By Ross Kerber and Aruna Viswanatha BOSTON | Mon Apr 2, 2012
News Corp faces a call to appoint an independent board chairman on concerns Rupert Murdoch’s media company needs to pursue more reforms to deal with its phone-hacking scandal and other issues.
The proxy proposal, filed by Christian Brothers Investment Services, is likely to fan an ongoing controversy over governance at the company.
Although unlikely to get a majority of votes, the nonbinding resolution filed last month could put pressure on the board to remove Murdoch, currently News Corp’s chief executive, from his other role as chairman of the company, the sponsor said.
With current arrangements, the company is “stepping into the scandal with a flawed corporate governance structure,” Julie Tanner, who oversees socially responsible investing at Christian Brothers in New York, said in a telephone interview.
CBIS Files Floor Resolution on Separation of Chair and CEO at News Corp
In response to the phone hacking scandal at News Corp that has come to light this month, CBIS has filed a resolution that asks News Corp to separate the Chair and CEO positions and appoint an independent Chairperson. You can read the full text of the resolution here.
CBIS is working with members of the Interfaith Center on Corporate Responsibility to strategize on ways to influence the company to institute corporate governance reforms. The phone hacking scandal has led to a loss of public confidence in the company, stopped a key business acquisition, and caused serious damage to the reputations of prominent News Corp publications. The events that led to the closure of News of the World demonstrate the financial, legal and reputational risk associated with weak corporate governance structures.
By establishing a separate, independent Chair, News Corp can begin to rebuild the public confidence and trust that is so critical to a major news organization. It can also help ensure shareholders that the board takes seriously the events that have undermined the company’s success and value. While separating the positions of Chair and CEO is not a guarantee against future scandals, it does provide another layer of checks and balances and could improve the board’s ability to oversee the activities of the company. By naming an independent chair, News Corp can create greater independence and objectivity on the board and promote a coherent, long-term response to the challenge of restoring the company’s reputation.
Because News Corp’s filing deadline for traditional resolutions was in May, well before the scandal erupted, CBIS filed this resolution as a “floor resolution.” A floor resolution is a rarely-used innovative mechanism that allows shareholders to bring an issue before the Board, management and investors for debate and a vote. It is raised during the shareholder meeting from the floor the day of the company’s annual stockholder meeting.
CBIS will still have the ability to present the resolution and it will be brought to a vote at the company’s annual meeting in October 2011 in New York City. Formally presenting our issue in this way will ensure careful scrutiny by the Board and management. We hope to meet with the company soon to discuss our concerns.
The media has also taken note of CBIS’ action. Our resolution was cited in The Wall Street Journal, Bloomberg, the BBC and others.