Buhlmann's Corner
The people rise up, but who will give them the tools?
Two thirds of Swiss voters want to bar the expropriation of shareholders by unspeakable executive salaries - but just how should the bar look, and will it have an impact on the nation as an industrial or banking location?
A quarter of Italian voters gave a comedian political power, and no one who wants to dine with the Italian President Napolitano or be a friend to the Italians dare call him that - but just why does the grotesque face in the mirror not please?
A tenth of the Austrian voters (so far only in Lower Austria and Carinthia) vote for slogans like “let us use our money for our senior citizens instead of for banks, speculators and bankrupt states in the South” that Frank Stronach, Magna’s 70-year- old founder and emigration returnee, suggests to them - just Pirates, and all with copied PhDs (in Germany (still) part of their names)?
When the outcome of Thomas Minder’s rip-off initiative was announced, the Financial Times (Europe, 4 March 2013) headlined “Referendum follows Europe-wide move” - even though it was only about Switzerland. The Handelsblatt had a problem with the simplistic notion and banned it from the headlines. On 25 February their headline was “The rip-off,” a report on a spectacular confession from among the so-called Predatory Shareholders in connection with the civil dispute between them and a probably just as predatory law firm in Munich.
Yet Germany has after all offered shining examples. A German top executive waived the €20 million (or more) salary “due to him” (who, pray, irresponsibly settled that?) for 360 days (or less) without then selling one more Golf. Should he get a medal, or just compassionate understanding because he must now be starving, getting along on only about 14 million?
The rounding error is the average salary of an assembly-line worker or one at a supplier, or at 220 days and 10 hours, an hourly salary of the list price of a Volkswagen up! (a city car) - with no discount, bonus or second sunshade. Whom should the people hit at here - the up! purchase price?
How many tomatoes must mutate into ketchup is hard to calculate – but what the 64-year-old Heinz boss William Johnson gets as a golden parachute after 15 years of service, estimated in The Washington Post at USD 212.7 million, represents approximately 6.000 ketchup bottles additionally for each of his working hours, as a golden goodbye.
When an outgoing executive “parks” the amounts that hide his severance pay for two years - as was rumoured in the Novartis case - then I call that robbery and fraud, and accuse not so much the accountant as the auditor and the supervisory-board members. If they previously “knew nothing”, then they now have to clarify that instead of sleeping on the pro rata reserves. But will that be enough?
If random majorities in general meetings are a bigger issue than voting majorities, there is indeed something a bit sick in the system. If everyone just waits for the Others to pay attention and explain (free-rider behaviour, or in German running-board rider) then it remains as it is today, and the people get stood up. Why do pensioners not ask their (own) Pension Fund: what are you doing with my pension capital against cheaters? Why does no one asks his church how, with the parked investment capital, ethics and decency can get a hearing?
There are organizations all over the world like PRI (Principles of Responsible Investment - born out of the UN, so UNPRI) and ICGN (Institutional Corporate Governance Network), which last week met in the premises of the Milan Stock Exchange. They meet as old friends, repeating once again “here and now” what has already been said elsewhere and calling hello and goodbye to each other, and the caravan moves on - but does not go past any general meeting, still less stop there.
ICGN now claims to pool 900 investors with 29 trillion USD; PRI is quoted at 25 trillion USD of “assets under management”. Although there is undoubtedly double counting between the organizations, where are these assets as responsible votes for corporate governance and ESG (environmental, social and ‘corporate’ governance) in voting at general meetings - at ThyssenKrupp in 2013 on the discharge issue, at MAN (with half attendance in 2010 at the supervisory-board elections) or Novartis, with only 20% No-Go to the compensation? Must we wait for Monte dei Paschi di Siena or jump out the window?
Yes, peoples rise up and many citizens cry out – but where is the filter funnel, the magnifying glass? Because the hammer (and chisel) are ready, and no one really needs sickles (or lawnmowers).