Friday, 18 November 2011

BSkyB news 2

So, apparently ISS have recommended an abstain on James Murdoch's re-election, but their report also reportedly says he should stand down as chair. That means that Murdoch has failed to receive the backing of any shareholder advisory group.

Of course, that doesn't mean much in itself, since asset managers don't just follow follow what their adviser says, and I have no doubt that a few of the usual suspects will continue to pull their punches. But there is undoubtedly some movement going on out there. Some asset managers will definitely take a tougher line this year than they have done for some time. There is also overseas investor interest in the chair's position.

I suspect asset managers may face questions from trustees about how they voted on James Murdoch, so support risks doing reputational damage. I still think he'll get through relatively easily, because I am cynical about mainstream asset managers, but this will store up trouble in the future.

I will be surprised if Murdoch doesn't get a slap of some form from the DCMS committee when it publishes its final report. The committee essentially seems to have come to the view that he is either incompetent or a liar. Taking the latter position would be very serious, but I suspect (currently) it's a minority view. But being criticised by parliament for incompetence is hardly something to stick on your CV & will surely add to pressure on him to stand down. I am kite-flying here, but it's a reasonable guess, I think, that James Murdoch can't come out of the committee's review within anything less than a further damaged reputation. If a dumbo like me can see this, so can an asset manager. So to give him the benefit of the doubt, and to vote for him, when you know this is a likely outcome seems rather irresponsible in my view.

Finally, note that the deckchairs are being shuffled, with Martin Gilbert apparently coming onto the board, and two others leaving. Gilbert would make a decent chair, and has done a good job at First Group, so maybe this is a medium-term plan? More surprising, when you think about it, is that the NEDs slotted to come off the board are not the News Corp reps. If two come off and Glibert plus one other join there is no change in the level of independent representation. Crispin Odey publicly said that the board needs more independence, though oddly not an independent chair, so why isn't he making more noise?

UPDATE: Actually I have been a doofus, one NED coming off is a News Corp rep.

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