NEW YORK — A leading shareholder advisory firm says most of News Corp.’s board, including Chairman Rupert Murdoch, should be replaced because of a phone-hacking scandal that has embroiled one of the conglomerate’s British tabloids.
Institutional Shareholder Services said shareholders should vote against the entire 15-member board, except for two new nominees. Two of Rupert Murdoch’s sons, James and Lachlan, are on the board.
The firm said the scandal follows a pattern of failures of board oversight going back as far as 2004. It has “laid bare a striking lack of stewardship and failure of independence by a board whose inability to set a strong tone-at-the-top about unethical business practices has now resulted in enormous costs,” ISS said Monday.
ISS also recommends voting against a pay package that gave Rupert Murdoch a bonus of $12.5 million for the past fiscal year. Such a vote is non-binding.
The company closed the News of the World tabloid in July amid revelations over frequent voicemail hacking by its employees. The newspaper was overseen by James Murdoch.
News Corp. said ISS is focusing too much on the hacking scandal.
In a statement, News Corp. spokeswoman Teri Everett said the company has been working hard to resolve issues surrounding the hacking.
“However ISS’ disproportionate focus on these issues is misguided and a disservice to our stockholders,” she said.
In judging the pay package, ISS failed to consider the company’s “robust” performance in the fiscal year that ended in June, Everett said.