UK pension funds have demanded a boardroom shake-up at News Corp as the media giant prepares for its annual shareholder meeting later this month.
The Local Authority Pension Fund Forum (LAPFF), whose members have combined assets of £100 bn ($153 bn), has called for James Murdoch to step down to draw a line under the phone-hacking scandal at News Corp’s UK division.
LAPFF has also called for a separation of powers at the top of the company, where founder Rupert Murdoch currently holds the joint roles of chairman and chief executive.
The demands were made in a voting alert issued this week to LAPFF members, which advises shareholders to vote against the reelection of James and Rupert Murdoch to the board at the annual meeting on October 21.
‘News Corp and its shareholders desperately want to draw a line under this scandal, but that will only be possible if the board accepts the need to demonstrate real accountability,’ comments Ian Greenwood, chairman of the LAPFF. ‘That requires a change in the structure and make-up of the board.’
LAPFF also said it had reservations about the independence of the inquiry being undertaken by News Corp into the hacking scandal, which is headed by director Viet Dinh.
But the forum added that it had decided the review must be given time to run its course and advised members to vote to reelect Dinh at the AGM.
The decision for Dinh to head the inquiry has been criticised, given the director’s close personal ties to the Murdoch family.
The inquiry was set up following allegations of phone hacking at theNews of the World, a UK tabloid owned by News Corp’s UK subsidiary News International, which is chaired by James Murdoch. The 168-year-old newspaper was subsequently shut down by News International.
Back in July, Dinh released a statement on behalf of News Corp’s independent directors saying they were ‘shocked and outraged’ by the allegations. The statement added that they were ‘united in support of the senior management team to address these issues’.
Investors have been fiercely critical of News Corp’s board following the scandal. Stock holders will find it hard to make an impact on elections at the AGM, however, as the Murdoch family controls almost 40 per cent of voting shares.
[Article by Tim Human, Inside Investor Relations]
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