James Murdoch faces 2nd investor revolt

James Murdoch faced his second investor drubbing in just over a month when over 40 percent of independent shareholders failed to back his re-election as chairman of pay-TV business BSkyB.

Investors vented their anger at Murdoch on Tuesday for his handling of the phone hacking scandal that has been plaguing Murdoch and his father Rupert Murdoch this year and resulted in the closure of News of the World, one of the staple of newspapers in the News International group.

Revolting shareholders said they voted against the 38-year-old at the key annual meeting because they also wanted a truly independent chairman rather than an executive of Rupert Murdoch's News Corp, which owns 39 percent of BSkyB.

While James Murdoch was supported by some shareholders in the room and given strong support by the rest of the board, the result signals his second investor drubbing in just over a month after he endured a huge protest vote for his own role at News Corp in October.

News Corp had to withdraw its $12 billion offer for BSkyB in July following revelations that people working for a News Corp weekend tabloid, the News of the World, had hacked into the phones of celebrities and murder victims to secure stories.

Results from Tuesday's vote showed investors representing 77 percent of shares backed James Murdoch but excluding the stake held by his father's company, support stood at 56 percent with 31 percent opposed to his appointment and 13 percent of votes withheld.

"He has been given a bloody nose by shareholders in this vote and there may well be further developments," Tom Powdrill, a spokesman for the shareholder advisory group PIRC, said.

"If you block out the News Corp stake, we calculate the opposed and abstain votes to represent around 40 percent - he has clearly lost the support of a large number of the company's owners."

James Murdoch, who was well regarded as CEO of BSkyB between 2003 and 2007, had been expected to win re-election to that role, thanks to the support of family and allies.

Guy Jubb, head of governance and stewardship at Standard Life which manages over 6 million shares, told the meeting that they had opposed his re-election because of his conflicts of interest with the largest shareholder.

Murdoch is chairman of News International, News Corp's British newspaper arm, and deputy chief operating officer at News Corp.

"We wrote to Mr Ferguson to advise him that we were concerned that James Murdoch remains chairman of the board and that we should like to see a new and independent chairman appointed," Jubb said.

"We pointed out that our misgivings had been heightened by the revelations of stewardship short-comings at the News of the World, a title for which Mr Murdoch bore a measure of responsibility."

Shares in BSkyB were flat at 1451 GMT in line with the blue-chip FTSE index.