Relations between the satellite operator BSkyB and the City became more fraught yesterday when the Association of British Insurers said it would issue its most severe warning about corporate governance issues at the media giant ahead of its annual general meeting next month.
The body, whose members control about a fifth of the stock market, said it would issue a "red top" warning about the re-election of Lord St John of Fawsley, BSkyB's senior non-executive director, to the board. It will release a similar warning about the formal election of James Murdoch, who joined as a non-executive this year.
The move came after Lord St John cancelled a meeting with the ABI at which the two sides were due to discuss whether Mr Murdoch, son of media mogul Rupert Murdoch, should be allowed to step into the chief executive's role at BSkyB.
The ABI has a policy of not explicitly guiding its members about how to vote in annual general meeting votes. But generally a red top notice is a signal that it strongly disapproves of a company's corporate governance regime. BSkyB's annual meeting is on 14 November. Some institutional investors are concerned that the proposed appointment of James Murdoch as chief executive would mean BSkyB would not be sufficiently independent of News Corp, which owns 35 per cent of the UK pay-TV business. Some investors have voiced concerns that Mr Murdoch senior, who controls News Corp, might want to funnel BSkyB's strong profits into other projects.
A spokesperson for the ABI said it was "concerned" that Lord St John had cancelled a meeting with them late last week, which followed an initial consultation between the two three weeks ago. The ABI added that a second meeting had not been rescheduled.
The ABI said the cancellation went against the spirit of the Higgs code of corporate governance, which stipulates that the senior independent director should be available to shareholders for them to voice thoughts and concerns to.
The ABI and the National Association of Pension Funds have been much more outspoken in this year's annual general meetings season than previously over corporate governance issues. They have also been keen to make companies take the Higgs code, which does not have regulatory force, seriously.
BSkyB refused to comment.Reuse content