Pay-TV company BSkyB's decision to name Rupert Murdoch's son James as chief executive has led irate investors to charge that the father-and-son executive team was forced on them.
BSkyB sought to placate investors by naming banker Jacob Rothschild as a non-executive deputy chairman to serve under the elder Murdoch and beginning a search for a new independent director.
But several large institutional investors voiced concern that choosing James Murdoch (30) to lead the company could compromise Sky's independence from News Corp., which is chaired by the elder Murdoch and owns about 35 per cent of the company's shares.
They fear that Sky's ample cash flow could be used to fund investments that would enrich News Corp. shareholders.BSkyB declined to comment.
Institutional investor groups argued the CEO search process was designed to ensure the younger Murdoch's ascension.
James Murdoch heads News Corp.'s STAR TV Asian pay-TV service and steered it to its first operating profit in the year to the end of June. He will start immediately, replacing outgoing CEO Mr Tony Ball.
"We have serious corporate governance concerns that these changes do not appear to address," said a spokeswoman for the Association of British Insurers (ABI). "We have no way of telling whether their selection process has been robust and objective, as the company has declined to keep us informed."
The ABI is dubious about "having a father and son as chairman and CEO," the spokeswoman added.
Earlier yesterday, the National Association of Pension Funds (NAPF) said investors had the "nuclear option" of calling an emergency general meeting and replacing the board.