In Germany's New Corporate Culture, Shareholders Make Sure Their Voice Is Heard

No longer willing to let top management call all the shots, major investors in many of Germany's top firms are demanding more of a say in how companies go about their business.

New Deutsche Bank board chairman Paul Achleitner (St. Gallen Symposium)
New Deutsche Bank board chairman Paul Achleitner (St. Gallen Symposium)
Karsten Seibel

BERLIN -- It was all over by 2 p.m. In Munich, semi-conductor manufacturer Infineon held its most harmonious shareholder assembly since it went public in 2000. Investors were full of praise for the top managers and the board. There was no trace of the tumult that marked the assembly two years ago.

At that meeting, a group of shareholders stood up to criticize board chairman Max Dietrich Kley's choice for his successor. The open opposition was something new, an unprecedented shareholder revolt that would eventually usher in a trend toward greater investor involvment.

Investors today are playing a far greater role in the way German companies are run. When they don't like something, there is no hesitation about criticizing it loudly. The days are over when big investors were at the ready to cough up fresh capital injections whenever necessary but otherwise left top management and the board to get on with it, no questions asked.

The new reality will prevail as other companies follow Infineon's lead and hold their own 2012 shareholder meetings. Deutsche Bank, Volkswagen, Metro and assorted energy companies can expect their managers will have to deal with some fairly heady attacks, and not just from the defenders of shareholders' rights or small private investors who have traditionally held forth at such gatherings, but increasingly from big investors.

Taking their shareholder rights seriously

"In the interests of our clients, we take our voting rights extremely seriously," says Ingo Speich of Union Investment, which has 170 billion euros under management. Increased attention paid to such rights is to some measure a result of the financial crisis.

When the crisis broke out, institutional investors in particular were accused of focusing too much on short-term stock performance rather than on healthy, long-term development. The subject was even taken up by the E.U. Commission in Brussels. "I consider it good practice that institutional investors adhere to so-called ‘stewardship codes," and disclose their voting policy and engagement strategy," Michel Barnier, the commissioner responsible for the internal market and services, told the Financial News in 2010.

Relevant guidelines are being worked on by the European Union, and U.N. guidelines not only recommend stronger investor engagement but also that companies take societal, social and environmental aspects of decisions into account.

But, says Speich, "when we took a stand against the RWE power company's continuing to participate in plans to build a very risky power plant abroad, we didn't do it on ideological grounds." It was a practical decision: it represented a level of risk investors weren't prepared to indulge. Speich is part of a four-person "sustainability team" that defends shareholder interests year-round with companies, and also prepares and presents motions at shareholder assemblies that reflect their concerns.

That's a role Hans-Christoph Hirt also plays. He represents investors at London-based Hermes Equity Ownership Services. His clients include more than 20 pension funds and asset managers with active assets of 100 billion euros. Hirt says that "companies today are also much more proactive with regard to their shareholders."

Words of advice for Deutsche Bank's new chairman

Hirt says that this year, for the first time, he deems it necessary to take the floor at the Deutsche Bank assembly. He wants to address the squabbling that went on for months about who should succeed CEO Josef Ackermann and the proposal to make Ackermann a board member.

And then there are all the legal cases Deutsche Bank is involved in. "Risk management is a core issue for a bank, " says Ioannis Papassavvas of Allianz Global Investors, a fund company that manages shares worth some 100 billion euros.

If Deutsche Bank's assembly thus promises to be thorny, Volkswagen's board chairman Ferdinand Piech may also find his company's annual gathering a tad uncomfortable. A Stuttgart Court of Appeals recently decided that he violated his duties as Porsche board chairman during the VW takeover. This has Papassavvas asking: "In view of the court decision, is Piech still in a position to carry out his VW mandate in a satisfactory way for investors?" Complicating the issue are billions of euros worth of suits filed by investors who feel deceived. "The closer we get to the assembly on April 19, the worse things look for Mr. Piech," he says.

Read the original article in German

Photo - St. Gallen Symposium

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What It Means When The Jews Of Germany No Longer Feel Safe

A neo-Nazi has been buried in the former grave of a Jewish musicologist Max Friedlaender – not an oversight, but a deliberate provocation. This is just one more example of antisemitism on the rise in Germany, and society's inability to respond.

At a protest against antisemitism in Berlin

Eva Marie Kogel


BERLIN — If you want to check the state of your society, there's a simple test: as the U.S. High Commissioner for Germany, John Jay McCloy, said in 1949, the touchstone for a democracy is the well-being of Jews. This litmus test is still relevant today. And it seems Germany would not pass.

Incidents are piling up. Most recently, groups of neo-Nazis from across the country traveled to a church near Berlin for the funeral of a well-known far-right figure. He was buried in the former grave of Jewish musicologist Max Friedlaender, a gravesite chosen deliberately by the right-wing extremists.

The incident at the cemetery

They intentionally chose a Jewish grave as an act of provocation, trying to gain maximum publicity for this act of desecration. And the cemetery authorities at the graveyard in Stahnsdorf fell for it. The church issued an immediate apology, calling it a "terrible mistake" and saying they "must immediately see whether and what we can undo."

There are so many incidents that get little to no media attention.

It's unfathomable that this burial was allowed to take place at all, but now the cemetery authorities need to make a decision quickly about how to put things right. Otherwise, the grave may well become a pilgrimage site for Holocaust deniers and antisemites.

The incident has garnered attention in the international press and it will live long in the memory. Like the case of singer-songwriter Gil Ofarim, who recently claimed he was subjected to antisemitic abuse at a hotel in Leipzig. Details of the crime are still being investigated. But there are so many other incidents that get little to no media attention.

Photo of the grave of Jewish musicologist Max Friedlaender

The grave of Jewish musicologist Max Friedlaender

Jens Kalaene/dpa/ZUMA

Crimes against Jews are rising

Across all parts of society, antisemitism is on the rise. Until a few years ago, Jewish life was seen as an accepted part of German society. Since the attack on the synagogue in Halle in 2019, the picture has changed: it was a bitter reminder that right-wing terror against Jewish people has a long, unbroken history in Germany.

Stories have abounded about the coronavirus crisis being a Jewish conspiracy; meanwhile, Muslim antisemitism is becoming louder and more forceful. The anti-Israel boycott movement BDS rears its head in every debate on antisemitism, just as left-wing or post-colonial thinking are part of every discussion.

Jewish life needs to be allowed to step out of the shadows.

Since 2015, the number of antisemitic crimes recorded has risen by about a third, to 2,350. But victims only report around 20% of cases. Some choose not to because they've had bad experiences with the police, others because they're afraid of the perpetrators, and still others because they just want to put it behind them. Victims clearly hold out little hope of useful reaction from the state – so crimes go unreported.

And the reality of Jewish life in Germany is a dark one. Sociologists say that Jewish children are living out their "identity under siege." What impact does it have on them when they can only go to nursery under police protection? Or when they hear Holocaust jokes at school?

Germany needs to take its antisemitism seriously

This shows that the country of commemorative services and "stumbling blocks" placed in sidewalks as a memorial to victims of the Nazis has lost its moral compass. To make it point true north again, antisemitism needs to be documented from the perspective of those affected, making it visible to the non-Jewish population. And Jewish life needs to be allowed to step out of the shadows.

That is the first thing. The second is that we need to talk about specifically German forms of antisemitism. For example, the fact that in no other EU country are Jewish people so often confronted about the Israeli government's policies (according to a survey, 41% of German Jews have experienced this, while the EU average is 28%). Projecting the old antisemitism onto the state of Israel offers people a more comfortable target for their arguments.

Our society needs to have more conversations about antisemitism. The test of German democracy, as McCloy called it, starts with taking these concerns seriously and talking about them. We need to have these conversations because it affects all of us. It's about saving our democracy. Before it's too late.

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