General meetings: A praise of indirect shareholder democracy


More and more often, shareholders refuse to grant discharge to those responsible: Bayer CEO Werner Baumann was met at the end of April, and next week Deutsche Bank’s management team will have to tremble. The trend is fuelling a fundamental debate about our corporate governance system: critics believe it is unacceptable for voting defeats to remain without consequences – and are therefore calling for a direct “shareholder democracy”. We consider this to be highly dangerous: If investors can not only warn managers not to relieve their workload but can also vote them out, long-term personnel and strategic planning becomes almost impossible.

Do capitalism critics strengthen shareholder value capitalists?

In addition, governance democrats should consider: Investors pursue their own, often short-term interests. If we give them more power, it would be a steep step for activist shareholders who want rapid price increases or who want generous dividends for their approval (at the expense of future investments). It is therefore clear to us that anyone who demands shareholder democracy in the style of a capitalism critic is strengthening shareholder value capitalists of all people. Supervisory boards, on the other hand, are committed to the entire company with all its stakeholders – and thus guarantee sustainable strategies if the committee members take their job seriously. Instead of asking the system question, we should therefore push ahead with the professionalisation of supervisory boards.