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Shareholders cast protest vote over Murdoch's role at BSkyB

Susie Mesure
Saturday 09 November 2002 01:00 GMT
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More than 10 per cent of BSkyB shareholders voted against the election of its chairman, Rupert Murdoch, and the re-election of its chief executive, Tony Ball, at the company's annual meeting yesterday as a protest against the satellite broadcaster's poor track record on corporate governance.

The vote against Mr Ball's re-election by one in 10 shareholders reflected widespread concern at a new deal for the Sky chief executive, which puts him in line for a two-year pay-off if he loses his job, as well as an on-going guaranteed annual bonus of £500,000.

Guy Jubb, the investment director at Standard Life Investments, a major Sky shareholder, said: "For us, guaranteed bonuses are a one-way street as they provide no incentive to perform."

The AGM protest came as the group, which is Britain's leading pay-TV operator, reported a return to first-quarter profit.

At issue for independent shareholders is the lack of detailed performance targets that Mr Ball and his fellow directors have to meet to receive their bonuses. Mr Ball's contract makes no mention of any targets that he has to reach to receive his remuneration package. BSkyB's annual report states only that the targets are based on "a combination of business measures derived from the company's business plan" as well as its relative total shareholder return.

Mr Murdoch said: "In the past two years [the main bonuses] have been against growth performance – and the company has grown brilliantly. You can't find another broadcasting company in Britain with anything like the performance of this company."

John Cruickshank, a retail investor who flew to London for the meeting from Aberdeen, said the group had "some way to go still in having directors that are genuinely independent". He also said two-year contracts were "widely thought to be not a good idea", echoing concerns expressed by the National Association of Pension Funds and the Association of British Insurers.

Mr Murdoch, whose News Corporation owns 36 per cent of the satellite broadcaster, brushed aside the significance of a protest vote that saw 15 per cent of Sky shareholders vote against his re-appointment as chairman. "I'm not aware of there being any conflict of interest between the major shareholder and BSkyB. [News Corp] risked its very being to create this company but we've received nothing in return."

The biggest vote against the re-appointment of a director was against John Thornton, who heads the group's remuneration committee. Almost one in five shareholders voted against Mr Thornton, the joint president of Goldman Sachs, the investment bank that played a lead role in Sky's 1994 float.

Anita Skipper, the head of corporate governance at Morley Fund Management, one of Sky's largest shareholders, said after the meeting: "There is an issue there. Shareholders are obviously not completely happy, which is why there is a fairly high level of protest votes."

Speaking after the meeting, Mr Murdoch, who is chairman of News Corp, played down his expectations of being able to acquire DirecTV, the US satellite television operator.

He railed against the BBC's "untouchable" status and licence fee funding and ruled out acquiring Channel 5 because his company is "not interested" in terrestrial broadcasters.

Mr Murdoch's comments came as Sky reported a pre-tax profit of £13.9m for the three months to 30 September against a loss of £89.2 a year earlier. Before goodwill, the profit was £43m, beating analysts' expectations.

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