Murdochs survive shareholder backlash

17 Oct 2012, 12:33 pm   -   Source: AAP

News Corp's Rupert Murdoch has survived a push to have him removed as chairman, while his sons have had their board seats saved.

It was News Corporation's annual shareholder meeting, but those with an investment stake in the company looked vastly outnumbered by security personnel and company representatives at the Daryl F Zanuck Theater on the Fox Studios compound in Los Angeles.

Only about 80 people, including media, took the opportunity to sit down and hear from News Corp's chief executive and chairman Rupert Murdoch and his executives outline the company's reaction to 2011's phone hacking scandal and their opposition to a global shareholder push for major changes in the company.

And even before several investors and pension representatives could present their cases to the meeting, which was also carried on News Corp's website, Mr Murdoch announced that the push to make the chairman's role independent, dump his sons James and Lachlan Murdoch from the board and eliminate the company's dual-stock structure had been defeated.

More than a majority of the preliminary votes from proxies opposed the shareholder proposals, he explained, a result that comes as no surprise given the Murdoch family's control of 40 per cent of the eligible vote.

It was a similar outcome to a more emphatically presented set of proposals at last year's meeting conducted in the wake of the phone hacking allegations that resulted in the closure of British tabloid News of the World and led to James Murdoch stepping down as chairman of News International.

In 2011, just under 35 per cent of shareholder votes went against the re-election of James Murdoch while Lachlan Murdoch received a 33.7 per cent vote against his re-election.

The company's $US12 billion ($A11.74 billion) bid to take full control of UK pay TV broadcaster BSkyB also was abandoned.

This year US firm Christian Brothers Investment Services repeated its call with the backing of Britain's Local Authority Pension Fund Forum, UK fund manager Hermes and others for Murdoch to give up his dual role at the company and let an independent chairman be appointed.

"We believe having a CEO serve as a chair represents a conflict of interest and is an impediment to a strong independent board whose primary job is to monitor management on behalf of all shareholders," Julie Tanner, assistant director of socially responsible investing at Christian Brothers, told the meeting.

"This reform is absolutely necessary at News Corp.

"The failure of internal controls has had real and lasting repercussion: it shuttered a news paper launched criminal investigations cancelled the BSkyB acquisition, eroded public trust and tarnished the company's reputation."

Murdoch noted that while many international companies separate the chairman and chief executive roles, 70 per cent of leading US firms do not, noting "we are an American company operating much the greater part of our business in this country."

Huge American pension fund, the California State Teachers' Retirement System, also lodged a well-supported request for extensive change to the News Corp board, including the exclusion of James Murdoch and his older brother Lachlan who was not on hand for the meeting.

However the Murdoch family dominance of the voting process ensured all 14 of the company's chosen candidates have been elected.

"These are issues that aren't going away," Ms Tanner said after the meeting.

When final tallies were compiled after last year's shareholder campaigns, nearly three quarters of votes, other than the Murdoch family's, backed the exclusion of Murdoch's sons from the board.

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