On a day when Rupert Murdoch defiantly testified that he had no intentions of resigning as CEO of News Corp. (NSDQ: NWS), the company’s nine independent directors are out with a statement that they are “united in support of the senior management team to address these issues.” No mention of Rupert Murdoch, son James or of COO Chase Carey — and none of the law firm hired to represent the indies.
Issued by Viet Dinh, the Georgetown professor of law overseeing the new internal investigation, the statement is terse:
“The News Corporation Board of Directors was shocked and outraged by the allegations concerning the News of the World, and we are united in support of the senior management team to address these issues. In no uncertain terms, the Board and management team are singularly aligned and committed to doing the right thing.”
Joel Klein, the News Corp. exec and director heading the internal investigation, reports to Dinh.
Last night, Bloomberg caused a stir with a report that the independent members of the News Corp. board were going to gauge their backing of Rupert Murdoch as CEO by his performance during testimony in Parliament today. The push back was quick and independent director Tom Perkins went public with strong support.
Perkins repeated that performance today, telling the News Corp.-owned WSJ that the independent directors have hired Debevoise & Plimpton to represent them. Unlike the group statement, Perkins also continued to express strong support for Rupert Murdoch:
“The board honestly thinks Rupert is a genius and we need him and the company needs him. Our worry is the shareholders at this point. The British police will take care of the hacking victims.
The next step is not to let the company go down the drain on this thing because we’re focused on events in London that are a small percentage of our business overall.
Perkins, a board member since 1995, has been criticized for being too friendly to Rupert Murdoch. Lucy Marcus, CEO of Marcus Venture Consulting, a member of several boards and a writer on the subject of corporate governance, quickly responded on Twitter to Perkins’ comments to AP Monday night: “Independent Director? “I have a lot of faith in Rupert Murdoch. He’s a great guy, he’s a friend of mine. He’s a genius.”
Perkins isn’t the only one. Marcus and other critics suggest the indies are either not really independent or not very effective. The other board members include José María Aznar, the former president of Spain; Natalie Bancroft, the opera singer who got a seat when her family sold Dow Jones to News Corp.; and some former News Corp. execs
In a post Tuesday for the Harvard Business Review, Marcus wrote:
Crises like this one shake people’s trust not only in News Corporation but also in the private sector as a whole. This trust can only be rebuilt if boards commit in word and deed to being proactively transparent, to acting with independence, and to serving as responsible stewards of business.
As for the News Corp. independent directors, there is still a chance to step in. For them, as for all independent directors, there is never a wrong time to do the right thing.
The case of News Corp, and others like it, presents a clarion call to all non-executive board directors: it is time to step up, or step down.
Or, in this case, lawyer up.