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