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By Steve McGrath
Of DOW JONES NEWSWIRES
LONDON -(Dow Jones)- British Sky Broadcasting PLC (BSY.LN) shareholders should oppose the re-election of a number of non-executive board members because the company's board doesn't have enough independent representation, and they should also vote against the company's remuneration report because of concerns over salary increases and bonuses, advisory group Pension Investment Research Consultants said Thursday.
PIRC, which advises institutional investors on corporate governance issues, said it doesn't think a number of the company's non-executive directors are independent because they are linked to controlling shareholder News Corp. (NWS). They include Tom Mockridge, chief executive of Sky Italia and News Corp.'s European television division; David DeVoe, chief financial officer of News Corp., and Arthur Siskind, a director of News Corp. It also thinks Allan Leighton isn't independent because he's been on BSkyB's board for more than nine years. PIRC said shareholders should oppose the re-election of all these directors.
On its Web site, BSkyB lists eight independent non-executive directors on its board out of 14 members.
PIRC also thinks shareholders should abstain on the re-election of Andrew Higginson, an independent BSkyB board member and head of retailing services and personal finance at U.K. grocer Tesco PLC (TSCO.LN). PIRC said it does consider Higginson to be independent but noted that he had missed two main board meetings and two audit committee meetings during the year.
"In view of his FTSE 100 directorship with Tesco and his history of missing board meetings, we have concerns over his time-commitments and suitability to his newly appointed role as chairman of the audit committee," it said.
PIRC's also recommending that BSkyB shareholders vote against the company's remuneration report because it doesn't give a detailed explanation of salary increases.
"Disclosure concerning base salaries is limited to noting the increase during 2009 and fails to expand fully on the changes from the last full fiscal period. So whilst base salary increases during the 2009 period have been limited to 5%, we note that the actual full year base salary earnings have increased significantly from 2008," it said, citing a 22% increase in the base salary of BSkyB Chief Executive Jeremy Darroch.
It also criticized the company for not giving enough detail on its long term incentive plan, particularly specific details on the performance conditions and targets.
"A clear lack of transparency in this regard has the potential to fuel fear of rewards for failure," PIRC said.
It also considers combined awards under the annual bonus and long term incentives scheme to be excessive in 2009.
BSkyB will hold its annual general meeting Oct. 23.
News Corp. (NWS), publisher of this newswire, holds a stake of around 39% in BSkyB.
-By Steve McGrath, Dow Jones Newswires; 44-20-7842-9284; steve.mcgrath@dowjones.com