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NEW YORK – Investors in Rupert Murdoch‘s News Corp. should vote against the re-election of 13 of 15 members of the entertainment conglomerate’s board, including all Murdoch family members, to increase independent oversight following the phone hacking scandal that has caused financial damage to the company, shareholder advisory firm Institutional Shareholder Services said Monday.
ISS, which provides advice on corporate governance issues, said that News Corp. investors should at the firm’s annual meeting in Los Angeles next week Friday vote against CEO and chairman Murdoch, sons James and Lachlan Murdoch, president and COO Chase Carey and nine other current board members, a company statement confirming a Bloomberg News report said. ISS expressed support for new board additions Joel Klein, the former NYC schools chancellor, and venture capitalist Jim Breyer.
“The company’s phone hacking scandal, which began its public denouement in July 2011, has laid bare a striking lack of stewardship and failure of independence by a board whose inability to set a strong tone-at-the-top about unethical business practices has now resulted in enormous costs,” the ISS recommendation said. The firm also criticized executive pay, such as a $12.5 million bonus for Rupert Murdoch in the latest fiscal year, at News Corp.
The phone hacking scandal in particular will hurt profitability at News Corp.’s newspaper unit and means loss of revenue and business deals, according to ISS.
A News Corp. spokeswoman said the company “strongly disagrees” with the ISS comments. “The company takes the issues surrounding News of the World seriously and is working hard to resolve them, however ISS’s disproportionate focus on these issues is misguided and a disservice to our stockholders,” a statement provided by the spokeswoman said. “Moreover, ISS failed to consider that the company’s compensation practices reflect its robust performance in fiscal years 2011 driven by its broad, diverse group of businesses across the globe. “
Recently, shareholder advisory firm Glass Lewis & Co. had also recommended that News Corp. shareholders vote against James and Lachlan Murdoch and four other directors next week to increase the board’s independence.
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