British lawmakers dub Murdoch unfit as CEO

Sarah Gardner May 1, 2012
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British lawmakers dub Murdoch unfit as CEO

Sarah Gardner May 1, 2012
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Kai Ryssdal: There was kind of an amazing development in the News Corp.-Rupert Murdoch phone hacking scandal over in the U.K. today. The world’s most famous media tycoon has been told he’s — and this is a quote — “not a fit person to run a major international company.”

And it was a parliamentary committee that told him so. Lawmakers in London accuse Murdoch of turning a blind eye to all the phone hacking that happened at the now-defunct News of the World tabloid. Marketplace’s Sarah Gardner reports.


Sarah Gardner: The committee’s vote to condemn Rupert Murdoch split along party lines, with conservatives dissenting.

But still, says University of Delaware’s Charles Elson, it was extraordinary.

Charles Elson: Particularly with a company of this size and someone of that reputation and power.

Corporate governance experts say it’s hard to imagine a congressional committee declaring a CEO “unfit.” If CEO’s in this country are deemed “unfit,” says Chief Executive Magazine’s J.P. Donlon, it’s normally in the privacy of a corporate boardroom.  And it’s usually about money.

J.P. Donlon: It’s very simple. It’s poor performance. If you don’t deliver and you have a board that’s responsive and your shareholders are active they tend to vote you out.

Ralph Ward, publisher of Boardroom Insider, says to many corporate directors,  it’s gotta get personal for them to tag a CEO as “unfit” for duty.

Ralph Ward: You can do a lot to a board of directors and get away with it, except lying to them and betraying them.

About naughty behavior, oftentimes. Like Mark Hurd at Hewlett Packard, says David Becher at Drexel University. Hurd was forced out in a scandal involving a female marketing consultant.

David Becher: And the board in that case did say that he had lost the trust of the firm and didn’t seem like he could continue leading it. But it was specifically for having a relationship with a woman he shouldn’t have and then supposedly using corporate money to pay for that.

Whether Rupert Murdoch’s board of directors will push him out is unclear. But Ralph Ward says he wouldn’t be surprised if a few of them are sending subtle messages to the 81-year-old that now may be the perfect time to retire.

I’m Sarah Gardner for Marketplace.

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