voted off News Corp. board, advisors say
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An influential consulting firm is advising that shareholders vote News Corp. Chairman Rupert Murdoch and 12 others off the board of directors of the media giant at its annual meeting later this month.
Calling the phone-hacking scandal that led News Corp. to close its British News of the World tabloid and has led to government probes of the company both in England and the United States, a ‘failure of board stewardship,’ Institutional Shareholder Services said Monday that an overhaul was necessary. News Corp. is scheduled to hold its annual meeting on Oct. 21 in Los Angeles.
‘The company’s phone-hacking scandal, which began its public denouement in July 2011, has laid bare a striking lack of stewardship and failure of independence by a board whose inability to set a strong tone-at-the-top about unethical business practices has now resulted in enormous costs — financial, legal, regulatory, reputational, and opportunity — for the shareholders the board ostensibly serves,’ ISS said.
The phone-hacking debacle, which has led to several resignations within News Corp., is ‘part of a mosaic of failures of board independence, oversight, and responsiveness to shareholder concerns stretching back at least to 2004, when the company reincorporated from Australia to Delaware,’ ISS added.
Besides voting out Murdoch, ISS recommended no votes for his sons Lachlan and James, the latter of which had oversight over News International, the unit that housed News of the World. Also given the the thumbs down were Chief Operating Officer Chase Carey, Chief Financial Officer David DeVoe and former general counsel Arthur Siskind. Independent board members Roderick Eddington, Peter Barnes, Viet Dinh, Andrew S.B. Knight, John Thornton, Jose Maria Aznar and Natalie Bancroft need to go as well, ISS said, because of ‘the pattern of repeated failures of board oversight and independence.’
A News Corp. spokeswoman said the company ‘strongly disagrees’ with ISS.
‘The company takes the issues surrounding News of the World seriously and is working hard to resolve them, however ISS’ disproportionate focus on these issues is misguided and a disservice to our stockholders,’ the spokeswoman said. Murdoch controls almost 40% of News Corp.'s voting stock
Interestingly, ISS recommended a vote to keep Joel Klein on the company’s board. It is Klein who is charged with cleaning up the mess from the News of the World imbroglio.
— Joe Flint