Sky chairman James Murdoch re-elected as supine shareholders bow down

There was a fire in the Sky at that company’s AGM. But it soon blew out.

On grounds of good corporate governance, James Murdoch’s position as chairman of Britain’s monopoly satellite broadcaster is unconscionable. He is, you may remember, a scion of the controlling family of 21st Century Fox, not to mention its chief executive. The same 21st Century Fox is Sky’s biggest shareholder, with ambitions to become its only shareholder. A planned takeover is awaiting the verdict of the Competition & Markets Authority.

Given all that, most reasonable people would see the potential for a conflict of interest in his position as chairman of Sky. The UK Combined Code on Corporate Governance, which is designed to prevent that from happening, holds that the chair of a publicly listed company should be an independent party, capable of representing the interests of all shareholders equally.

But, of course, there’s a problem. Companies are free to ignore it should they so choose. The Code operates on the basis of ‘comply or explain’ which means that if you don’t like the rules you’re free to ignore them – as long as you say why. Sky only needs to say that it thinks Mr Murdoch is a superstar (which is what it basically argues), and the problem is dealt with, as long as you can keep your shareholders onside.

That, of course, means keeping the City’s institutions onside. And it isn’t terribly difficult. Sometimes all it takes is a nice lunch in the boardroom and perhaps a few DVDs for the kids. OK, OK, I jest.

Or maybe not. Because it is a fact that all three of the main advisory firms, which produce reports for City institutions on how they should react when faced with situations like this, said vote against Mr Murdoch.

Despite this, and the fact that some of the more progressive institutions, such as Royal London, described Mr Murdoch’s position as “inappropriate”, he won the day. Some 51.5 per cent of independent shareholders gave him their backing.

That rather raises a question: What on earth would it take for them to say no?

One day someone is, for a laugh, going to appoint a goldfish to chair a FTSE 100 company. And I’d be willing to bet that the institutions would fall into line if the company said he was a jolly clever goldfish.

If regulators approve Fox’s proposed takeover of Sky, and Britain’s politicians use that as cover to bow before Mr Murdoch’s father Rupert – as they always have in the past – the debate over his role as Sky’s chairman will be moot.

It’s a different mater for the Code. It is the vehicle, remember, for important parts of Theresa May’s supposedly ‘world leading’ package of corporate reforms, which in turn are part of her claimed agenda of making Britain “a country that works for everyone and not just the few”.

As such, there is a live debate over whether it is fit for purpose. Mr Murdoch’s victory suggests that it isn’t.