Rebekah Brooks' £7m pay-off set to overshadow News Corp AGM
Facing investor backlash, feisty Rupert Murdoch tweets 'take your profits and sell' if you don't like it
RUPERT MURDOCH'S hopes for a peaceful gathering at News Corp's annual general meeting of shareholders in Los Angeles today have likely been dashed by a report in The Financial Times that says Rebekah Brooks received a pay-off totaling more than £7m in cash and pension payments, an allowance for legal fees and the use of a chauffeur-driven car.
The substantial severance for an executive facing charges of conspiracy charges in connection with the News of the World phone-hacking investigation, will serve to further anger institutional investors calling for the appointment of an independent chairman.
According to CNBC, there is a growing list of investors opposing Rupert Murdoch and his family's control over News Corp.
"There's been a lack of responsiveness by the board to this scandal," says a spokesman for Christian Brothers, which invests about $4 billion for largely Catholic institutions. "The company is at risk where a scandal like this could happen again without having very clear and strong oversight."
The California State Teachers Retirement System, with $153 million dollars in management, is preparing to vote against the re-election of every single News Corp director while the California Public Employees Retirement System, which has $273 billion under management, is opposing the re-election of Rupert Murdoch and his sons James and Lachlan to the board.
The pension funds join a list of investors concerned about the Murdoch family's lack of independent perspective on the board. In July, a consortium of 18 companies, including Aviva Investors, Calvert Investments, and the Connecticut State Pension Fund, wrote: "We believe the board is in need of independent leadership."
Shareholder advisory firms such as Glass Lewis have endorsed the measure, says Businessweek, and it's won support from investors who are otherwise supportive of Murdoch's leadership.
But how likely are the rebels to succeed in their quest to separate the chairman and CEO roles - both held by Murdoch Snr - to increase accountability? Not very, seems to be the answer. Investors may not like the taint that comes from the hacking inquiry but they can hardly complain that News Corp shares have risen 37 per cent this year.
The company laid out its official position to the demand last month: "Mandating a separation of the positions of chairman and CEO would weaken the company's current leadership structure. The proposal would deprive the board of the valuable flexibility to exercise its business judgment in selecting the individual best suited to serve as chairman in the future."
Murdoch meanwhile twittered that he's been busy preparing for the meeting. "Signs pretty peaceful, but any shareholders with complaints should take profits and sell!" he said.