(October 6, 2011) — Following News Corporations’s phone hacking scandal, local authority pension funds have urged the firm to overhaul its board structure.
The Local Authority Pension Fund Forum (LAPFF), whose 54 members have combined assets of £100 billion, has issued a voting alert to its members this week on News Corp. “Having undertaken extensive research into the phone-hacking scandal, and having engaged with News Corp directly, LAPFF has reached the view that board change is necessary. The Forum believes that lead director Rod Eddington is well placed to take this process further,” according to a news release on the firm’s website.
The statement by LAPFF continued: “The Forum believes that the News Corp board must take responsibility for the hacking scandal and that this would be best achieved by a change to its existing membership and structure. LAPFF believes that James Murdoch’s continued presence on the News Corp board is causing significant reputational damage to the company and is no longer in shareholders’ interest. The Forum has therefore recommended that its members oppose James Murdoch’s election.”
Additionally, LAPFF said it wishes to see a separation of powers at the head of the company, and the appointment of an independent chair. The Forum has recommended that its members oppose the election of Rupert Murdoch, who currently holds the combined roles of chair and chief executive.
“News Corp and its shareholders desperately want to draw a line under this scandal, but that will only be possible if the board accepts the need to demonstrate real accountability,” stated Forum chairman Ian Greenwood. “That requires a change in the structure and the make-up of the board. Whilst these are difficult issues for the company to address, we believe that to secure News Corp’s long-term future such reform is necessary.”
In September, pension funds and other News Corp shareholders brought fresh charges against the media firm stemming from its phone-hacking scandal. The shareholders — including the New Orleans Employees’ Retirement System and Central Laborers Pension Fund — stated that the “still unfolding hacking scandal is just a continuation of the board’s malfeasance.” Shareholders highlighted cases involving several News Corp US subsidiaries which suggested that hacking, privacy breaches, and anticompetitive practices were not restricted to the newspaper division.
In July, the Massachusetts Laborers’ Pension and Annuity Funds (Mass. Labor) filed a lawsuit against Rupert Murdoch and the other directors of media giant News Corporation, adding to the list of shareholders suing the company for failure to act in the wake of the recent phone hacking scandal.
To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742