Buhlmann's Corner

First gems of 2014 – and how many still to come?

Shortly after his decision to leave Deutsche Telekom for Ziggo – in René Obermann’s own words “leaving the bridge for the engine room” a takeover bid arrived which, after some mending, looked set to succeed. Some speculated that skipping between companies was a pretext for using Ziggo as a springboard to get to the executive board of the buyer Liberty Global. Others squinted their eyes even further afield and saw a course already set for the top slot at Deutsche Lufthansa. There is only question that occurs to the shareholder who staunchly believes in corporate governance. “Whether or not the clause about change of control was agreed before or after the first (again, ruinous) purchase offer – who did it benefit?” Once again, it benefited not the company bought over nor its shareholders but the buyer alone (who, now, can be rid of troublesome governors) and above all the board of directors itself. After 3 weeks service, their right to holidays has yet to accrue but, seemingly, they have already acquired two years pay plus percentage bonuses and pension rights, not to mention a cancellation of the clause forbidding them to engage in competition...

Safe and sound within their old boys’ network and riding on the crest of company success and personal respect, the shareholders and supervisory board members who belong to the Siemens family (6% of company equity) got together and voted the old chair of the supervisory board back into office. Not that there was much of a choice but at least a handshake paid lip service to the proposal of setting off immediately to search for a successor to be groomed and presented to the world.

The silence, however, reminded some shareholders of the promise made prior to the general meeting in January. Resolving, therefore to get beyond the chit chat, they took pen and paper and wrote to the capital representatives on the supervisory board to jog their memory about the previous year’s agreement, in particular the part about having the right to be informed during the general meeting  about what steps were being taken as regards succession by 2015. In this initiative, they had not only the backing of those same shareholders (with 650 thousand million Euros of asset under management – in the meantime the group had expanded) but also by other investors including the biggest in Germany.

Although hard to assess, the outcome of the vote was unequivocal.

4% voted against approving the accomplishments of the chair of the supervisory board and 14% of those entitled to vote abstained. These 14% have no legal weight and are swept under the carpet. The number, though, is high enough to be dissected mathematically – indeed it has never been so high since 2008 (in 2010 it was lower than 1%).

The ball is now in the supervisory board’s court – let them figure out how to interpret an 18% withdrawal of shareholders’ approval.