LOS ANGELES ó The British phone hacking scandal rocking Rupert Murdoch’s media empire did not stop the company’s top executives from being lavished with big salaries and bonuses.|By Meg James, Los Angeles Times
LOS ANGELES ó The British phone hacking scandal rocking Rupert Murdoch’s media empire did not stop the company’s top executives from being lavished with big salaries and bonuses.
Murdoch, chairman and chief executive of News Corp., collected a $12.5 million bonus in fiscal 2011. He continues to be one of the most handsomely compensated executives in America ó collecting a total package of $33.3 million for the fiscal year 2011.
The 80-year-old media mogul’s salary and stock package soared 46 percent over 2010 because of the bonus, which was bestowed because of Murdoch’s leadership guiding the company through the economic downturn, News Corp. said in its proxy filed Friday with the Securities and Exchange Commission.
“Given all that has happened at News Corp. this year, it just raises more questions about this company’s compensation practices,” said Charles Elson, corporate governance expert at the University of Delaware.
Murdoch’s youngest son, James Murdoch, who runs the company’s European operations, received a $6 million bonus despite coming under mounting pressure for his handling of the phone hacking crisis at the company’s now defunct London-based News of the World tabloid. However, the 38-year-old media scion said he would not accept his bonus.
“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. “I feel that declining the bonus is the right thing to do.”
News Corp. executives have been struggling to contain the damage from the ethics scandal. The crisis exploded in July with revelations that reporters for Murdoch’s News of the World tabloid in London eavesdropped on cellphone messages of royal family members, celebrities, sports figures, crime victims and fallen soldiers.
Amid the furor, the company shuttered the 168-year-old News of the World, eliminating the positions of about 200 people. News Corp. abandoned its $12 billion bid for the remaining shares of Britain’s largest pay television service, British Sky Broadcasting ó an acquisition that Wall Street had endorsed as a way to strengthen the company’s base of revenues.
The scandal also cost the company a nearly $30 million contract with the state of New York for educational materials. News Corp. has spent heavily to bulk up on public relations consultants and lawyers to deal with the fallout, including an investigation by prosecutors to determine whether News Corp. violated the U.S. Corrupt Foreign Practices Act because of the illegal activity and bribes paid to police officers in Europe. Later this year, both Rupert and James Murdoch are expected to be called before a high court that has been convened to review the ethics scandal.
James Murdoch also 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 from the panel 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.
The younger Murdoch was elevated to the company’s No. 3 executive position in late March ó while the phone hacking scandal was making headlines in Britain but before it exploded into front page news around the world. News Corp.’s fiscal year ended June 30.
James Murdoch had been set to receive $17.9 million in compensation. By declining the bonus, the amount was lowered to $11.9 million. That included $3 million in salary and $8.3 million in stock awards. In 2010, he got $10.3 million. He “played an important role during fiscal 2011 in developing the company’s key businesses and investments in Europe, Asia and the Middle East,” the company filing states. He also “successfully transitioned into his new role as deputy chief operating officer … expanding his responsibilities.”
News Corp.’s board, which has been criticized for being too pliant, took steps Friday to inject new blood into the board. The company announced that venture capitalist James W. Breyer, who is a partner of Accel Partners and a member of the boards of Wal-Mart Stores Inc., Dell Inc. and Facebook Inc., was being nominated to the board as an independent director. He also is a director of Legendary Pictures, an independent studio, and thus must recuse himself during discussions related to News Corp.’s 20th Century Fox Film studio. Breyer will fill one of the seats that will be opened by the departure in October of two longtime board members ó Silicon Valley venture capitalist Thomas J. Perkins and Kenneth E. Cowley. Cowley has served on the board since 1979, while Perkins has been a board member since 1996.
Elson, the corporate governance expert, said Breyer serves on so many boards that he might not have the time or attention to devote to News Corp. “I don’t think this helps their case,” he said.|
