Buhlmann's Corner
What is the point of Corporate Governance?
The sense of corporate governance or best practice is certainly not being constrained within a labyrinth of rigid rules and regulations that has a fabricated answer ready and waiting for every occasion, such as ‘if something goes wrong in the new steelworks in Brazil, I’ll get rid of a couple of board members and that’ll set things straight’.
No, that won’t work. There are ways of getting round any regulation, even the most complex. René Obermann, who is on the point of leaving the helm of Telekom Deutschland, is taking the place of Beatrice Weder di Mauro on the supervisory board of Thyssen, and he seems the right “woman” for the job. Networking is not to be underestimated as a factor in decision-making, and knowing how it works is also a part of corporate governance.
We all know that a ‘just resigned’ CEO ought to go through the regular cooling-off process before taking a seat on another supervisory board, so it is good that there is a law against it, only … with Linde it’s different. It is most unusual for a CEO to reorganise his company and make it grow so convincingly to success, bypassing the market number one without leaving social casualties. There are many reasons for Professor Reitzle’s immediate appointment to the supervisory board of Linde to be advantageous to the company and hence to its shareholders, not least the personality of the man himself. A discreet, reserved Reitzle is not without charm, but a fiery Reitzle is a rare asset indeed, as he also showed in Continental.
A man like Ferdinand Piech could only smile at such a question like that (assuming he is still in possession of his sense of irony). “That’s the rule ... and I’m the exception that proves it” is one of his favourite sayings. He is no doubt laughing up his sleeve at the lack of understanding and knowledge about how things work in the verdict handed down by the European Court in the case of The European Commission vs The Federal Republic of Germany. He who nothing knows should nothing decide. Only the Frankfurter Allgemeine Zeitung gave a proper name to the situation, namely the right of designation on Germany’s part to the supervisory board of Volkswagen. A similar example is the representation of Krupp Stiftung on the supervisory board of the precarious ThysssenKrupp.
It really is true. Good corporate governance needs life; life that rules can be adapted to and rules that life can be adapted to. Responsibility instead of blindly sticking to procedure.
The supervisory board of Daimler is in need of change, but can it only be done during in one-on-one back-shop trysts? Is it right that certain shareholders (in this case Blackrock) rake in 8.5 thousand million from the Bank of America and 5.8 thousand million from J.P. Morgan (not only do the numbers mirror each other but they were made public that way) because of management errors, so impoverishing overall shareholder wealth? Is it right that the members of the Rhön Klinikum supervisory board had to drink the bitter cup of mismanagement for years and then, when the time came to set things right, they all resigned en masse? Let us proceed no further because the simplistic verdict handed down by the European Court turned two blind eyes to this hypothetical consequence and, like those German CEOs completely out of touch with reality, are spending their third term trying to get onto “their” supervisory board.
The best Practice of Corporate Governance is a combination of common sense rules and common sense conduct that can adapt itself to real life. The user is required to respond to it. I am curious as to how the much publicized 2014 “board evaluation” will turn out.
Last Tuesday Barack Obama said that he likes taking walks in the rain. Well, not to me personally he didn’t, but during a mobile telephone conversation – and we all know that it’s not nice to eavesdrop on friends’ telephone conversations.