WWW.ICGG.BIZ issue 03/2010 INSIGHT corporate governance germany Essential: Information, Analysis and Opinion for Investment Professionals, Advisers and Academics CONTENTS 02 COMPANIES 16 CAMPUS Infineon rebels fail DAX majority has CG shortcomings 03 BUHLMANN´S CORNER 18 CAPITAL NEWS Buying & Selling in February 07 AGM DATES 19 DIRECTORS´DEALINGS 08 ACTIONS CORNER 21 INSIGHT SHAREHOLDER ID 09 POLITICS More women on Supervisory Boards 41 EVENTS DIARY SUSANNE BERGIUS 11 42 READING SUGGESTIONS ESG goes mainstream 14 PEOPLE 43 INDEXES OF COMPANIES Apotheker leaves SAP AND PERSONS 01 INSIGHT corporate Governance Germany companies Infineon rebels fail At Infineon, British Pension fund Hermes failed with its counter-candidate Willi Berchtold. Instead Klaus Wucherer, favoured by the old board, is to be elected as the new chair. Hermes wanted a change because Wucherer has been on the board since 1999 and does not stand for the necessary new start. Wucherer received 72.5% of votes and Berchtold only 27%. Hans-Martin Buhlmann of the Vereinigung Institutioneller Privatanleger (VIP) complains that procedures for counting votes were changed twice during the AGM so that ultimately the votes were manipulated. Commerzbank not free of impositions till 2011 To date an agreement with bank rescue fund €1.5 billion this year. Since however the Frank- SoFFin has prevented semi-nationalized Com- furt bank made losses in 2009 and expects them merzbank from distributing dividends. Altoge- in 2010 too, it need not make these payments ther the government has supported Germany’s for the moment. The requirement not to release biggest private bank, in difficulties because of any reserves for interest or dividend payments its takeover of the Dresdner Bank, with €18.2 will however run out in 2011. Commerzbank billion; of this €16.4 billion were a silent cont- should then also be making a profit again and ribution. As a counterpart the government got could release the €7.9-billion-strong reserves. 25% plus one share in the institution. As soon That would enable payment of interests and also as the bank makes profits, it has to pay interest of a dividend. on the silent contribution; thise will run up to ISSUE 03/2010 02 companies BUHLMANN`S CORNER Greeks bearing gifts “Quidquid id est, timeo Danaos et dona ferentes,” says Virgil in his epic on the Trojan War, and that’s precisely the way things are going now with Infineon shareholders in Munich. The old-new Superviso- ry Board chair, Professor Wucherer, is now the self-styled lame duck. Officially, to secure his chance of election, he is limiting his period in office to 12 months. We’ve no idea what the notary did with that: whether he minuted this declaration. or only the five-year appointment was entered in the document. If the new Supervisory Board is wise, then it won’t appoint the board for five years, but leave that to its successor next year. We have several times been asked how such an unexpected voting outcome can be explai- ned. It is a normal thing here that management knows the declared votes well before the meeting and can adjust to that. In a black box, it then tests the instructions long enough in order for the right choice of motion and election procedure to guarantee the “desirable” result. As long as shareholders do not take part in the vote, or are represented at the AGM only blindly with one-way instructions and then display no interest in how the vote actually happened, the owner’s will is going to be subordinate to executive management’s. Just imagine that a week before the election Angela Merkel could assess the postal-vote ballot boxes, with two thirds of the total vo- tes, to decide whether the election campaign ought to be comple- ted. That is just what happens, and even more. As long as sharehol- ders ask their agents whether the vote was cast – and don’t (want to) see that all they can do is simply confirm having passed on the voting instructions – the stability of this system-for-show will go on working. In practice we know that participation in the vote doesn’t (ever?) come about. As long as institutional voters contentedly file away an incomplete voting receipt, since after all they’ve paid for it, one must still continue to “fear the Greeks, even bearing gifts”. Hans-Martin Buhlmann is the founder of proxy-voting agency VIP Vereinigung Institutionelle Privatanleger e.V. (www.vip- cg.com). 03 ISSUE 03/2010 03 INSIGHT corporate Governance Germany companies Lax supervision at Bilfinger Berger After the collapse of the Cologne city archives building on 3 March 2009, investigations of Bilfinger Berger for building errors on the Co- logne North-South underground railway are expanding. On 19 Februa- ry Cologne public prosecutors investigated the consortium of firms in- VW creeps into MAN volved in building the underground. The investigations were of a dozen suspects including Bilfinger Berger employees. Lately there have been Utility vehicle maker MAN SE will be clo- accusations that records on the construction of stabilization anchors ser in personnel terms too to Germany’s have been falsified. Instead of building-in the anchors they are said to biggest carmaker Volkswagen (VW), after have been sold on the side to scrap dealers. As head of the construction the AGM on 1 April. With banker Stefan group, Bilfinger Berger had already dismissed two construction workers Ropers leaving the Supervisory Board at and a finisher. On indications from the public prosecutors, the Mann- his own request, the purchasing head of heim construction firm is also investigating shabby construction on the VW subsidiary Audi, Ulf Berkenhagen, is ICE high-speed stretch from Nuremberg to Ingolstadt. On this 171km joining it, becoming the third VW repre- stretch, building records are alleged also to have been falsified. Lately sentative on the Supervisory Board beside suspicions have hardened that on the underground in Düsseldorf too Audi CEO Rupert Stadler and chair Ferdin- Bilfinger-Berger workers did not build some parts in accordance with and Piech. Currently VW holds 29.9% of regulations. One employee has since been dismissed. Despite the accu- the MAN shares. sations made against Bilfinger-Berger, the company sees no occasion to The commission payments and corruption set aside reserves. They had enough insurance, stressed CEO Herbert accusations at MAN are now having an Bodner. epilogue. According to the AGM agenda, ex board members Hakan Samuelson, Karlheinz Hornung and Anton Weinmann Frenzel blocks Fredriksen will not for the moment be given dischar- ge. The background is the still uncomple- At this year’s TUI AGM too, Norvegian Investor John Fredriksen had ted special audit for possible breaches of to accept a defeat. Fredriksen has a holding of around 15% in the tou- duties by the three executives, who have rism and shipping group and has been for years fighting for two seats on already left the board. the Supervisory Board. Together with his confidant Tor Olav Troim, the Norwegian has for long being pursuing a confrontation course against TUI CEO Michael Frenzel, who according to Fredriksen is responsible for the fall in the share price and ought to resign. Criticisms here centre Foreigners building up on the TUI financial aid to struggling shipowning subsidiary Hapag- Lloyd, in which TUI still holds 43%, as well as the issue of a convertible holdings bond in autumn 2009. Additionally, the Scandinavians are complaining Shares in companies listed in Germany about the lack of dividend. A special audit called for by Fredriksen did were still in demand by foreign inves- not, however, get a majority at the AGM on 17 February. The Norwegi- tors in February: US star investor Warren an is also still denied the two seats on the Supervisory Board. Frenzel Buffett built up his holding in Munich Re had offered Fredriksen one seat, but attached to the condition that he from 3% in late January to 5.02% in mid would second a neutral person and support management in its strategy. February. One of the best known short “We are not prepared to pay that price for involvement in the Supervi- sellers on Wall Street, Gilchrist Berg, came sory Board,” said Troim, rejecting this. Meanwhile TUI is looking in the into special packaging maker Gerreshei- medium term for an investor for its holding in Hapag-Lloyd, so as to mer at 3.1%. US investment firm Fidelity concentrate more intensively on its core tourism business. Lately there raised its holding in Qiagen to 10.09% have been reports that TUI might buy back Tui Travel, listed in Britain. and is thus the only shareholder in the Management has however denied this. biotech firm with a holding of over 5%. ISSUE 03/2010 04 companies German EADS holding to stay � � � � � � � � � � � � � � �� A consortium of twelve German banks – in- cluding Commerzbank and Deutsche Bank ������������� – is to keep German carmaker Daimler’s ������������� 7.5% holding in European aerospace Group EADS. The French government and the La- gardère group still hold 22.5% of EADS. In 2007 the Stuttgart carmaker wanted to lower its holding in EADS from 22.5% to 15%. But to keep Franco-German balance at EADS, the German government searched, at the time in vain, for a German investor for the 7.5% block, so that the transitional solution was agreed with the bank consortium. In it, the credit institutions lent Daimler €1.5 billion and took the 7.5% block plus preference dividends as collateral. Now, according to Financial Times Deutschland, the agreement, expi- ring in July 2010, is to be extended for three years.