Buhlmann's Corner
A Banana Republic, and box-ticking
If a Banana Republic is one where the length and curvature of the banana are legally regulated and prescribed, but on the other hand the rules apply only for those who are not plantation owners, then Germany is clearly a banana republic when it comes to corporate governance. Although the Code, Company Law and the Law on the Appropriateness of Executive Compensation, and even the charter, contain clear, simple and metrical rules for good behaviour, and there are also transparent-seeming decision-making and open criticism, the criteria do not seem to be relevant for the Piëch family business called "Volkswagen AG".
When a few years ago I texted, "Grandson buys grandpa's business with the operating assets", I meant it very ironically - now the talk is of gross dereliction of duty, as the judges at the Stuttgart Higher Regional Court found. When I asked a little later at the AGM, "what happens to VW if Ferdinand Piëch gets a cold?" rather than a reply I got a certificate the rule-maker was in the best of health.
In the chain of Executive Chairmen, Works Council chairmen and Supervisory Board chairmen there has been none who could handle the the delicate - and never really understood in Brussels at the European Commission, even with Wiedeking's help - rules of the so-called VW Act with such virtuosity. This law, only partially explained even in Wikipedia, makes its own structures, preserving power as a bulwark against the rest of the world. True enough, any shareholder could have known these circumstances before he bought a single share.
What brought the global criticism from shareholders, customers and politics of Murdoch & Family at News Corp. was denied media wizard Leo Kirch for 10 years at Deutsche Bank. With Ferdinand Piëch, it just rolls off like rain on the nano-paint sealer:
When at MAN the election of top-earner Martin Winterkorn in the 2011 AGM agenda met with criticism from shareholders, the vote was changed slightly and stooges were elected, who in 2012 must give way to the candidate from 2011 - a clear signal that the non-elected are to call the shots in the meantime.
CalSTRS, the State Board of Florida & co. have announced 'no' votes for the upcoming VW AGM - sometimes they are against the election of a wife, sometimes they are desperately seeking the last independent directors, and sometimes it is just uncertainty about how a single person in 360 days can be worth €17 million, can earn it or even only ought to get it, and how this is related with a book-value profit of 5 billion in Porsche derivatives (fair value).
If the no votes are sent to the Volkswagen Annual General Meeting by simple box-ticking, then the Piëch Banana Republic has already won. Only if the shareholders have their voting participation confirmed have they a chance to know what happened. At MAN in 2011, without being noticed by shareholders more than half of the capital present was relegated to abstention. At VW it cannot be excluded that critical votes fail at the entrance stairs to the AGM forum - because the VW Law - no, the family patriarch - wants it that way. Grandpa's firm is nobody's business - right?