News Corp. Chairman and Chief Executive Officer Rupert Murdoch said shareholders rejected a proposal to split the top two roles at the company, based on a preliminary count of votes.
Shareholders also rejected a proposal to eliminate the company’s dual stock capital structure, Murdoch, 81, said today at the annual shareholder meeting in Los Angeles. Nominees to the board, including Murdoch’s sons Lachlan and James, received majority approval, he said.
Investors have re-mounted a campaign to separate the chairman and CEO roles — both held by Murdoch — to increase accountability. The efforts were unsuccessful at last year’s meeting and stem from Murdoch’s handling of a phone-hacking scandal that erupted at the company’s U.K. newspapers last year.
“This reform is absolutely necessary,” said Julie Tanner, assistant director of socially responsible investing at Christian Brothers Investment Services, which backs the split. “The lack of internal controls at the company has had real and lasting repercussions. It has resulted in shuttering a newspaper, criminal investigations, the canceled BSkyB acquisition, eroded public trust, and it has tarnished the company’s reputation.”
News Corp., based in New York, is embroiled in multiple police investigations for hacking into mobile phones and computers, as well as bribing public officials. U.K. authorities also are considering whether to bring corporate charges against News Corp.’s board for the alleged crimes.
At least 60 people have been arrested since police began the probes last year. The company was forced to call off its acquisition of British Sky Broadcasting.
News Corp. Class A shares gained 1.7 percent to $24.78 at 1:28 p.m. in New York. The nonvoting stock had gained 37 percent this year as of yesterday.
The board opposed the split of the top roles, as well as elimination of the dual classes of stock. The Class B shares give Murdoch a 38 percent voting stake in the company.
“Mandating a separation of the positions of chairman and CEO would weaken the company’s current leadership structure,” News Corp.’s board said in a Sept. 4 filing. “The proposal would deprive the board of the valuable flexibility to exercise its business judgment in selecting the individual best suited to serve as chairman in the future.”
Christian Brothers, which invests about $4 billion for largely Catholic institutions, has been a vocal opponent of Murdoch’s governance. Tanner filed the proposal to separate the chairmanship and CEO positions earlier this year, garnering the support of at least 18 investor groups holding a total of more than 13.5 million of the nonvoting shares. News Corp. has a market value of $59 billion.
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