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James Murdoch turns down $6 million bonus over phone hacking scandal in Britain
LOS ANGELES (AP) ' News Corp.'s 38-year-old heir apparent, James Murdoch, says he's declining his $6 million bonus for the past fiscal year because of the phone hacking scandal at the British tabloid he oversaw as an executive.
Even without the bonus, he was awarded a pay package totaling $11.5 million in the fiscal year through June, a 31 percent increase from $8.8 million a year earlier, according to an Associated Press review of a securities filing.
"In light of the current controversy surrounding News of the World, I have declined the bonus that the company chose to award to me," Murdoch, the company's deputy chief operating officer, said in a statement. "While the financial and operating performance metrics on which the bonus decision was based are not associated with this matter, I feel that declining the bonus is the right thing to do."
Two-thirds of the bonus for executives is meant to reflect how much the company grew compared with its forecasts, according to the filing. The other third is based on qualitative factors such as contributing to various goals, including non-financial ones.
The $6 million bonus that Murdoch was supposed to receive would have been 100 percent of the targeted amount. The company said in the filing that he led the success of entertainment company Star India and satellite TV provider Sky Italia, as well as expanding the company's presence in the Middle East.
Murdoch became deputy chief operating officer and international chief executive in March, a promotion from his role as CEO of Europe and Asia and chairman of News International, the tainted British newspaper unit.
The company makes no mention of Murdoch's role in closing the under-fire tabloid, News of the World, nor does it point out that the scandal over widespread hacking by its employees forced News Corp. to drop its $12 billion takeover of lucrative pay TV operator British Sky Broadcasting.
More than a dozen people have been arrested amid claims that News of the World journalists working with a private investigator eavesdropped on voicemail messages of celebrities, royals, politicians and crime victims.
Murdoch's father, Chief Executive Officer Rupert Murdoch, 80, saw his pay package jump 75 percent to $29.4 million from $16.8 million the previous year, while Chief Operating Officer Chase Carey's compensation rose 27 percent to $29.4 million.
The Murdochs control the company through a family trust that owns 38 percent of voting shares worth $5.1 billion.
The compensation figures were contained in the company's proxy statement, a document that gives information to shareholders ahead of the company's annual shareholders meeting, which will be held Oct. 21 on the lot of its movie studio, 20th Century Fox, in Los Angeles.
The company also said Friday that independent director Thomas Perkins, a Silicon Valley venture capitalist, will step down from the board, along with former News Corp. executive Kenneth Cowley, after the annual meeting. It appointed James Breyer, 50, another venture capitalist and Facebook board member, to stand for election to replace Perkins.
Perkins said his resignation was due to his age and had nothing to do with the scandal in Britain.
The Associated Press formula calculates an executive's total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different, in most cases, from the total reported by companies to the Securities and Exchange Commission.
The value that a company assigned to an executive's stock and option awards for 2010 was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company's stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.