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Last Updated: Wednesday, 5 November, 2003, 20:02 GMT
Shareholder group criticises BSkyB
James Murdoch
James Murdoch: Under pressure to prove himself quickly
A major UK shareholder group has said it is still unhappy at the appointment of James Murdoch as chief executive of BSkyB.

The National Association of Pension Funds (NAPF) said the firm still had to convince investors that it was right to appoint the chairman's son as chief executive.

Its comments followed a meeting with two members of BSkyB's nomination committee who were trying to calm shareholder unrest.

Earlier on Wednesday, James Murdoch had told the Financial Times that the satellite broadcaster would pay a dividend for the first time since 1998.

"There is a resolution at the board to discuss future dividends and that will be done," Mr Murdoch told the Financial Times newspaper.

The move was seen as an attempt to placate shareholders.

Family ties

But following a meeting with Allan Leighton and Gail Rebuck - both members of BSkyB's nomination committee - the NAPF was still not happy.

"BSkyB needs to convince institutional shareholders that the father and son relationship at the head of the company will not constrain the board decision-making process and concentrate too much power in the hands of one family which is inextricably linked to the major shareholder," said the NAPF.

The association also said it wanted to see more boardroom changes at BSkyB.

"This should, as a minimum, involve the appointment of more independent NEDs (non-executive directors) and a thorough review of all corporate governance procedures at the company," it said.

The NAPF repeated its call for its members to vote against the re-election of Lord St John of Fawsley at BSkyB's annual general meeting on 14 November.

Lord St John was the director in charge of finding a new chief executive, and the NAPF has said it was unhappy at the way the high-profile succession process was handled.

Protest

But the NAPF has not recommended that its members vote against the re-election of James Murdoch as a director of BSkyB.

However, other shareholders are reportedly considering a show of protest at BSkyB's AGM.

Some fear that with two Murdochs at the top, BSkyB's strong cashflow could be used to prop up the balance sheet at parent News Corp.

There has been speculation that some investors may use the meeting to demand that Rupert Murdoch surrender his role as BSkyB chairman as the price for installing his son as chief executive.

Charm offensive

The influential US voting advisory agency Institutional Shareholder Services has also reportedly told its clients to vote against the re-election of Lord St John at the 14 November meeting.

At the time of the appointment, Lord St John praised the new BSkyB boss as "outstanding" among the 290 candidates for the job.

James Murdoch has begun a charm offensive among the company's investors.

In an interview with the Financial Times, he said that as well as working with his management team his job was about communicating with shareholders and being sensitive and responsive.

He told the FT: "One of the first things I'm doing is trying to meet with a number of our shareholders and start a dialogue and listen to their concerns.

"I intend to explore with them the concerns they have."


WATCH AND LISTEN
The BBC's Hugh Pym
"Allan Leighton will continue with a round of meetings with other shareholder groups"



SEE ALSO:
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04 Nov 03  |  Business
BSkyB chief Tony Ball quits
23 Sep 03  |  Business
Tony Ball: Murdoch's solid enforcer
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