Murdoch faces stormy AGM after hacking scandal
Rupert Murdoch faces a firestorm on Friday at his News Corporation's annual shareholders' meeting, amid calls for him and his sons to be ousted after the phone hacking scandal in Britain.world Updated: Oct 21, 2011 07:53 IST
Rupert Murdoch faces a firestorm on Friday at his News Corporation's annual shareholders' meeting, amid calls for him and his sons to be ousted after the phone hacking scandal in Britain.
But given that his family control about 40% of the shares, and that Murdoch-backing billionaire Saudi Prince Alwaleed bin Talal owns an additional 7.0%, the calls are likely to fail.
Nevertheless the Los Angeles gathering promises to be dramatic, three months after the hacking scandal blew up in Britain, forcing News Corp. to close its top-selling tabloid, the 168-year-old London-based News of the World.
On the eve of the meeting it emerged that a British lawmaker who was a leading figure in a parliamentary probe into the phone-hacking scandal plans to make allegations about News Corp.'s use of surveillance at the AGM.
"I want to leave investors in no doubt that News Corporation is not through the worst of this yet," member of parliament Tom Watson said, according to the Guardian newspaper, which exposed the full extent of the scandal.
"There are more questions for the Murdochs to answer," added the British lawmaker, who was to attend the LA meeting having been given a proxy vote by a US trade union umbrella group, the Guardian reported.
Earlier this month corporate advisers International Shareholder Services recommended that News Corp. shareholders vote against the reelection of 13 members of the 15-member board, including Murdoch and sons James and Lachlan.
The hacking scandal had rumbled on for two years but it exploded in July when it was revealed that a private investigator working for the News of the World had accessed the voicemail of a missing British schoolgirl later found murdered.
The newspaper's owners, Murdoch affiliate News International, has since settled dozens of compensation claims from celebrities and other public figures whose phones were also hacked.
The scandal "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," ISS said.
In addition, it said shareholders should take aim at Rupert Murdoch's exceptionally high base salary" of $8.1 million, plus a $12.5 million bonus in the 2011 fiscal year that ended in June.
ISS is among a number of voices worldwide calling for a major shakeup at the powerful globe-spanning news, entertainment and media empire built by the 80-year-old Australian-American.
Three weeks ago, a collective of the biggest Australian pension funds, the Australian Council of Superannuation Investors, urged shareholders to vote against reelecting six board members, including the magnate's two sons.
In Britain, the Local Authority Pension Fund Forum said the News Corp. board "must take responsibility for the hacking scandal and that this would be best achieved by a change to its existing membership and structure."
Since August, a US group of religion-oriented investors, the Interfaith Center on Corporate Responsibility, has urged that the two posts held by Rupert Murdoch -- chief executive and chairman -- be separated.
Last week News Corp. fired back at ISS, saying its "disproportionate focus" on the News of the World scandal is "misguided."
Besides the potentially fiery meeting at Fox Studios in LA, News Corp. is preparing to defend itself against class-action lawsuits for damages incurred by shareholders after the company's stock plunged after the hacking scandal.
On the eve of the meeting The Times newspaper in Britain, also owned by News International, announced that it was cutting up to 100 journalist jobs out of a total workforce of 700 in response to a near 15% budget cut.
Editor James Harding blamed the cuts on the stalling economy, a 25% increase in the cost of newsprint and slow progress in raising advertising revenue from the iPad edition, according to the online version of the paper.