VIPsight International
VIPsight America - Mexico
23 October 2013
Consortium Volkswagen.
In the theory of Corporate Governance will have various control mechanisms to allow companies to alleviate the problem of agencies that are introduced, and since then that such control mechanisms are aimed at in the search for a good performance of the firms. The mechanisms in which the company has a greater influence are the internal ones. One of them is represented by the creation of business groups, in this, the purpose is to obtain the profitability and the highest performance it will be possible for the companies through the generation of a Consortium that will have the greatest amount of satellite companies, this is, it does so through the acquisition or merger of companies, ranging from those that are closely related as the companies that do not have the slightest relationship.
This strategy has been adopted by the Consortium Volkswagen. We realized that due to the fact that since several years ago has been merging or acquiring many companies in the automobile industry, as well as other industries no longer so closely related to the automobile industry as it is the financial one, since April 1st 2008 was founded the Volkswagen Bank with headquarters in Puebla. As mentioned earlier, this strategy is aimed to obtain the highest profitability of the entire Consortium Volkswagen.
In addition, this coincides with the corporate strategy toward 2018, where it is mentioned that this strategy is focused on positioning the Consortium Volkswagen as the leader among automotive manufacturers worldwide, through four objectives that will make Volkswagen manufactures the most successful and fascinating cars in the world (taken from the corporate website of the Consortium Volkswagen):
1. Volkswagen intends to deploy intelligent innovations and technologies to become a world leader in customer satisfaction and quality.
2. The goal is to increase unit sales to more than 10 million vehicles a year; in particular, Volkswagen intends to capture an above-average share of the development of the major growth markets.
3. Volkswagen intends to increase its return on sales before tax to at least 8% so as to ensure that the Consortium Volkswagen’s solid financial position and ability to act are guaranteed even in difficult market periods.
4. Volkswagen aims to become the top employer across all brands, companies and regions; this is necessary in order to build a first-class team.
Currently the Consortium Volkswagen account with twelve marks from seven European countries:
|
Brand |
Country of origin |
Year of acquisition |
|
Audi |
Alemania |
1964 |
|
Bentley |
Reino Unido |
1998 |
|
Bugatti |
Francia |
1998 |
|
Ducati |
Italia |
2012 |
|
Lamborghini |
Italia |
1998 |
|
Maschinenfabrik Augsburg-Nürnberg SE (MAN SE) |
Alemania |
2011 |
|
Porsche |
Alemania |
2009 |
|
Scania |
Suecia |
2008 |
|
Škoda |
República Checa |
1991 |
|
Sociedad Española de Automóviles de Turismo (SEAT) |
España |
1982 |
|
Volkswagen |
Alemania |
1937 |
|
Volkswagen Vehículos Comerciales |
Alemania |
1956 |
In addition, the consortium Volkswagen is holder of the 19.9 % of the shares of Suzuki (Japan) and 90.1 % of the shares of Italdesign Giugiaro (Italy).
In accordance with the official information from the Consortium Volkswagen, operates 105 plants of production in 19 European countries as well as in more than eight countries in the Americas, Asia and Africa. It has 550.000 employees worldwide that manufacture 37.700 vehicles daily. Its vehicles are sold in 153 countries of the world.
When on January 30th 1933 Adolf Hitler is appointed chancellor of Germany, picks up the project to build a car that was accessible to the vast majority of the Germans, with the main objective to show the world that the German plants were the most competitive of all Europe, through a policy of state with a great support to the German industry. It is as well as you are responsible to Ferdinand Porsche the project of the construction of the “car of the People” (Volks wagen). Therefore, the goal of Adolf Hitler was to build the factory largest automaker in Europe, that he gave the task of looking for the ideal place for this purpose. The features that It was looking for was, in the first place that had access to a navigable waterway, in second place was necessary to take an own electric power station, in a way that could supply power to both the new factory as to the city because he believed that the factory should have its own city where will shelter to all workers and their families from the Volkswagenwerk. The location selected was the town of Fallersleben on the shores of the channel of Mittelland. Since the fourteenth century this village was part of the county of Schloss Wolfsburg, which was owned by the count Friedrich-Werner Graf von der Schulenburg.
Adolf Hitler called the car as Kdf-Wagen (Kraft durch Freude: strength through joy) and the city is named as Kdf-Stadt. However this name is only mentioned in the catalogs and between the Nazi military, as in all of Germany he was known as Volkswagen, beetle or Bettle. Although Ferdinand Porsche made the drawings and designs of the Kdf-Wagen, Adolf Hitler was the sharpened the last details of the Bettle.
It was as well as the May 28th 1937 was founded the city and the new factory, arrived more than 70,000 people from all corners of Germany to be present at the opening ceremony where since then Adolf Hitler was present mounting in a Kdf-Wagen convertible drive by Ferdinand Porsche.
At the end of the second world war, the British government took control of the factory that was totally destroyed by bombing to produce again the model beetle during the difficult years of the postwar era, however, for the year 1948 by the management of the former head of Opel, Heinrich Nordhoff ensured that the British government returned the company to the German government.
The German federal government issued shares in 1960 for the German stock market in such a way that changed the name of Volkswagenwerk Aktiengesellschaft and for the July 4th 1985 it was appointed as Volkswagen AG.
In March 1954 are arriving in Mexico the first models of Volkswagen.
In January of 1964 started operations the Volkswagen of Mexico’s company.
Construction work of the Volkswagen plant in Mexico beginning in June 1965 in the city of Puebla.
In October 1967 in the Puebla plant is constructed the first Volkswagen sedan, which is the official name given to the “vocho”, or “Bettle”.
The Volkswagen sedan has reached the amount of 1’000,000 units in September 1980.
In July 2003, almost forty years of interrupted production of the Volkswagen Sedan in the plant of Puebla, ends the worldwide manufacture of the “vocho”. Since 1946 there were manufactured 21’529,464 units.
Definitely after having reviewed the information concerning the Consortium Volkswagen makes me think that the theory of Corporate Governance is made specifically for this company. There is no doubt that lead to practice each of the theories and concepts which frame the Corporate Governance and on everything related to the formation of economic groups. Here I will tell you an anecdote, in recent days was visiting here in Puebla Hans-Martin Bühlmann. He and I went to visit the Volkswagen plant that it is found in this city and were really surprised by this vast and fascinating plant, in addition we are thankful to all the people that we dealt with and that made possible the visit to Volkswagen in Mexico, especially Thomas Karig and in particular to Donaji Baez. However, it will be possible for the Consortium Volkswagen achieved their objectives that have been raised? The will be able to achieve without any mishaps even in spite of future financial crises that could occur during the next 5 years? We will have to see…
VIPsight Europe - France
16 October 2013
Christian Dior: a reference in French code compliance!
Christian Dior, the luxury company which gathers each fall as shareholders at the prestigious Carousel of le Louvre, tends to take it easy with its compliance to the French reference code.
Proxinvest considers the eleven members of its Board as not free of potential conflicts of interest, while the company considers six of these as independent.
This is for instance the case of Ségolène Gallienne, the daughter of Albert Frère, called independent director "despite having served on the Board of Directors of Château Cheval Blanc, part of the LVMH group ", while she is also a Communication Director for Dior Fine Jewelry, and the Annual Report of the company does not specify any existing ownership links between Groupe Arnault and the Frère family Belholding Belgium a holding of the Albert Frère family, reported to hold 18.08 % in the Groupe Arnault. In addition, Delphine Arnault, the daugther of Bernard, sits on the Board of M6 chaired by Albert Frère...
We smiled reading that " Mr. Eric Guerlain should be considered, taking into account personal circumstances, as an independent member notwithstanding his membership on the Board of Directors of the Company for more than twelve years and his tenure on the Board of Guerlain, a unit of LVMH ..."
Besides Christian Dior still does not give any details on the consulting contract of € 505,716 signed between the group and its former CF0, Denis Dalibot, representative of Arnault SAS for Belgium and director of a dozen of the Arnault Group subsidiaries.
In recent years this related party agreement for consulting services was not even mentioned in the special report of related party transactions signed by reputable firms Ernst & Young and Mazars, a clear breach with the article L 225-38 of the French Code of Commerce...
We therefore can congratulate here Eric Guerlain Chairman of the Nomination and Remuneration and Audit Committee for his excellent compliance job! Also in accordance with the AFEP / MEDEF code which the company explicitly refers to, the compensations due and allocated for the year ended April 30, 2013 to the Chairman and to the CEO is proposed for a non-binding vote.
To make its recommendation, Proxinvest reviewed 52 control items in four areas: Transparency, Quantum & Structure, Alignment with Performance and Dynamics.
This first experience of "Say on Pay" should have prompted the company to a better disclosure about the remunerations paid to holding companies of the Bernard Arnault Group... The main factor for a “NO” vote is that the total amount received by Bernard Arnault taking into account its € 8 million compensation through holding companies reached a remuneration of € 11,414,039 ... far beyond the socially acceptable maximum defined by Proxinvest 240 SMIC, while the amount of the commitment made by LVMH for his complementary pension on April 30, 2013 was of € 15.7 million!
The young CEO Sydney Toledano € 1.8 million total annual compensation is much lower, but the quantitative criteria of the bonuses are not verifiable and account for only one third while another third is based on the achievement of untraceable qualitative objectives. Finally, Sidney Toledano has a non-compete clause of 24 months of gross salary in case of termination and, in the case of grants of shares, his final allocation is based on a positive trend to be observed at only one of the four criteria of your choice (current operating income, net cash from operating activities and operating investments, current operating margin Group)...
An fine luxury life…
12 October 2013
New release of the Proxinvest Governance Metrics CAC 40 rating
Based on forty-two risk factors organized into three categories (Shareholder Democracy, Board Composition , Executive Pay ) and developed from the Proxinvest principles of governance, the new Proxinvest Governance Metrics© rating published by Proxinvest provides a fresh rating of the governance in the CAC 40 index.
This rating is based on Proxinvest Corporate Governance guidelines and enables homogeneity, transparency and integrity and allows putting forward the best companies in terms of governance, in order to help responsible investors in their stock selection and the definition of their investment universe when it has been now unanimously recognized that risks associated to a poor governance can affect the companies’ financial performance.
The Proxinvest Governance Metrics ©’s methodology provides investors with a tool facilitating the integration of the risks associated to a poor governance. This tool, complementary with proxy reports and voting recommendations already delivered by Proxinvest and ECGS, can also facilitate the engagement process of investors towards investees companies identifying burning issues to be further discussed. During the conference where investors, issuers and journalists were gathered, Proxinvest disclosed a brief summary of its 2013 rating report with the best in class reaching an average Total Shareholder Return (TSR) of 3.23 % over the period 2008-2012 while the companies marked with a grade lower than the average show an average TSR of -1.03 % over the same period
On top of this ranking, Unibail-Rodamco (Real Estate) occupies the first place with a grade of A+ (256/300), rewarding its important efforts to implement and maintain good corporate governance standards for many years now.
According to Proxinvest, seven companies show a favorable coupling of positive returns over the 2008-2012 period and good governance (Air Liquide, Essilor International, Gemalto, Kering, Legrand, Technip and Unibail- Rodamco ) while twelve companies combine poor governance and negative 2008-2012 total returns for shareholder (Accor, AXA, Bouygues , Carrefour, Credit Agricole, Danone, EDF, Lafarge, Renault,STMicroelectronics and Total).(see erratum on Schneider Electric)
This Proxinvest Governance Metrics© methodology reward companies providing a healthy shareholder democracy, respecting the " one share, one vote" principle, with an open capital stock, encouraging employee share ownership independent of management, promoting the separation of powers and independent oversight within the corporate bodies, ensuring transparency, moderation and the long-term performance alignment of the remuneration policy.
Proxinvest Governance Metrics ©’s finds its originality in its approach exclusively focused on investors’ side as unfortunately, the existing codes of governance and especially the French AFEP-MEDEF code mostly set up by the companies’ managements do not address certain issues and investors’ expectations in terms of corporate governance and/or shareholder rights can sensibly differ from those of management.
For instance, Proxinvest reported three major concerns:
• First, 32.5% of the CAC 40 components opted for a dissociation of the roles of chairman and CEO.
• Second, 32.5% only of those companies have a Board made of a majority of independent members.
• Third, the managements of 5 companies out of the 40 constituting the Index are protected by anti-takeover devices (“Bons Breton”, Dutch Stichting, special French legal status of “Société en Commandite par Actions” corresponding to a partnership limited by shares), raising in the meantime the issue of registered headquarters in the Netherlands or Luxembourg as anti-takeover devices where lower shareholder rights are then observed.