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Benedicte Hautefort’s Column

Shareholder democracy under pressure in Germany

Board members are under pressure in Germany. Shareholder support to their election has dropped from 93% to 89%, compared to above 95% in all the other countries ; participation is low, at 60%, vs 78% in average elsewhere. In other words, legitimacy is at stake.

Why ? According to Scalens analysis of shareholder questions, German shareholder disapproval roots in the fact that their board members do not focus enough on gender diversity, more sustainability-related criteria in executive compensation, and that they lack of detailed responsiveness to shareholder concerns. Moreover, german board members tend to dry some sessions – 10 prominent members of the DAX attended less than 75%, some of them less than 50% of the board meetings last year, an unheard-of situation in the other countries. The situation becomes more complicated when the figures show that German board members are better paid than their peers.

This is being a little hasty in condemning too quickly German-style governance. DAX issuers reach 89% of independence, when the other countries are between 50 and 66%. They have massively this year voted for virtual AGM possibility, with compulsory webcast, when most of the other european countries are still on a physical meeting, with votes results released often weeks after the event – we Scalens attending every event, we know how complicated it can be for a shareholder. Thank you Germans.

There’s no secret about what’s in store for German board members in 2024: if they want to win back the love of their shareholders, Say-on-Climate is the core topic.

When tens of Say-on-Climate are disputed all over the worlds, only one Climate resolution has been posted in Germany, and this was submitted by shareholders – at RWE in 2022. The resolution gained less than 3% support, as it was also the symbolic ground for a larger proxy fight. Of course, the Ukraine war, the energy crisis and the restarting of coal-fired power stations is causing indicators to fall. We expect to see 10, 12, maybe 15 German corporates submitting Climate strategy to vote next year. Thus emphasing the good sides of shareholder democracy « the german way 

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