News Corp. (NWSA) director Tom Perkins said he resigned from the board because of his age, reducing the number of independent directors at Rupert Murdoch’s media company two months into a phone-hacking scandal.
Kenneth Cowley, also considered independent, won’t stand for re-election, New York-based News Corp. said today in a statement. James Breyer, a partner of venture capital firm Accel Partners, was nominated to join the board.
Together, the changes would reduce the board’s size to 15, and lower the number of independent directors to eight from nine. Perkins, 79, began to discuss stepping down several months ago, he said today in an interview. A member since 1996, he is News Corp.’s second-oldest director after 80-year-old Murdoch, who is chairman and chief executive officer.
“We agreed that having two 80-year-olds on the board wasn’t great corporate governance,” Perkins said. “This has nothing to do with current events.”
News Corp. has faced shareholder criticism of board ties to Murdoch, even among directors the company considers independent.
“An examination of News Corp.’s governance reveals several areas of concern, including dual chairman/CEO role, a high number of inside or affiliated directors, and a dual share class structure,” Wespath Investment Management, wrote to lead independent board member Roderick Eddington last month, on behalf institutional investors who questioned the board’s independence.
Viet Dinh, the News Corp. independent director who serves as a conduit to the panel created to cooperate with official investigations, is godfather to the second child of Murdoch’s son Lachlan.
The “management and standards” committee, established by News Corp. in July, reports to board member and Executive Vice President Joel Klein, who then reports to Dinh.
Murdoch dismissed those concerns during a Aug. 10 earnings call. “I don’t acknowledge,” he said. “I don’t plan changes. It’s a very strong board, very often very critical, and we have a lot of free-ranging discussions.”
The changes won’t affect his viewpoint on News Corp.’s governance, said Christopher Marangi, a fund manager at Rye, New York-based Gamco Investors Inc. (GBL), which held 6.18 million non-voting shares as of June, according to data compiled by Bloomberg.
“Some of the cosmetics are interesting but it doesn’t change our view,” Marangi said in an interview. “It’s Murdoch’s company and it will always be Murdoch’s company.”
Murdoch and his son James were questioned by British lawmakers in July regarding phone-hacking allegations at the News of the World tabloid. The scandal, which escalated in July after disclosures that the newspaper intercepted the voice mails of murder and terror victims, has led to the closure of the newspaper and 15 arrests, and prompted the company to drop its 7.8 billion-pound ($12.7 billion) bid for all of British Sky Broadcasting Group Plc. (BSY)
Perkins, founding partner of venture capital firm Kleiner Perkins Caufield & Byers, was among those who suggested that Dinh serve as point man for the board’s role in News Corp.’s response to the phone-hacking scandal, a person familiar with the situation has said.
The venture capitalist had sought Dinh’s advice after resigning from Hewlett-Packard Co. (HPQ)’s board in 2006 to protest that company’s probe of media leaks. At the time Perkins accused HP of illicitly obtaining his personal cell- and home-phone records as part of its investigation.
Pressure on Klein
News Corp. directors, especially Dinh and Klein, are under pressure to show that the board is independent, said a person close to some News Corp. directors who is also knowledgeable about governance issues. That’s what’s behind the resignations of Perkins and Cowley, said the person, who declined to be identified because the matter is private.
Cowley was a senior executive of News Corp.’s News Ltd. subsidiary from 1964 to 1997, according to company filings. He has been a director since 1979.
After Murdoch and Perkins, Cowley, 76, is News Corp.’s third-oldest board member.
“It doesn’t make sense to stay on any public company board after you are 80 unless you own the company,” said Perkins, who turns 80 in January.
Calls to Cowley’s office in Australia were not returned.
Rupert Murdoch controls News Corp. through an almost 40 percent stake in the voting shares.
Perkins said today he wrote an e-mail to director Andrew Stephen Bower Knight, a member of the audit committee on which he also serves, several months ago, saying he wanted to resign.
“I told him that if Rupert really wants me to stay I will but I really don’t want to,” Perkins said. “There’s no rancor or discord.”
Perkins said he doesn’t expect Murdoch to give up his post as CEO and chairman. If Murdoch suddenly is unable to fulfill his duties as CEO, Deputy Chairman Chase Carey would be the logical executive to succeed him, Perkins said.
“I completely support the family,” Perkins said. “If you buy stock in News Corp. you accept the fact that it is a Murdoch enterprise.”
Class A shares of News corp., whose assets include the Twentieth Century Fox film studio, the Wall Street Journal and the Fox television network, fell 54 cents to $16.27 today in Nasdaq Stock Market trading. The stock has gained 12 percent this year.
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