Buhlmann's Corner

Germany, where are your thinkers?

Internationally, Germany is switched off and the national government revolves around the River Spree. According to this “political leadership,” ethical quality among corporate executives is limited to a single individual. Though there are unambiguously scintillating members, other than Hambrecht there are no practitioners or economists on the so-called German Ethics Commission for consideration of future energy policy, so that the government cannot be blamed.

Granted, sometimes business is not very farsighted either. We can see this at the otherwise exemplary Deutsche Bank. Hadn’t the last shareholder meeting, by 60 percent, expressed an opinion clearly critical of the remuneration model? After all, more than two-fifths of the voting shareholders had said no to the proposal formulated by the Supervisory Board. True, the law rescues the members; it says that a German shareholder opinion is only a recommendation. But shareholders don’t like being shut out.

It has already been said and written that the Supervisory Board ought at least to make amends and that there is a need for clarification vis-à-vis the owners. Nevertheless, the Supervisory Board tried last month to dodge the vote, without comment or time limit. The SoP (say-on-pay) issue was not on the agenda – that must not be repeated in 2012. Not only ISS (the renamed Risk Metrics) but Hermes too have told Deutsche Bank in no uncertain fashion that such behaviour in 2012 will logically lead to the question of discharge or even to withdrawal of shareholder confidence in the Supervisory Board – Glass Lewis already refused discharge in 2011. Now you may well ask: is it an opportunity or a problem for a Supervisory Board member to get a second black mark on his copybook?

The Supervisory Board has, without any actual need but with great intensity, allowed the question of succession to the board chairmanship to fall like an all-embracing shadow over the only internationally significant bank without government support needs in the confidence crisis in 2009 and thereafter. It could offer neither a clear concept nor a solution mechanism for this; it said only: “there is a transparent process and the predecessor is involved.” The process is indeed so transparent that outside the Supervisory Board no outlines are visible; and that a board should influence succession to itself is as common as it is against all rules of good corporate governance.

Maybe it’s a sign that the Praktiker AGM, shortly after the Deutsche Bank SoP vote, voted consistently, with 78 percent opposed – the first message from the company announced the management still winning the vote (honi soit qui mal y pense). Now a small-cap has a chance to show the big Deutsche Bank what one ought to do with democratic shareholder votes. It is to be hoped that the positions vis-à-vis the Deutsche Bank will not get blurred in eleven months. Courage is called for, my dear Supervisory Board members, as again with the vote at the Fraport AGM, where they could vote, but preferred to leave the determination of the Supervisory Board up to the judge. The solution took only a daring shareholder motion, but then it turned out that it really does work and actually does not hurt – decent corporate governance.