December 8, 2023

DealBook: Pension Investor to Vote Against Murdochs on News Corp. Board

LONDON – Hermes Equity Ownership Services, which represents British Telecom and other large pension funds, said Friday it planned to vote against the re-election of Rupert Murdoch and his sons to News Corporation’s board at next week’s shareholder meeting.

Hermes EOS, indirectly owned by the BT pension scheme, Britain’s largest, said News Corporation’s directors failed to react to concerns about the composition of the board. The institutional investors also raised concerns that calls for an independent investigation into corporate governance and the culture at the media conglomerate went ignored, following the phone hacking scandal at one of its publications were also ignored.

Jennifer Walmsley, director of Hermes EOS, said she had a number of meetings with the independent directors of the board to discuss the demands but that they have “not reacted with sufficient urgency.” Hermes EOS, which represents about 0.5 percent of News Corp., plans to withhold support for Rupert Murdoch, his sons, James and Lachlan Murdoch, as well as Arthur Siskind and Andrew Knight.

“They’ve made some very minor changes to the board so far, which is rather a tinkering around the edges,” Mrs. Walmsley said. “To know why the change isn’t happening, you only have to look at the composition of the board.”

“Members are either family members, owe their position to a relationship with the family or are somehow linked to the family,” she said. “We want to see family members and affiliated directors to be replaced.”

It’s a sign of the mounting pressure on the board. On Monday, Institutional Shareholder Services, a major investor advisory firm, recommended Monday that investors vote against the vast majority of the company’s board at the shareholder meeting on Oct. 21.

Still, such efforts may not have much sway. Mr. Murdoch, who is the company’s chairman and chief executive, controls about 40 percent of the voting shares.

Concerns about the management grew after the phone-hacking scandal in Britain that has led to the arrests of several News Corporation executives earlier this year. Institutional Shareholder Services criticized ”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 — financial, legal, regulatory, reputational and opportunity – for the shareholders the board ostensibly serves.”

Additional revelations this week of a controversial circulation deal at the media company’s Wall Street Journal Europe that lead to the resignation of the newspaper’s publisher were just the latest proof that an independent investigation into all of News Corporation was needed, Mrs. Walmsley of Hermes EOS said.

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