Proxy Advisory firm Glass Lewis & Co. told shareholders of media giant News Corporation to vote against six directors, including Rupert Murdoch's sons James and Lachlan, for re-election to the company board.

At this year's annual meeting, shareholders should carefully consider the nature of the relationship each director has with the Company and its controlling shareholder, the Murdoch family, in order to establish a board with proper independence levels and strong oversight, the firm said in a statement.

In addition, proxy advisory firm Insitutional Shareholder Services called for the removal of 13 of 15 board members, including the 80 year-old Murdoch and his two sons, primarily citing a failure to deal with the recent phone-hacking scandal.

The company's phone hacking scandal, which began its public denouncement 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-financial, legal, reputational, and opportunity-for the shareholders the board ostensibly serves, a statement from ISS said.

The board of directors of News Corp. has 15 directors. Seven have affiliations with the company.

Along with Murdoch and his two sons, the other members of the board who have affliations with the company are President and Chief Operating Officer Chase Carey, Chief Financial Officer David DeVoe, Executive Vice President Joel Klein and Senior Advisor to the Chairman Arthur Siskind. Glass Lewis is calling on the shareholders to reconsider the nominations of the Murdoch sons, Siskind, DeVoe and independent directors Natalie Bancroft and Andrew Knight.

The company is embroiled in a phone-hacking scandal which led to the closing of Britain's News of the World newspaper and the firing of the former editor, Rebekah Brooks, and the then-CEO of News International, Leslie Hinton. Among other issues, claims that the board has been too deferential to management in dealing with the scandal led Glass Lewis to recommend ousting the Murdoch sons and Siskind from the board.  

Knight was recommended not to be re-elected to the board because of his role on the executive compensation committee. Concerns over executive pay have been stirred controversy in the past. Murdoch was paid $33.3 in total compensation, including a $12.5 million bonus despite the phone-hacking scandal. His son James was given $17.9 million, however he turned down his $6 million bonus in light of the recent scandal.

Furthermore, the elder Murdoch receives $8.1 million in salary each year, which has drawn flak from some corporate governance experts because the pay is not tied to the performance of the company. Glass Lewis points out that the base pay is by far the highest base pay of an S&P 100 CEO, with Jeff Immelt of General Electric having the second highest base pay at $3.3 million. Both Glass Lewis and ISS call on shareholders to reject the executive compensation plan.

Glass Lewis also recommended voting against DeVoe. The firm is concerned that having the CFO serve on the board rather than just report to it will lead to less rigorous oversight of the company finances.

Finally, the firm is concerned that Bancroft, given her young age of 31 and her occupation as an opera singer, is ill equipped to serve as a director of a company such as News Corp. She became a director when News Corp. purchased Dow Jones in 2007.  

ISS has called for the re-election of Klein and independent director James Breyer exclusively, noting they have just joined the board.

News Corp. will host their annual meeting on Oct. 21 in Los Angeles. The company could not immediately be reached for comment, but they did give a statement to the Wall Street Journal.

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, the statement said.

Bob Arciniaga, the founder of Advisory Board Architects, a consulting firm focused on building corporate boards, told the International Business Times that while having a high percentage of board members as insiders to the company isn't necessarily unusual, it usually doesn't lead to the best corporate governance practices.

I personally don't feel a board can be independent if half the board is insiders, Arciniaga said.

Even the size of News Corp.'s board could be problematic, Arciniaga said. He said his firm usually works with boards consisting of roughly six or seven people, and said too many board members can be difficult to manage and counterproductive.

The Walt Disney Corporation and Time Warner have 12 and 13 members of their board, respectively. However, both companies have only one insider who serves on their board (Disney CEO Robert Iger and Time Warner CEO Jeff Bewkes).

It won't be easy for shareholders to make the changes recommended by Glass Lewis.  Murdoch and his family own just 12 percent of the shares of News Corp. However, the family owns Class B shares of the company, which gives them nearly 40 percent of the voting rights. However, Arciniaga said that companies have been paying more attention to shareholder concerns in nominating and retaining directors.

Shares of News Corp. were up 4.11 percent to $16.97 at market close.

Write to Samuel Weigley at s.weigley@ibtimes.com