James Murdoch will remain as Sky chairman after receiving justĀ 51.5 percent of the independent shareholder vote on Thursday.

Institutional Shareholder Services (ISS), Glass Lewis, and Pirc — companies that advise many of the worldā€™s biggest institutions on how to vote at annual meetings — urged investors to vote against Murdoch’s re-election.

But why did Murdoch fail to garner more support from investors?

1. Conflict of interest

A number of investors remain concerned about a potential conflict of interest, given that Murdoch is also chief executive of 21st Century Fox, which is in talks to buy a 61 percent stake in Sky for Ā£11.7bn.

Fox already owns a 39 percent shareholding in Sky.

Murdoch responded to criticism on Thursday by saying that the both Sky and Fox were ā€œengaged constructively with the regulatory authoritiesā€ about the deal.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile ā€“ free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

The Competition and Markets Authority (CMA) is investigating the tie-up to assess whether or not it is in keeping withĀ media plurality rules and broadcasting standards.

Despite the CMA’s involvement, Royal London, one of Sky’s shareholders and the largest mutual insurer in the UK said Murdoch’s dual position was still “inappropriate”.

The company, which owns a Ā£44m stake in the British satellite broadcaster, added that Sky needs a ā€œtruly independentā€ chair.

“Independent oversight of the board is particularly important given Fox’s ongoing bid to acquire Sky,”Ā said Ashley Hamilton Claxton, the firm’s corporate governance manager.

Independent shareholder Hugh Lawson was one of many who echoed Royal London’s concerns on Thursday.

ā€œFox is getting a very sweetheart deal out of this, and mainly I think itā€™s because of the lack of independence on the board,ā€ he said.

Martin Gilbert, the non-executive deputy chairman of Sky and co-chief executive of Standard Life Aberdeen, said the board had already engaged in ā€œimpartial discussionsā€ about the deal that did not include Murdoch or other Sky directors with connections to Fox.

ā€œWe have met 11 times,ā€ he said. ā€œI can assure you that none of the [Sky] directors linked to Fox took part.ā€

2. Executive pay

Only 36 percent of independent investors supported the companyā€™s remuneration report.

The total pay package for Skyā€™s chief executive,Ā Jeremy Darroch, quadrupled to more than Ā£16m in the year to the end of June, despite the company’s falling profits.

Darroch also received an annual bonus of Ā£1.9m.

ā€œThe board notes the significant vote against resolution 3, the directorsā€™ remuneration report, and resolution 12, the re-election of James Murdoch, and will continue to engage with shareholders to understand their views as part of its ongoing program of engagement,ā€ Sky said in a statement.

3. Phone-hacking and sexual harassment

Opponents of the deal with Fox have pointed to the plethora of sexual harassmentĀ allegationsĀ at Fox News over the past year, which led to the departure of itsĀ chair, Roger Ailes, andĀ anchor Bill Oā€™Reilly.

In 2011, the phone-hacking scandal rocked News Corp, also owned by the Murdoch family, when it emerged that journalists were accessing audio content without consent.

Murdered schoolgirl Milly Dowler was one of the victims of phone hacking.

ā€œAre you confident the CMA wonā€™t unearth new Fox scandals which could derail the bid in the way that the Milly Dowler scandal did back in 2011?ā€ Alaphia Zoyab, senior campaigner at activist group Avaaz asked Murdoch on Thursday.

Five years after the phone-hacking scandal prompted Murdoch’s resignation from the company, he was reappointed chairman of Sky in 2016.

Murdochā€™s level of support from independent Sky shareholders this year was a slight improvement on the 47 percent he garnered last year.

Sky’s latest results showed sales in the three months to 30 September — the first quarter of its financial year — rose 5 percent to Ā£3.3bn.