Business

News Corp faces proxy call for independent chairman

April 03, 2012

File picture of News Corp chairman Rupert Murdoch. — Reuters picFile picture of News Corp chairman Rupert Murdoch. — Reuters picBOSTON, April 3 — News Corp faces a call to appoint an independent board chairman on concerns Rupert Murdoch's media company needs to pursue more reforms to deal with its phone-hacking scandal and other issues.

The proxy proposal, filed by Christian Brothers Investment Services, is likely to fan an ongoing controversy over governance at the company. Although unlikely to get a majority of votes, the nonbinding resolution filed last month could put pressure on the board to remove Murdoch, currently News Corp's chief executive, from his other role as chairman of the company, the sponsor said.

With current arrangements, the company is "stepping into the scandal with a flawed corporate governance structure," Julie Tanner, who oversees socially responsible investing at Christian Brothers in New York, said in a telephone interview.

The group manages about US$4 billion (RM12.2 billion), mainly for Catholic institutional clients. It is among a group of activists gaining traction in their drive to reform corporate governance. Last year, pressure from Christian Brothers convinced Goldman Sachs Group Inc to make the leading board role of presiding director more powerful.

A News Corp spokesman declined to comment.

Under Murdoch, News Corp has grown to become one of the world's most powerful media companies, but also has drawn increasing scrutiny over newsgathering practices at some of its publications and questions about how much senior executives knew of abuses. Last week, it also faced reports that one of its television units had promoted piracy attacks on rivals, which the company denied.

Too late for 2011 meeting

Matters came to a head last July when News Corp abruptly closed the News of the World tabloid amid scrutiny of the use of private investigators, and several top News Corp executives left.

The events happened too late for Christian Brothers to file a proxy proposal related to corporate governance in time for News Corp's 2011 annual meeting, held in October, Tanner said.

But Tanner was able to offer a floor resolution at the 2011 meeting calling for an independent chair. Though it got few votes, it gained support from the proxy advisory firm Glass Lewis and public-sector investors such as the UK's Local Authority Pension Fund Forum.

Noting that support, and significant opposition from shareholders to the election of four directors last year, Tanner said she hoped the recently filed measure might gain more than 30 per cent support at the meeting expected this fall. Such support could lead News Corp's board to reduce Murdoch's role, she said.

"I think a very strong vote will put them in a position where they should take some kind of action," she said. — Reuters

 

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