European Corporate Governance:

The Investors’ View

Corporate Governance in Europe, focussing on Germany

Europe post-crisis continent – post?

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• EU aspects

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• VIP eV Professional AGM - Proxy Service- direct involvement in Q & A

- direct voting

- direct control of votes

- 2,200 AGMs/year

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Club of Florence International Institute for Good Corporate Governance- non-profit organization

- CG- think-tank

- seminars

• Regular personal AGM-Presence and Voting since 1975

• Active participation in the international CG -Discussion since 1990

• Professional physical AGM-Presence and VIP proxy voting since 2000

• 2011: 9.9 bn € Assets under Voting

Quorum of present capital in DAX

60.95

56.3654.85

53.03

51.23

49.14

47.29

44.58

49.88

56.50

58.60 58.38

56.39

58.20

40

45

50

55

60

65

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Entwicklung (Durchschnitt DAX®)Development (Average DAX ®)

DAX®30 Present Capital, Development 2010/201157.6

3

45.1

4

45.4

6

49.0

0

69.4

9

74.5

5

47.4

1

43.0

6

34.0

0

42.9

2

52.7

8

64.7

4

62.1

0

41.9

2 75.8

2

79.9

0

72.2

5

86.0

8

52.8

2

54.7

2

64.9

1

64.8

2

56.6

0

52.0

3

45.4

0

52.6

1

65.5

0

43.7

2

58.4

7

Adid

as

Alli

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Com

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VW

2011

(a)

58,20

46.3

7

37.1

0

52.0

2

49.5

9

73.3

2

77.4

8

48.7

2

40.2

9

35.0

8

45.1

0

48.0

0

67.6

0

58.7

0

43.7

3

87.8

6

74.3

6

69.9

6

82.4

4

50.8

9

56.2

3

62.9

9

60.7

1

58.2

1

81.8

5

40.0

8

53.1

5

56.8

5

46,4

7

55.0

4

Adid

as

Alli

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BA

SF

Baye

r

Beie

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BM

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Com

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bank

Daim

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Deuts

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ank

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2010

(a) 54,06

Present capital 2011

Present capital 2010

AGM-Culture in Europe

• Different national rules and roles

• Complexity of cross-border voting

• Proxy solicitor

CAPITAL IN AGM

• France 64.2 (61.6) %

• Suisse 53.5 (50.3) %

• Spain (attendance fee) – up to 103%

• AGM - Culture in Germany

• German Corporate Governance Code– Commission

– CG legality /-transparency

– Comply or Explain

– 2 tier structure /co-determination

• Agenda of the AGM

– Presentation

– Dividend

– Discharges

– Auditor

– By-laws / supervisory board

Q & A - Session• Gender balance / men quota

• Say on Pay

• Authorized capital

• Board elections

• Separation of CEO /Chair

• Economic situation

• Corporate Governance in general

Curiosities and other issues

• National shareholders versus global NGOs

• Purpose of sustainability - ESG, CDP, CSR, GRI

• Sharing of principles - ICGN, UN-PRI, reco.

• Transparency of voting processes

• SEC-discussion

• Custody-chain /service-provider

• example SoP

– Born in USA through post-dated options

– Consultative: G, BE, No, UK

– No rule at all: CH / 45% consultative vote

– Binding: DK, NL, SE, IT

• Acting in concert

• Lufthansa 2003

– 12/2002 closed airport by firemen walk-out

– AGM 2003 VIP counter-motion >60%

– Deputy chair non-discharged

– Deputy chair 2011 still board member

– Union-leader in codetermination

• ThyssenKrupp 2007

– Dr. Gerhard Cromme, chair

– Right of designation / secondment

– 24.9% attending capital

– 4/5 minority capital inline with VIP counter-motion

– Terms of voting discloseded/ fixed at 5 p.m. CET

– Krupp privilege – no change by AGM possible

– Result: DAX tool to German Corp. stopped

• Infineon 2010

– 56% in favor to minority proposal

– 27% followers after ballot-transformation

– In 2011 : chairman replacement in line with

counter motion

• 2011 Germany

– RWE

• HERMES and VIP: 29% no-votes

– METRO

• Forgotten voting-box, no change in result

– MAN

• 51% abstain in board election

• 2011 non-German– IBERDROLA

• More votes per custodian

– Vodafone

• No entrance after „stille Post“» “Chinese whispers”

» Amer. „telephone“

– Swiss

• SoP urging in lettering, media and Q&A

– France

• Double compensation – RENAULT

• Separation chair and CEO

– Italy

• Golden share in ENI, Enel & Co

• Highlight of European AGMs 2011

• TNT company split

• Hochtief (owner of Leighton Holdings) ACS merger

• BP versus TransOcean

• BritishSkyBroadcasting (UK) / NewsCorp (US)

• “As the main arena for communication between shareholders, management and the Board of Directors, the AGM is a very important element of corporate governance. AGMs should provide an opportunity for some discussion of substance.”

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• Quoted from :

– South-European CG-codex

– North-European CG-codex

– Bangladesh CG-codex

– Brazilian corporate law

– SEC-rule in Dodd-Frank Act

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• Hans-Martin Buhlmann

HMBuhlmann@VIP-cg.com

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