Gulf News

Hermes is putting pressure on VW

Investor takes unusual step of asking shareholde­rs not to discharge chief executive

- BY RICHARD MILNE

Hermes, the influentia­l UK activist investor, has tabled a counter-motion highly critical of Volkswagen’s supervisor­y board chairman to ensure there will be discussion at the carmaker’s annual meeting later this month of what it sees as one of the worst corporate governance situations in recent German history.

Mark Anson, Hermes’ new chief executive, took the unusual step of personally signing the motion that asks shareholde­rs to withhold their discharge of Ferdinand Piëch, VW chairman. The failure of shareholde­rs to discharge, or give their approval to, Piëch for fulfilling his duties in the past year would be highly embarrassi­ng for the chairman.

Piëch’s role is particular­ly controvers­ial as he is a controllin­g shareholde­r at Porsche, which holds 31 per cent of VW and has launched a low-ball takeover offer for its larger rival. Hermes criticises Piëch above all for his role in ousting Bernd Pischetsri­eder as chief executive last year, only six months after giving him a new contract.

Little chance of success

The motion has little chance of success as both Porsche and the state of Lower Saxony, which holds 20.5 per cent of VW, have

pledged their support to Piëch staying as chairman. Large German funds are also intending to stay away from the annual meeting on April 19 as they believe little is to be gained by speaking out.

But privately many investors as well as German businessme­n believe that VW is setting a highly damaging example in corporate governance. Ger- hard Cromme, the head of Germany’s corporate governance commission, resigned from VW’s board last year to protest against Piëch’s behaviour.

Hermes’ move is designed to give support to the independen­t directors on the board who are critical of Piëch such as Christian Wulff, Lower Saxony’s premier, and Heinrich von Pierer, Siemens’ chairman.

Porsche role

Citing the role of Porsche and Piëch’s role in certain board decisions, the Hermes motion says: “All this has further undermined investors’ trust in corporate governance by Volkswagen.”

Hermes is also likely to ask for more details about a special committee of the board, designed to discuss potential conflicts of interest between Porsche and VW.

VW, which declined to comment before its official response to the countermot­ion is published this week, has underlined its strong share performanc­e since last summer. But most of the largest internatio­nal investors have sold their shares and Hermes believes much of the share price rise is due to Porsche buying 31 per cent and the resulting takeover speculatio­n.

 ?? NIÑO JOSE HEREDIA/Gulf News ??
NIÑO JOSE HEREDIA/Gulf News

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