Although all members were re-elected to News Corporation's board of directors Friday, shareholder votes showed that not everyone is happy with the company's leadership.
While 433 million votes were cast to re-elect James Murdoch to the board of directors, 232 million were cast against him, according to SEC filings. His brother, Lachlan, received 440 million votes in favor of re-election, although 232 million were cast against him.
Other directors receiving over 200 million no votes were Natalie Bancroft, Andrew Knight and Arthur Siskind.
The outcomes of all the votes were never in doubt. The Murdoch family controls nearly 40 percent of the voting shares and Prince Al-Waleed bin Talal, who has publicly supported both the board and the management, controls seven percent of the shares.
However, excluding Rupert Murdoch's 317 million voting shares in the company, shareholders voted against both James and Lachlan by approximately a 2 to 1 margin. Shareholders generally approve of board members by about 95 percent, said Julie Tanner, assistant director of Christian Brothers Investment Services and an attendee at the shareholder meeting.
This is very, very rare, she told the International Business Times.
Chairman and CEO Rupert Murdoch received 562 million votes for re-election and 92 million against. Although he didn't receive as many no votes, Tanner said the amount of votes against the founder of the company was abnormal, especially since there were 12 million abstentions.
A spokesman for News Corp. declined to comment.
Before the meeting, numerous shareholder groups urged investors to withdraw their support for board members. Some shareholder advisory groups, such as CBIS, called for a near-complete overhaul of the board, while others, such as Glass Lewis, called for the removal of some of the directors. A lot of the concerns stemmed from the board's response to the News of the World hacking scandal, as some investors accused the board of less-than-rigorous oversight.
Many shareholders claimed that the board lacked independence, given that only half of shareholders were considered independent directors. At the meeting, the board fought back against those charges. Lead independent director Roderick Eddington said the company's independent directors have regular sessions to provide oversight of company executives.
Furthermore, an advisory vote on executive compensation passed, however many shareholders voted against the plan (433 million to 232 million). Some people were upset with Rupert Murdoch's $33.2 million compensation in 2011 in spite of the hacking scandal. Many shareholders also expressed frustration that Rupert Murdoch made $8.1 million in base pay since the remuneration isn't tied to performance.
Although all members were re-elected and the pay package vote passed, Tanner was happy to see that many shareholders stood up to what she viewed as poor corporate governance practices.
The question is whether the board will follow through with changes, she said.
A proposal from CBIS to split up the role between chairman and CEO was defeated handily, with 1,517,604 votes in favor of the proposal compared to 680,583,000 votes against. Only investors who were present at the meeting could vote, thus diminishing the votes cast.
If changes are not made to corporate governance, Tanner said the company may call for a proxy vote next year to allow all shareholders to vote on the proposal. She notes that the deadline for proxy proposals was in May, before the phone-hacking scandal re-entered the media spotlight.
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CORRECTION: Julie Tanner said shareholders generally approve of board members by 95 percent. A previous version of this article said boards approve of board members.