Procedures for voting at the upcoming AGM of Volkswagen AG have raised a few eyebrows at Manifest today (Tuesday 12th April).
Unashamedly putting the Shareholders’ Rights Directive (SRD) record back on the record player, and turning the volume up to 11, (and just checking it wasn’t April 1st again) we were somewhat surprised, to say the least, to find that foreign shareholders of VW’s shares are still required to physically sign a proxy form in order to appoint and instruct a proxy to vote their shares.
This, despite Article 11 of the SRD clearly stating that “Member States … shall ensure that every company offers to its shareholders at least one effective method of notification by electronic means.” We fail to see how this meeting stands up to that requirement, meaning that either German company law has not transposed the full meaning of the SRD or that VW is not following due process.
Furthermore, ISS are giving shareholders a whole 3 clear working days to get the process done, with signed forms being circulated after 6pm today (12th April) and having to be returned to Germany, signed by the shareholder, by Monday 18th. Quite a tight deadline for a meeting that’s not happening until the 3rd May, and for which the local market deadline for receipt of proxy instructions is not until the 29th April. Broadridge users are only 1 day better off.
Stepping aside from technical points about the difference between share (asset) owner and shareholder (technically, the last custodian bank in the chain) we’re still deciding whether this process might be achievable if we were to have the services of loveable VW Beetle “Herbie” who could quite easily whizz off to the four corners of the earth and back in the mere 3 clear working days available. It would certinly make for a good film storyboard.
However, the smart money in our office is now leaning more towards needing a Delorean DMC12. That’s because countermotions for the meeting will only be published AFTER the 18th April, leaving shareholders who have appointed a proxy via the above process – which has to be completed on or before the same date – powerless to vote on any countermotions at all without the aid of a time machine.
This is not shareholder democracy in the 21st Century as we know it. Requirements for voting are meant to be no more stringent than is necessary “to ensure the identification of the client, or the possibility of verifying the content of voting instructions, respectively, and is proportionate to achieving those objectives” (SRD, Article 13).
These requirements seem to go well beyond necessary into the realms of actual and very real disenfranchisement.
Last Updated: 12 April 2011
As always, Chairman (and now indirectly, principal shareholder) Piëch is not only insufferably autocratic; he leaves absolutely nothing to chance. Opposition to his control is never even allowed a voice, and he is apparently fond of citing the ‘support’ he receives from 90% and more of VW minority shareholders (e.g., on the discharge of the supervisory board.) After all, it’s a ‘routine’ resolution. . . .
His whole career has been a textbook case of what can happen when shareholders sit on their rights. When there was an opportunity to clip his wings when he moved from CEO to Chairman five years ago, a major American shareholder declined to get involved, saying it would ‘wait and see’ what he did in his new role. By the next year, it was too late to do anything. Then he made a move on MAN, gradually increasing VW’s stake through market purchases without launching a bid, and ran for the board with two VW colleagues as well. Upon election, he was made Chairman, and proceeded to fire those executives who dared to oppose him. Again, there were numerous fence-sitters who declined to do anything until it was too late. Now, MAN will probably suffer a sub-market bid, followed by more market purchases on the part of VW. Some people never learn, or perhaps they don’t want to.