Stephen Foley: News Corp investors should reject Murdoch's minimalist shake-up
Stephen Foley is a former Associate Business Editor of The Independent, based in New York. He left in August 2012. In a decade at the paper, he covered personal finance, the UK stock market and the pharmaceuticals industry, and had also been the Business section's share tipster. Between arriving with three suitcases in Manhattan in January 2006 and his departure, he witnessed and reported on a great economic boom turning spectacularly to bust. In March 2009, he was named Business and Finance Journalist of the Year at the British Press Awards.
Saturday 03 September 2011
US Outlook: Rupert Murdoch's message to the corporate governance campaigners snapping at News Corp could not be any bolder if he had written it on the front page of one of his tabloids: Stick it up your punter.
The shake-up announced by News Corp yesterday was breathtaking in its minimalism. The hacking scandal has revealed just what a sclerotic band of Murdoch cronies stuff the boardroom around there. But instead of the wholesale clear-out that is needed, we got the retirement of two directors with a combined age of 155 and just one fresh independent director to replace them.
It is a start, I suppose, in bringing the company into genuine compliance with rules that require a majority of board members to be independent of management and the major shareholders (i.e., of the Murdochs). Both of the retirees were ludicrously categorised as "independent" under News Corp's legalistic reading of the Nasdaq rules, but Ken Cowley used to run the company's Australian operations for Mr Murdoch, and the venture capital veteran Tom Perkins has been enjoying News Corp's clubby boardroom lunches for 15 years now, enough to make anyone go native. Mr Perkins, you will remember, was the first director to go public at the height of the hacking scandal to declare Mr Murdoch "a genius" who must not be dislodged from either the chairmanship or the chief executive post.
In comes Jim Breyer, a sprightly 50, who is one of those serial non-executives who are above reproach. He is on the board of Facebook, bringing a little internet savvy to a News Corp still wounded from its ownership of MySpace, and of international giants Wal-Mart and Dell.
As well as appointing Mr Breyer, News Corp is taking some cheekier little steps to prevent dissension among shareholders. Chief among these is decamping the annual meeting this year to Los Angeles, so fewer might be in attendance to vote on a floor motion to strip Mr Murdoch of the chairmanship. However, the corporate governance campaigners will surely be out in force, and so they should be.
Shareholders should also vote against the re-election of every pretend-independent board member, from the opera singing Natalie Bancroft (of the family that sold the Wall Street Journal to Mr Murdoch) to Andrew Knight, the veteran journalist who has been on Mr Murdoch's board for 20 years now and still runs its generous compensation committee.
Most egregious of all, though, is the position of Sir Rod Eddington who, in his role as lead independent director, is supposed to be the go-to guy for shareholders on corporate governance issues and a counter-weight to the power of the Murdochs. He also runs the audit committee, which is in charge of vetting so-called "related-party transactions", such as when Mr Murdoch wants to buy one of his children's businesses. But before running British Airways, Sir Rod was in charge of an airline part-owned by News Corp. He has also been on the board for more than a decade, another reason he would not be considered independent in many jurisdictions, the UK included.
So three sarcastic cheers for News Corp's shake-up yesterday. Now, shareholders, do your worst.
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