James Murdoch faced further calls to quit News Corporation's board yesterday after a shareholder activist group representing £100 billion ($200 billion) in assets said he was causing the company "significant reputational damage".
The Local Authority Pension Fund Forum , the majority of whose 54 members own shares in the US-based News Corp, called for an overhaul of the board, and that Murdoch's continued presence on the board was "no longer in shareholders' interest". News Corp declined to comment yesterday.
Murdoch runs News Corp's operations in Europe. In the wake of the phone hacking scandal, the forum circulated a briefing paper to its members advising they oppose his re-election to the board. It also demanded a "genuinely independent chair" criticising Rupert Murdoch holding both that and the chief executive role. News Corp investors will vote on whether to re-elect the Murdochs at the company's annual general meeting in California later this month.
The forum said its members "want a line drawn under the hacking". Yet the forum's chairman, Ian Greenwood, said it would only be possible to move on "if the board accepts the need to demonstrate real accountability. That requires a change in the structure and make-up of the board".
He concluded: "Whilst these are difficult issues for the company to address, we believe that to secure News Corp's long-term future such reform is necessary."
The pension fund members met on Wednesday for a scheduled quarterly meeting, and the issue of the structure of News Corp's board was top of the agenda. One source close to the meeting said none of the members opposed the points raised in the briefing paper .
The forum said it had drawn up its recommendations for its members after "extensive research into the phone-hacking scandal" and after engaging News Corp directly. The forum said: "The News Corp board must take responsibility for the hacking scandal."
The group did back three of the 15-strong board to maintain their roles. It is understood that the forum has not yet drawn up recommendations over Sky, which News Corp failed in its attempt to buy this year and where James Murdoch is chairman.