Deutsche Bank’s non-executive board is facing a protest from an influential activist investor over its pay policies and turbulent succession planning in another sign of how global investors are challenging bank directors.
An investor group led by Hermes, the UK fund manager, is asking shareholders not to vote for an annual meeting resolution approving the supervisory board’s performance for the past year. The protest will come as a setback for Clemens Börsig, the departing chairman, who will be replaced by Paul Achleitner at the meeting next month.
The group of 27 pension and investment funds represented by Hermes holds only 0.5 per cent of the bank’s shares, but the fund manager has made its name in Germany by forcing through changes at some of the country’s largest companies with similarly small holdings. Two years ago, it spearheaded a shareholder rebellion at chipmaker Infineon.
Mr Börsig would comment “as appropriate” on the Hermes proposal at the annual meeting, Deutsche Bank said.
The investor group is particularly angry that Europe’s largest bank by assets did not give shareholders the opportunity to vote on its remuneration report for last year. The bank’s move followed a rejection by 42 per cent of shareholders of the pay system the year before, the second worst voting result on such a matter in the German blue-chip Dax index. The bank has put the vote on executive pay back on to the agenda for the AGM.
A vote against the supervisory board’s performance is not binding, but it would probably force the bank to concede to more changes on the 20-strong board. Mr Börsig will be one of three non-executive directors to step down at the meeting.
“We want to give Mr Achleitner a clear mandate to undertake a thorough review of corporate governance and eventually push through additional changes on the supervisory board,” said Hans-Christoph Hirt, Hermes’ head of European corporate governance. In its motion, Hermes criticises the supervisory board for its handling of a leadership transition that will see Anshu Jain and Jürgen Fitschen replace Josef Ackermann as chief executive. Mr Ackermann last year said he would seek to become supervisory board chairman, only to later withdraw the proposal.
VIP, a German shareholder advisory group, on Monday submitted the same counterproposal, arguing that the supervisory board had failed to show strong enough leadership particularly in its search for new executive board members.
The Hermes protest comes amid wider signs of bank investor discontent. In the UK, Barclays on Friday faces the prospect of investor criticism of a £25m pay package for Bob Diamond, chief executive. In the US last week, shareholders refused to back a $15m pay package for Vikram Pandit, Citigroup’s chief.