The popular verdict on James Murdoch’s performance at the various UK phone hacking inquiries last year was that Rupert’s son and heir was either a fool or a liar, and that if he didn’t know his journalists at the News of the World were hacking into voicemails on an industrial scale, he certainly should have done.
You may remember that in May 2008 James was shown an email and a legal opinion which revealed the hacking at the NotW was rife. He claims he didn’t read either, yet agreed to buy off a victim who was suing News International with a 700,000 pound settlement.
So, has young Jimmy been sacked, demoted, or shown the door? Well, no. He’s been promoted to News Corp’s Deputy Chief Operating officer and Chairman and CEO International.
And, as the 96-page notice of News Corp’s October annual general meeting shows, he has also been given a pay rise, and awarded a US$5 million cash bonus for having such a great year.
James did the decent thing in 2011 and refused to take the $6 million bonus the board was keen to give him then -- in view of what had happened on his watch at the News of the World and The Sun, dozens of whose journalists have now been arrested on suspicion of phone hacking or corruption. But this year, he has had no such qualms.
Accordingly, his pay packet has swollen to US$16,838,072 from the paltry US$11,921,625 he had to make do with last year.
His dad has done even better, taking home US$30,022,292, or almost twice as much, but poor Rupert has been forced to tighten his belt after last year’s US$33,292,753 because the board has made him take a share of the blame for what went at his favourite British papers.
News Corp’s compensation committee goes to great lengths to explain to shareholders why this sort of money is entirely deserved, and make a fair shot at it with Rupert, whose “leadership” helped send the stock price up by 23% in 2011-12. But they struggle to find much to say about James’s contribution, suggesting that two of his key achievements were that he “transitioned into his new role” and “successfully transitioned into his new role”.
Another way of putting James’s flight from the UK is that he was forced to resign as Chairman of BSkyB after the NotW phone hacking scandal derailed News Corp’s US$12 billion bid for the 61% of BSkyB it didn’t already own.
One might arguably also blame James for the closure of the News of the World, with the loss of some 200 jobs, for the $224 million in legal and other costs, and for the huge reputational damage done to News, because he let the phone hacking scandal get out of hand.
It must be said in his defence that James helped turn BSkyB into a powerhouse after joining in 2003 and that, as pay-TV executive, he’s no chump. But it’s hard to believe he would have survived the disasters at the News of the World and The Sun -- or his subsequent performance before the House of Commons committee -- if his dad didn’t run the company and his family didn’t own 40% of News Corp’s voting shares.
Not surprisingly, the resolutions for this year’s AGM -- due to take place in Los Angeles at the Darryl F. Zanuck Theater on 16 October -- include one to scrap the gerrymander that keeps the Murdoch family in power, and another to split the roles of Chairman and CEO, both of which are currently held by Rupert. Not surprisingly, the board is “unanimously opposed” to both suggestions.
We’ll see what happens on the day, and whether the opposition can do more than register a loud vote of protest, as it did last year. But The Power Index couldn’t notice that the board has been thinking about a succession plan if something should happen to Rupert. It seems it does this every year, and part of the process is that the Compensation Commitee (which awarded James that $5 million cash bonus) discusses “potential internal candidates” with the CEO, ie Rupert.
We’d love to have been a fly on the wall at that meeting, when James’s suitability and recent stellar performance came up.
We see from the 96-page blurb for the AGM that the committee also identifies “development needs ... of specific individuals”.
We wonder if they’ve told James he needs to work on reading those emails? Can someone please ask this question at the AGM?