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+++ From the boardroom: Evonik, STADA, VW +++ Investor scene: Praise for Deutsche Bank supervisory board, Strenger's allies against VW, criticism of Bayer’s Monsanto plans, Axa dumps tobacco stocks +++ In brief: Manager liability +++ America’s high executive pay +++ Activist offensive +++ Investor relations prize

Topics in this edition

TOPS: The value of self-awareness and fresh air for STADA

FLOPS: Tax man discredits boards / Predatory shareholders

News: Why investors are praising Paul Achleitner

Social Media: Tweet of the week


Good governance…

Team building: the value of self-awareness

In recent weeks, we’ve read interesting profiles of supervisory board chairs such as the one in Manager Magazin about Werner Brandt or ZEIT's take on Paul Achleitner. These stories underscore one clear point: An external, unbiased take on the strengths and weaknesses of a supervisory board can be helpful. For example, by nominating a new member that specifically targeted weaknesses, a board could shore up shortcomings and move forward. However, supervisory board members shouldn't simply wait for a journalist to come calling - that might take a while. As an alternative, we suggest professional coaching and team building, which unfortunately remain underutilized.

Pharma company STADA: fresh air on supervisory board

The efforts of the Active Ownership investor group to nominate five candidates to the STADA supervisory board (see GermanBoardNews May 13) appear to have been effective. The company has pushed back its annual meeting to August 26 and plans to nominate new candidates based on “a clearly defined set of criteria” by then. The company said “relevant expertise and experience in the fields of generic pharmaceuticals and OTC products [...] expertise in finance, audit and legal matters [and] personal independence" were important criteria. STADA said it will also give “due consideration” to the German Corporate Governance Code. That sounds promising. We wish the chair of the nomination committee, Dieter Koch, all the best to ensure the company’s good intentions result in a good board. The GermanBoardFinder might be of use.

… and bad governance

Stock corporation law: return of predatory shareholders?

The era of professional claimants (or “predatory shareholders") seemed to be over: Their business model - raising legal claims following annual meetings and secretly demanding payment to drop them - is no longer viable thanks to new laws. But now there's a new species on the move, putting pressure on companies with audit proposals or claims for damages and compensation while only seeming to act in the interest of all shareholders. In reality, a small number of these investors are only interested in turning a quick profit. If you are aware of any instances of this blackmailing tactic occurring, we’d be glad to hear from you.

Taxes: authorities discredit supervisory board members

Governance expert Manuel Theisen brought a tax rule to our attention in his column for Handelsblatt that seems to be outdated: Companies are only allowed to claim half of supervisory board compensation as operating expenses. The rule dates back to a time when board meetings were often boozy affairs, leading to the suspicion that those in charge were merely subsidizing friends and acquaintances. This has become the exception; most supervisory board members are honestly pursuing the interests of the company. It is high time that this is recognized by tax authorities.

Do you have a suggestion for the “Governance Tops and Flops of the Week”? Tell us at:

From the boardroom

CVC leaves Evonik board

Following Evonik's annual meeting, Steven Koltes and Christian Wildmoser of financial investor and former major shareholder CVC have left the chemical company’s supervisory board. The new board members are former Evonik exec Ulrich Weber and Deutsche Post’s former labor director Angela Titzrath.

Koch first to go

Dieter Koch, chair of the nomination committee on the STADA supervisory board (see “Tops”), is set to leave the board at the annual meeting, which has been postponed from June 9 to August 26. Current board members who will vacate their posts to make room for the four newcomers likely to be appointed at the annual meeting have yet to be named.

Huber ends career

Citing his health, Karl-Josef Huber has handed over the supervisory board chair of the water treatment company that bears his name to his daughter, Johanna Rong. This marks the end of a 47-year run for the 70-year-old Huber at the company. Rong, whose husband is part of the executive board, took over her father's stake in the company years ago.

Hoteliers on the board

Best Western hoteliers Oliver Schreiber from Ulm and Carsten Weber from Cuxhaven have been elected to the supervisory board of DEHAG Hotel Service AG, the parent company of Best Western Hotels Central Europe GmbH. DEHAG's supervisory board chair remains hotelier Christoph Unckell from Würzburg.


Investor scene:

Angry at Bayer

Henderson Global Investors are among investors critical of Bayer’s proposed $62-billion takeover of US seed company Monsanto. “I’m angry that the company has refused to discuss this with us,” said Henderson fund manager John Bennett, adding that Bayer's supervisory board should reconsider the position of the executive board. Monsanto has since rejected the offer but has said it is open to negotiation.

Support for Strenger

Investment adviser Hermes is recommending withholding an endorsement of Volkswagen's executive and supervisory boards at the company’s annual meeting on June 22. Hermes now joins DSW, Germany’s oldest and largest association for private investors, and Deminor investment group in backing governance expert Christian Strenger’s calls for an audit to examine, among other things, the “composition and efficiency of the supervisory board.”

Paul Achleitner commended

After 52 percent of shareholders voted against the proposed executive compensation system at the annual meeting, Deutsche Bank is planning reforms. There was some praise for the company at the meeting as well, including a show of support for supervisory board chair Paul Achleitner. Union Investment’s Ingo Speich said that thanks to Achleitner, the board “was competently occupied and better off.” 

AXA sells tobacco interests

Insurance group AXA made a short-notice divestment of its positions in tobacco companies. This represents 200 million euros in investments and 1.6 billion euros in bonds. AXA’s German CEO Thomas Buberl said tobacco leads to too many deaths, which the company no longer wanted to support. "This decision has a cost for us," said Buberl "but the case for divestment is clear: the human cost of tobacco is tragic; its economic cost is huge."


In brief

Manager liability.

According to “Handelsblatt,” Volkswagen has informed its D&O insurer that the company is still considering damage compensation claims stemming from the Dieselgate affair.

CEO salaries.

CEOs of S&P 500 companies earned $12.4 million on average in 2015, 335 times as much as an “average production worker.” In 1980, CEOs earned 42 times as much as the average worker.

Investor relations.

The German investor relations association DIRK teamed up with WirtschaftsWoche and Extel to announce the companies with the best investor relations. The winners can be found here.


According to a recent study, activist investors have taken on 349 companies worldwide in the first five months of the year - an increase of 13 percent compared to the same period last year.


How to respnd to $62bln bid when your mrkt cap is 40bln? Lts ask #Monsanto - "incomplete and financially inadequate”


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