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Category: James Murdoch

Rupert Murdoch and sons reelected to News Corp. board

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Rupert Murdoch and his sons survived a shareholder challenge to their control of News Corp.

Following the company's annual meeting in Los Angeles on Friday, News Corp. announced that Murdoch, his sons James and Lachlan, and the remainder of the board had been reelected -- despite calls from some shareholders for their ouster.

News Corp. declined to announce the vote tally, saying it would release figures early next week.

The vote is expected to be a referendum on Murdoch's stewardship of the $33-billion-a-year conglomerate that owns the Fox broadcast network, Fox News Channel, the 20th Century Fox movie studio, HarperCollins publishing house and such newspapers as the Wall Street Journal.

The media company has been under increasing pressure to make dramatic changes to its management structure. Some investors have lobbied to reduce the influence of the 80-year-old Murdoch and his family since a tabloid cell phone hacking scandal in Britain exploded into front-page headlines in July.

Operatives for News Corp.'s now-defunct News of the World tabloid illegally eavesdropped on cellphone messages left for members of the royal family, celebrities, soccer stars, British soldiers and crime victims.

Murdoch's critics knew that they faced an uphill battle to unseat Murdoch and others on the board. Murdoch and his family control about 40% of the voting shares. A close ally holds an additional 7%. That meant that nearly every other shareholder would have had to vote against Murdoch to topple him.

On Friday, about a hundred shareholders attended the meeting in a theater on News Corp.-owned 20th Century Fox's movie studio lot in West Los Angeles. Some expressed support for Murdoch. But several investors demanded that more independent members join the board of directors.

Venture capitalist James W. Breyer, 50, a partner at Bay Area-based Accel Partners, was elected to the board as an independent director.

Investors, who have long been critical of the company's management structure, were emboldened to lobby for changes in light of the scandal.

"We have found the board's response to be inadequate," said Julie Tanner, assistant director of Christian Bros. Investment Services Inc., which made a motion on Friday -- which was defeated -- to break up the job of chairman and chief executive. Murdoch serves as both.

Corporate governance experts have long decried News Corp.'s dual-class structure, contending that it provides Murdoch with undue influence to run News Corp. like his own personal fiefdom with little accountability to shareholders.

Although Murdoch and his family alone control 40% of the company's voting shares, they own only about 13% of all of the shares outstanding.

The dual-class structure -- with Class A and Class B shares -- allows votes only to shareholders who own News Corp. Class B shares. The vast majority of News Corp. investors own Class A shares and do not have a voice in company matters.

"It's time to get on the governance high road," said Stephen Mayne, an Australian shareholder who said he spent thousands of dollars to travel to Friday's meeting. Mayne, who previously worked at a Murdoch paper, said: "You should get with the program and embrace a board with more independent board members."

But Murdoch was undeterred.

"I'm very proud of the culture of this company," he told his critics. "Have there been mistakes made? Yes, and we are putting them right. We will stop at nothing to get to the bottom of this and make things right."

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-- Meg James, Joe Flint and Dawn C. Chmielewski

Photo: Rupert Murdoch speaks outside a hotel in London where he met the family of slain teenager Milly Dowler on July 15, 2011. Credit: Kirsty Wigglesworth / Associated Press

 

James Murdoch recalled to testify in phone hacking scandal

James Murdoch must appear once again before a committee of the British Parliament to answer more questions about when he first learned of the cellphone hacking scandal that has rocked his family's  media empire, News Corp.

The Culture, Media and Sport Committee said Tuesday that it was recalling the 38-year-old scion to try to sort out conflicting evidence in the ethics scandal that has damaged the reputations of the Murdoch family and raised questions over whether James Murdoch should eventually run the sprawling company.

When he first appeared with his father, Chief Executive Rupert Murdoch, before the prominent panel in July, James Murdoch said he did not learn of the widespread nature of the illegal activity at the now-defunct World of the News tabloid until late last year.

James Murdoch has been in charge of the company's European and Asian operations since 2007, and earlier this year was promoted to deputy chief operating officer of the entire company. 

However, two of his former underlings quickly challenged James Murdoch's statements to Parliament, saying they had shared a crucial piece of evidence with him in 2008.  

The two men -- Colin Myler, the former tabloid editor; and the publication's lawyer Tom Crone, told the committee this month that they showed James Murdoch an email that suggested several people at the tabloid were involved in the hacking of cellphones of soccer stars, celebrities and members of the royal family. The three men met to discuss whether to settle a lawsuit brought by one of the phone hacking victims.

News Corp. had long maintained that one "rogue reporter" and a corrupt investigator hired by the tabloid were responsible for the illicit eavesdropping. However, revelations in recent months have undermined the company's initial statements and suggested a wider cover-up.

James Murdoch said he gave an accurate account during his appearance in July. 

"James Murdoch is happy to appear in front of the committee again to answer any further questions members might have," a News Corp. spokeswoman said.

Read the full story here: 

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-- Meg James

James Murdoch declines $6 million News Corp. bonus

James-Murdoch-gives-up-bonu Embattled News Corp. scion James Murdoch said he was giving up his $6-million bonus for fiscal 2011 because of the phone-hacking scandal that occurred at the company's now-defunct London tabloid, the News of the World.

"In light of the current controversy surrounding News of the World, I have declined the bonus that the company chose to award to me," James Murdoch said in a statement Friday. "While the financial and operating performance metrics on which the bonus decision was based are not associated
with this matter, I feel that declining the bonus is the right thing to do."

Murdoch, who is in charge of News Corp.'s European operations, said he would "consult with the compensation committee in the future about whether any bonus may be appropriate at a later date."

The $6-million bonus was part of a $17.9-million total compensation package that Murdoch received for the company's fiscal year that ended June 30.  By declining the bonus, Murdoch garnered nearly $12 million in compensation, including a $3-million base salary and $8.3 million in stock awards.

James Murdoch, 38, was elevated to the company's deputy chief operating officer in late March, while the News of the World scandal was making headlines in Britain but before it exploded into front-page news around the world.  James Murdoch, who approved settlements to victims of the phone hacking, is expected to be called back before a committee of the British Parliament this fall to answer more questions about when he became aware of the widespread illegal activity at the News of the World. 

The ethics scandal not only led to the demise of News of the World, it has rippled throughout the entire media giant. Key senior executives have resigned and probes into how News Corp. operates are underway on both sides of the Atlantic Ocean. The debacle also led to News Corp. having to ditch plans to buy outright the powerful British satellite broadcaster British Sky Broadcasting.

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Photo of James Murdoch; Credit:  Warren Allott / AFP / Getty Images

Rupert Murdoch's compensation swells to $33.3 million in 2011

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News Corp. Chief Executive Rupert Murdoch continues to be one of the most richly compensated executives in America -- collecting $33.3 million for fiscal year 2011.

The 80-year-old media mogul's salary and stock package soared 46% over 2010 because of the addition of a $12.5-million bonus.  

The company's top executives have been struggling to contain widespread damage from the British phone hacking scandal. The crisis exploded in July with revelations that reporters for Murdoch's now-defunct News of the World tabloid in London eavesdropped on cellphone messages of royal family members, celebrities, sports figures, crime victims and fallen soldiers. 

Rupert Murdoch and his son James Murdoch, who runs the company's European operations, are expected to be called before a high court later this year to account for the scandal.

Rupert Murdoch qualified for the full amount of his target bonus in 2011 because of his leadership "through the recent economic downturn, positioning the company for long-term growth and ongoing strategic development," according to the News Corp. proxy which was filed with the Securities and Exchange Commission on Friday morning.  The company's fiscal year ended June 30.

In 2010, Murdoch collected $22.7 million.  Each year he receives an $8.1-million base salary, an amount which has long raised the eyebrows of corporate governance experts because it is not linked to the company's financial performance.  Murdoch also was paid $8.5 million in stock awards.

His second-in-command, Chief Operating Officer Chase Carey, received $30.2 million in fiscal 2011.  Carey's compensation included a $4-million base salary, a $10-million bonus and $15.2 million in stock awards.

James Murdoch, 38, who has been under increasing pressure for his handling of the British phone hacking crisis, was paid $17.9 million.  He received $3 million in salary, $8.3 million in stock awards and a $6-million bonus.

James Murdoch's compensation soared 74% over 2010 when he received $10.3 million.  He was elevated to the No. 3 position in the company in late March -- three months before the phone hacking scandal exploded into front page news in Europe, Australia and the U.S.

James Murdoch is expected to be called back before a committee of the British Parliament to further explain his role in the scandal.  After he answered questions this summer, two former associates challenged his account of when he first learned of the widespread nature of the illegal activities at the News of the World. 

James Murdoch "played an important role during fiscal 2011 in developing the company's key businesses and investments in Europe, Asia and the Middle East," the filing said. He also "successfully transitioned into his new role as deputy chief operating officer ... expanding his responsibilities."  

Roger Ailes, chairman of the popular Fox News Channel, received $15.6 million in compensation.  That included a $5-million base salary, a $1.5-million bonus, $8 million in non-equity incentive compensation and nearly $282,000 for corporate jet privileges, a car and driver, and personal security.

Chief Financial Officer David F. DeVoe's compensation package topped $18.2 million -- more than double the $7.1 million he received in 2010.  DeVoe's compensation jumped because of the addition of a $5-million bonus and $9.5 million in stock awards.

News Corp. separately said that it was nominating James W. Breyer, a venture capitalist, to serve on the company's board of directors.  Two directors are stepping down -- Kenneth E. Cowley and Thomas J. Perkins.  Five years ago, Perkins resigned from the Hewlett Packard Co. board after that company had hired an investigator to obtain his phone records.

News Corp. did not say why Perkins or Cowley, both longtime directors, were exiting after the company's annual meeting in October. 

News Corp. had planned to nominate Murdoch's 43-year-old daughter, Elisabeth Murdoch, to the board. However, in August she delayed her nomination in the wake of the company's various controversies, including shareholder lawsuits filed after News Corp. paid $675 million to buy her London-based TV production company Shine Group. Of that amount, Elisabeth Murdoch received $214 million.

In a departure, News Corp. said it would hold its annual meeting with shareholders Oct. 21 at the Fox lot in Los Angeles.  News Corp. typically holds its annual meeting in October near the company's headquarters in New York.

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Rupert Murdoch's L.A. dinner featured steak -- but not hacking

-- Meg James

Photo: Rupert Murdoch. Credit:  Ben Gurr / Reuters

Rupert Murdoch's L.A. dinner featured steak -- but not hacking

Rupe3 
 
It's a summer tradition at News Corp. Top Los Angeles-based entertainment executives, along with their spouses, mingle with members of the company's board of directors for an elegant dinner at Chief Executive Rupert Murdoch's Benedict Canyon home.

The affair -- held Monday night at Murdoch's mansion, once owned by MCA founder Jules Stein -- always occurs the evening before the summer board meeting in Los Angeles.

And this year, there were as many hot seats as hot dishes.

News Corp. has seen its market value tumble during the last month in the wake of the British phone hacking scandal. The crisis has put a dark cloud over the company and its management. News Corp. last month shuttered its 168-year-old News of the World tabloid and withdrew its planned $12-billion purchase of the remaining shares of British Sky Broadcasting, the region's top pay-television provider. Two senior executives, sullied by the scandal, stepped down. More than 10 people in Britain have been arrested.

Probes of News Corp. activities have been launched by governments in both Britain and the United States. James Murdoch, often mentioned as the heir apparent to his father to eventually run the company, has been tarnished by the mess.  James Murdoch, who has been responsible for News Corp.'s European operations since 2007, approved large settlements to several victims of the phone hacking -- a decision he has said he now regrets because he had insufficient information.

Meanwhile, some investors have demanded action by News Corp.'s board.  They have complained that several of the independent directors are not as independent from Rupert Murdoch as they should be. 

For example, a key independent director is Viet Dinh, a Georgetown University law professor who served in former President George W. Bush's Justice Department, is the godfather of a son of Lachlan Murdoch,  Rupert Murdoch's oldest son.  Dinh oversees the company's internal review of the phone hacking scandal, which was expected to be discussed at Tuesday's board meeting.

The menu Monday night included steak, a vegetarian dish and perhaps a little avoidance.

Rupert Murdoch thanked everyone for attending, according to people present.

The 80-year-old patriarch, who hosted the dinner along with wife Wendi Deng, then expressed his gratitude to the spouses for putting up with the long hours and hard work that their mates must put in to be part of the News Corp. family. 

But Murdoch only briefly mentioned his British troubles.  He said the problems were isolated to one part of the company  -- and had no effect on the whole.

James Murdoch, who serves on the board and is deputy chief operating officer, was in attendance, as were more than a dozen executives who run key News Corp. operating units, including News Corp. Chief Operating Officer Chase Carey and Chief Financial Officer David DeVoe.

Other News Corp. executives who attended included: Fox Entertainment Chairman Peter Rice; 20th Century Fox Television Studio Co-Chairmen Gary Newman and Dana Walden: Fox Entertainment President Kevin Reilly; 20th Century Fox Film Production President Emma Watts; Fox Sports Chairman David Hill; Fox Sports Vice Chairman Ed Goren; Fox Sports co-Presidents Eric Shanks and Randy Freer; Twentieth Television President Greg Meidel; and the company's chief human resources officer, Beryl Cook.  Communications executives Teri Everett and Julie Henderson were on hand.

It was unclear whether Wendi Deng served pie for dessert.

-- Joe Flint and Meg James

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In lawsuit, investors claim 'a culture run amok' at Rupert Murdoch's News Corp.

Lawsuit agains Rupert Murdoch's News Corp. revised
The News of the World phone-hacking scandal continues to be an out-of-control brush fire for Rupert Murdoch's media empire.

Although Murdoch's News Corp. on Sunday shut down the 168-year-old tabloid in an effort to quell the controversy, British officials now are casting a wary eye on the company's bid to acquire 100% of Britain's largest pay-TV service -- British Sky Broadcasting. News Corp. currently owns 39% of BSkyB. Murdoch on Sunday flew to London to manage the crisis.

But on Monday, embers from the scandal touched down in the U.S.  A group of institutional investors led by Amalgamated Bank in New York revised a lawsuit filed earlier this year against News Corp. to include claims of "improper conduct" at high levels of the media company.  

Amalgamated Bank, which is leading the legal effort on behalf of several investment funds, first sued News Corp. in March in a Delaware court after Murdoch agreed to spend $675 million to buy daughter Elisabeth Murdoch's British television production company, Shine Group. 

The bank has been asserting that the 80-year-old media mogul operates News Corp. "as his own private fiefdom with little or no effective oversight from the board." 

On Monday, Amalgamated amended its complaint to fold in accusations stemming from the News of the World scandal. The lawsuit notes that at least two longtime Murdoch newspaper executives -- Rebekah Brooks and Andy Coulson -- have been implicated in the scandal. On Friday, Coulson, the former newspaper editor and a onetime aide to British Prime Minister David Cameron -- was brought in for questioning by Scotland Yard.  The entanglements between the newspaper, politicians and police have made the scandal front page news in Britain -- and the U.S.

The bank said Murdoch's son James Murdoch -- who in March was elevated to the No. 3 position within News Corp. as its deputy chief operating officer -- was deeply involved in the wiretap scandal. James Murdoch acknowledged that he authorized payments to some of the victims of the newspaper's phone hacking. He has been in charge of News Corp.'s European and Asian operations since 2007.  

"These revelations should not have taken years to uncover and stop," the bank said in its complaint, which now stands at 94 pages, compared with an earlier version that totalled 46 pages.

"These revelations show a culture run amuck [sic] within News Corp and a board that provides no
effective review or oversight," Amalgamated claimed. "In fact, Brooks was promoted while the scandal has been unfolding. Murdoch's son and fellow board member, James, has been personally involved in the cover-up of the extent of the scandal, as he finally confessed on July 7."

The bank contends that "given the close relationships with Murdoch, Brooks and Coulson, it is inconceivable that Murdoch and his fellow Board members would not have been aware of the illicit news gathering practices" at the News of the World.

"Yet, the Board took no real action to investigate the allegations until July 7, 2011, when Murdoch selected two of his codirectors to deal with the imbroglio," the lawsuit said.

A News Corp. spokeswoman declined to comment.

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Photo: A photo illustration of various front pages of London newspapers reporting on the closing of News of the World. Credit: Stewart Stanley / Getty Images

News Corp. shares hammered in wake of British phone hacking scandal

News Corp. shares hammered in wake of British phone hacking scandal
Shares in Rupert Murdoch's empire, News Corp., have been roughed up this week as the British phone hacking scandal continues to cast an ominous cloud over the global media company's management.

By Friday, after four days of salacious news coverage, shares of News Corp. had fallen 6%, erasing $2.6 billion in market value. A week ago the shares were trading above $18. They closed Friday at $16.75 in New York.

The crisis has tarnished the reputation of Murdoch and his youngest son, James, who four months ago was elevated to the No. 3 management spot in News Corp. Now deputy chief operating officer, James Murdoch has been in charge of the company's Asian and European operations, including its British newspapers, since 2007.James Murdoch

The biggest concern so far for investors is that the controversy threatens News Corp.'s bid to take control of a media jewel -- Britain's largest pay TV service, British Sky Broadcasting. Government regulators had been expected this month to approve News Corp.'s buyout of the remaining BSkyB shares. Analysts now predict that approval of the BSkyB deal could be delayed up to a year, a costly proposition for  News Corp. 

BSkyB investors also have taken it on the chin as its shares have lost 12% in value this week.

In an attempt to quell the outcry in Britain, James Murdoch on Thursday announced that British subsidiary News International was shutting down the 168-year-old News of the World, the tabloid at the center of the storm. Sunday's edition will be the paper's last, a closure that eliminates the jobs of 200 newspaper staff members. 

Two people were arrested Friday in London in connection with the scandal, including former News of the World editor Andy Coulson, who until earlier this year was an aide to British Prime Minister David Cameron. Police also are investigating whether a News International executive deleted millions of emails to obstruct Scotland Yard's probe of the phone hacking scandal, the Guardian reported.

There are increasing questions about James Murdoch's involvement. He acknowledged his oversight in approving payouts for victims of the phone hacking scandal. "I did not have a complete picture when I did so. This was wrong and is a matter of serious regret,” James Murdoch said Thursday.

OldRupert Analysts said the scandal could force the company to review its management succession plans.

"There have been questions about whether these events undermine James Murdoch’s credentials to succeed his father, and perhaps that is why News Corp.'s share price is lower," Needham & Co. media analyst Laura Martin wrote in a research note Friday. "We don't think so."

She wrote that Wall Street investors have a favorable impression of News Corp.'s second in command, Chief Operating Officer Chase Carey. Shareholders, she wrote, do not know James Murdoch well enough to assess his ability to run the company.

Martin did speculate that the controversy could hasten the retirement of 80-year-old Rupert Murdoch. Since he controls News Corp. through his super-voting shares, Rupert Murdoch could not be forced out.

"There is no question that Rupert will go down in history as one of the best businessmen and most accurate visionaries of his age," Martin wrote, adding that News Corp. stock would be worth less "without Rupert Murdoch at the helm, regardless of who he hands the reins to."

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Top photo: A photo illustration of various front pages of London newspapers reporting on the closing of News of the World. Credit: Stewart Stanley / Getty Images

Middle photo: James Murdoch arrives for work Friday at News International in East London.  Credit:  Ki Price / AFP/Getty Images  

Bottom photo: News Corp. Chief Executive Rupert Murdoch on Friday at the Allen & Co. media conference in Sun Valley, Idaho.  Credit: Scott Eells / Bloomberg News

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