Aareal, Bayer, Commerzbank – the ABC of pressing governance issues


Dear readers of GermanBoardNews,

“Beep, beep, beep, we all love each other”: Nationwide falling incidence and rising vaccination figures, the Eurovision Song Contest and the Whitsun Festival with open holiday resorts and outdoor gastronomy. Who wants to burden themselves with negative or critical thoughts? It’s all for naught anyway, isn’t it? Maybe, but it’s exciting, what’s being offered on the stage of this year’s HV season. And it raises pressing questions.

Let’s start with Aareal Bank, which I already addressed in April: Activist investor Petrus Advisors is messing with the Supervisory Board, but can’t get its way. After the AGM, the old leadership team is the new one – but the problems remain. Now one could say that Petrus has at least prevailed with regard to the remuneration of the Management Board: After all, 63 percent voted against manager salaries, so the Supervisory Board must now follow up.

What gets me, though, is when activists started complaining about lavish executive salaries. Is this a change of heart or, after all, just waving a flag in the direction of ESG-driven institutional investors – some kind of friendly offer to forge alliances? If it was meant to be, it only started to work: Large funds and proxy advisors voted against Aareal manager salaries, but clearly opposed Petrus on the key issue of supervisory board appointments.

Coba: Who has a say in the selection of supervisory board candidates?

The next question: What does the hound of hell Cerberus have that the guardian of heaven Petrus does not? At Commerzbank, which is in the sights of the activist investor called Cerberus, the supervisory board – unlike at Aareal Bank – has just been shaken up. You have to go back very far in the history of German corporate governance before you come across a comparable situation: Five shareholder representatives resigned from their supervisory board mandates within a very short period of time.

Whether and to what extent Cerberus was able to influence the selection of the new members (see our section “New members of the supervisory board”) or whether major shareholder Bund pushed through its candidates is known only to those involved. In any case, the Supervisory Board is now headed by a sympathetic older gentleman, and Wirecard’s auditor EY has been allowed to get to work again. It is striking that one of the new supervisory board members is now a long-time EY employee. Fantastic approval ratings of up to 99.9% at the annual general meeting. And all this with the German government as shareholder, represented by the Federal Ministry of Finance under the leadership of Olaf Scholz, one of the key players in the Wirecard investigation committee.

Bayer: How do you judge the performance of supervisory board members in retrospect?

Looking ahead to Bayer’s Annual Stockholders’ Meeting, in turn, the question arises as to who is actually assuming responsibility now that Werner Wenning has taken his hat off. After all, the long-serving Chairman of the Board of Management and Supervisory Board is the true originator of the glyphosate drama: Wenning brought the current CEO Werner Baumann on board with his Monsanto project.

If no consequences are threatened, this fuels the impression that a supervisory board is a kind of merry-go-round in which you get on, ride along and get off again without anything happening. And that is supposed to be corporate governance? Good corporate governance should be measurable, even if it is difficult. In school, there were grades for performance. In real life there is no such thing anymore?

Enough food for thought for the Whitsun weekend, which is all about falling incidences. Still, stay safe – and healthy.

Sincerely yours,

Yours, Peter H. Dehnen