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Sky AGM: independent shareholders vote against James Murdoch

Over half of the Sky’s (LON: SKY) independent shareholders  rebelled against the election of James Murdoch as a non-executive director at last week’s AGM following his appointment as chairman earlier this year.

Overall Murdoch received 71.6% support for his re-election, the lowest vote in favour of any of the AGM’s resolutions. However, when 21st Century Fox shareholdings are excluded the level of support dropped to 49.1% according to analysis by Manifest’s VoteWatch team. The AGM results also show a relatively high level of shareholder votes positively withheld which suggest some investors, while not voting against Murdoch, did not wish to demonstrate support the appointment either.

giving evidence before the culture, media and sport select committee in July 2011

James Murdoch giving evidence to the UK’s Culture, Media and Sport Select Committee in July 2011

Murdoch is also chief executive of 21st Century Fox which owns around 39% of  Sky’s shares which critics of the appointment, such as Royal London Asset Management, believes raises concerns for the protection of minority shareholders. Of particular concern is the spectre of Fox (NASDAQ: FOXA) repeating its failed attempt in 2011 take full control of the company. The company accepts that Murdoch is not an independent director but believes with other appointments it has safeguarded minority shareholders’ interests.

Murdoch has already served previously as both chief executive and chairman at Sky. He stood down in 2012 following criticisms which emerged from the News of the World phone hacking scandal. Murdoch was the head of  News International and its subsidiary News Group Newspapers (NGN) – now re-branded as News UK, part of the News Corporation group and which is run by the Murdoch family. Having served on the Sky board since 2003 Murdoch’s tenure would automatically raise a red flag for most institutional investors’ voting policies.

Following the AGM Sky’s issued a regulatory news announcement stating that it was “aware that some proxy advisory services recommended that shareholders vote against his election on the basis that he is not independent.” The company explained that the decision to re-appoint Murdoch as Chairman was “unanimous and recognised that he is a highly experienced executive with extensive knowledge of the international media industry and has been a strong contributor to Sky since he joined the Board in 2003“.

The board said it was confident that with the appointment of Martin Gilbert as deputy chairman and Andrew Sukawaty as senior independent Director, there were strong governance processes in place to protect the interests of independent shareholders. The board said it would now engage with the shareholders who voted against the appointment of Murdoch. As reported in January 2016 Sky did not engage with shareholders in advance of Murdoch’s appointment as chairman.

Governance Fact Check

What does the UK Governance Code say about board chairmen?
Sky has suggested that proxy advisor recommendations were the reason for the poor voting result at Sky’s AGM.

Check out what the UK Governance Code says about board chair appointments in the first of Manifest’s Governance Fact Checks Read More >>

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