Sending a Message to the Murdochs10/31/2011 12:01 AM Eastern
Shareholders angry over News Corp.
management’s handling of the phone-hacking scandal
in the United Kingdom sent a message to chief operating
officer James Murdoch last week, with 35% of votes submitted
at its recent annual meeting going against his reelection
to the media giant’s board of directors.
According to documents filed with the Securities and Exchange
Commission late Oct. 24, James Murdoch received 433
million votes for his re-election, 232 million votes against and
494,831 votes abstained. There were 16.6 million broker nonvotes.
News Corp. had said earlier that all of its directors were
elected at the annual meeting on Oct. 21, but did not give
the actual vote tally until the following Monday (Oct. 24).
While James Murdoch’s seat on the board is secure, some
analysts had said a negative tally of more than 25% would
be a solid no-confi dence vote for any director.
James’s father, chairman and CEO Rupert Murdoch, fared
much better, receiving 561.7
million votes “for,” 91.8 million
votes “against” and 12.1
million votes abstained, for a
14% negative tally.
Lachlan Murdoch, Rupert’s
son and a former executive
at News Corp., received
440.9 million votes for, 224.2
million against and 477,972
abstained, for a 34% negative
News Corp. has reeled from
the phone-hacking scandal,
in which reporters at its News of the World tabloid were accused
of illegally accessing the voice mail accounts of celebrities, politicians
and private citizens. The outrage reached a zenith earlier
this year when it was revealed that among the victims was
Milly Dowler, a British teenager murdered in 2002.
News of the World reporters altered the voice-mail account
on Dowler’s cell phone, which led investigators at the time
to believe the teenager was still alive. News Corp. settled the
Dowler case earlier this month, agreeing to pay the family £2
million ($3.2 million) and
to donate 1 million pounds
($1.6 million) to charities
designated by the family.
The newspaper was also
Miller Tabak media analyst
David Joyce said last
week that while it was expected
that James and Lachlan
Murdoch would receive a
hefty number of “no” votes,
he was most surprised by the
low number of negative votes
for Rupert Murdoch.
Joyce noted that Murdoch’s 14% negative vote tally was less
than other directors that have virtually no impact on operations
— particularly investment banker Andrew S.B. Knight
(32%) and Natalie Bancroft, opera singer and member of The
Wall Street Journal’s former ruling Bancroft family (33%).
A handful of the remaining directors received negative votes
in excess of 20% of those tallied, including chief financial officer David DeVoe (150.6 million against and 1.1 million abstained,
or 22%); and Arthur Siskind (200.1 million against and
1.1 million abstained, or 30%).
The no-confidence vote rivaled a similar effort in 2004
by Th e Walt Disney Co. shareholders against former CEO
Michael Eisner. Eisner, who had come under fire from several
shareholder groups — including one headed by Roy Disney,
Walt Disney’s nephew — received a 43% negative vote
at the 2004 meeting. At that meeting, Eisner relinquished
the chairman’s title and later that year agreed to step down
as CEO, paving the way for current chief Bob Iger. Analysts
were quick to note that the News Corp. vote was not nearly
high enough to force such drastic measures.