US nationwide investors’ advisory group ISS intensified the pressure for corporate governance changes inside Newscorp US on Monday. America’s biggest investor group recommended shareholders vote against the re-election of 13 of the media company’s 15 directors, including Rupert Murdoch, chairman and chief executive.
A News Corp spokeswoman, Teri Everett, criticised ISS for not taking enough account of its operating profit of almost $US5 billion, up 23 per cent on last year. Warning: accusing folks making mountains of money can damage your wealth.
”The company takes the issues surrounding News of the World seriously and is working hard to resolve them,” she said in a statement. ”However, ISS’s disproportionate focus on these issues is misguided and a disservice to our stockholders.” Teri did not, on this occasion, dish out any bollocks about cooperating fully with the authorities and having a zero-tolerance policy towards employees who hack phones, blackmail politicians, and physically threaten competitors. Such defensive weapons are presumably being held in reserve until it becomes clear that more serious crimes have been committed by Rupert Murdoch’s empire.
The ISS advisory group said that the phone-hacking scandal at Newscorp’s London-based newspaper group had “laid bare a striking lack of stewardship and failure of independence” by the board that had led to “enormous financial and reputational costs to shareholders”. ISS recommended that shareholders vote against the re-election of Mr Murdoch, his sons James, the deputy chief operating officer, and Lachlan, as well as the chief operating officer Chase Carey and all but two of the remaining directors, including non-executives such as Sir Rod Eddington, former chief executive of British Airways, and José María Aznar, the former prime minister of Spain. Only Joel Klein and James Breyer, both new directors, won a recommendation of support.
ISS also recommended a vote against the executive compensation motion on the meeting’s agenda. The group – for some reason, God alone knows why – said it thought it inappropriate for Rupert Murdoch to be awarded a $12.1m bonus, having been effectively found guilty of hacking the phones of everyone in the UK from the heir to the Throne to the Prime Minister.
Glass Lewis, the US investor advisers, last week recommended a vote against all three Murdochs and four other directors, while the Local Authority Pension Fund Forum in the UK advised its members to oppose the re-election of Rupert and James Murdoch.
But sadly, News Corp uses – guess what? – that dual-class share structure so beloved of the Glaser family which allows one set of genetic retards to control almost 40% of the voting rights…..despite holding just 12% of the total equity.
Charles Elson, head of the Weinberg Center for Corporate Governance, said: “Any time the shareholders express their view in an emphatic way you have to pay attention to it … If you have significant opposition, it makes it harder to run the company.”
Meanwhile across the Pond, former right-hand Murdoch man, Les Hinton, will give evidence to MPs on the culture, media and sport select committee for a third time on 24 October.
Hinton was chairman of the UK newspaper arm of Newscorp during the key 2005-7 period. He will be interviewed via videolink from the US by MPs investigating phone hacking by the News of the World. So, keeping his distance, then. Probably very wise, Les.
Hinton told MPs in March 2007 that he believed Clive Goodman, the News of the World reporter jailed for phone hacking, had acted alone. In September 2009, after the first allegations that hacking was more widespread, he said he had seen no evidence to suggest that was the case.At the time of his resignation Hinton said he had “watched with sorrow from New York as the News of the World story has unfolded” but said that although he had seen “hundreds of news reports of both actual and alleged misconduct during the time I was executive chairman of News International”, he was “ignorant of what apparently happened”. However, he said he chose to quit because “in the circumstances I feel it is proper for me to resign from News Corp and apologise to those hurt by the actions of News of the World”. It is quite astonishing, is it not, how often Newscorp executives resign on issues about which they know nothing.
The only exception to this general rule is James Murdoch, who knows nothing and yet stays where he is – in charge of a US listed company. The degree of inter-personal discretion inside Newscorp is commendably all-embracing.