Firm urges ouster of Rupert Murdoch from News Corp. board
An influential consulting firm is advising that shareholders vote News Corp. Chairman Rupert Murdoch and 12 others — including his two sons — off the board of directors of the media giant less than two weeks before the company’s annual meeting.
Institutional Shareholders Services Inc. said Monday that an overhaul was necessary in light of the phone hacking scandal that continues to rock News Corp. and has led to government inquiries of the company in England and the United States. The firm called the debacle, which led to News Corp. shutting down its British tabloid News of the World, a “failure of board stewardship.” Institutional Shareholder Services said Monday that an overhaul was necessary.
Murdoch controls about 40% of the voting shares of News Corp., which is scheduled to hold its annual meeting Oct. 21 in Los Angeles and whose board has 15 members.
“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 fiasco, 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 whom had oversight over News International, the unit that covered News of the World. Also given the thumbs down were Chief Operating Officer Chase Carey, Chief Financial Officer David DeVoe and former general counsel Arthur Siskind.
Independent board members Rod 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.”
News Corp. spokeswoman Teri Everett 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,” Everett said.
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.
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