A powerful shareholder group, the National Association of Pension Funds, has backed James Murdoch as the new chief executive of BSkyB, the satellite television company.
Following a meeting yesterday between the NAPF and Allan Leighton, a key Sky non-executive director, the shareholder group said it would not be recommending investors vote against James Murdoch, the son of chairman Rupert Murdoch, at the company's annual general meeting.
"BSkyB's corporate governance will not be improved by voting the new CEO off the board at this stage," the NAPF said. "Institutional investors will, for their part, achieve more by entering into an active process of engagement with BSkyB directors."
Today, Mr Leighton will meet the Association of British Insurers, the other main investor group. James Murdoch is contacting some individual institutional investors himself.
Shareholders are concerned over the perception that James Murdoch was given the chief executive post without an open selection process. Investors have also said that, with a father-and-son team in the top two jobs at Sky, there is no effective separation between the roles. Murdoch senior also heads News Corp, which has a 35 per cent stake in Sky. The NAPF said: "BSkyB needs to convince institutional shareholders that the father-and-son relationship at the head of the company will not constrain the board decision-making process and concentrate too much power in the hands of one family which is inextricably linked to the major shareholder."
It said it could not "cast aspersions" on the recruitment process as that would "reflect a lack of faith" in the headhunting firm involved and the non-executive directors, who oversaw the appointment.Reuse content