Sky shareholders protest reappointment of James Murdoch
Over 50% of independent Sky investors voted against the return of James Murdoch as chairman at the annual general meeting (AGM) on Thursday, over concerns about board independence and the phone-hacking scandal.
FTSE 100
8,044.81
16:49 23/04/24
FTSE 350
4,424.29
16:59 23/04/24
FTSE All-Share
4,378.75
17:14 23/04/24
Media
11,966.12
16:59 23/04/24
Sky
1,727.50p
16:34 06/11/18
Despite that, the appointment went through after the company’s largest shareholder, 21st Century Fox, with a 39% stake in the group, stepped in to support his return after a four-year departure, bumping up the vote in his favour to 71.55%.
Murdoch had been forced to resign as chairman in 2012 after the phone hacking scandal at News International, publisher of the Sun, Times, Sunday Times and News of the World, where he was also chairman. Meanwhile, he remained as a non-executive director at Sky and was the only candidate put forward by its nominations committee to take over as chairman from Nick Ferguson.
“No attempts were made to advertise the position externally, or appoint an agency, which goes against the UK corporate governance code,” said chief investment officer at Royal London Piers Hillier.
Royal London Asset Management, which owns £52m of the company’s shares, urged a vote against Murdoch along with a number of other shareholder advisory firms.
“We continue to believe that James Murdoch’s reappointment as chairman of Sky is inappropriate,” said chief investment officer at Royal London Asset Management Piers Hillier.
They argued that the Europe-wide broadcaster needed an independent chairman and criticised the process by which he was re-appointed earlier this year.
Murdoch dismissed concerns about the conflict of interests arising from his role at the Guardian during the AGM, admitting he was not an independent director. “I’m not an independent director, being associated with the major shareholder,” said Murdoch.
A big concern investors have is whether they will get a fair slice if Fox, where Murdoch is chief executive, seeks to merge with the company.
“Should Fox make a bid for Sky, investors need a strong independent chairman to protect the interests of minority shareholders and negotiate the best possible deal,” said Hillier.
Head of technology research at Northern Trust Capital Markets Neil Campling thinks the merger is a possibility given the weakness of the pound.
The company’s board responded saying they noted the “significant” vote against the re-election of James Murdoch and it will “engage with those shareholders.”
According to the firm, around 85% of the voting capital was represented and the board’s decision to re-appoint the younger Murdoch as chairman in January was unanimous.
Spokeswoman Rowan Pearman told Bloomberg that eight out of ten of the company’s top UK institutional shareholders supported his reappointment.
Chief executive of ShareAction Catherine Howarth said shareholder opposition to Murdoch was a significant moment similar to that of the recent Sports Direct debacle.
“James Murdoch will have to work very hard indeed to win back the confidence of shareholders. The Sports Direct debacle has demonstrated the financial risk of rotten corporate governance and of losing the confidence of your shareholders,” said Howarth.
The share price rose 0.35% to 851p at 1122 BST on Friday.