Scandals, concerns over control, and heavy losses at several large European firms have led some investors this year to consider voting against resolutions to ratify board actions.
Shareholders at many European companies are asked each year to retroactively “discharge,” or ratify the actions of, the management and supervisory boards and to indemnify directors against loss or legal action. At most firms, these management proposals are considered routine and pass with minimal resistance. However, at companies like Germany’s Volkswagen and Siemens, and Switzerland’s UBS, shareowners are expressing a greater reluctance this year to sign off on directors’ past decisions.
Wolfsburg-based Volkswagen likely will see resistance to its discharge resolutions and board nominees at its April 24 annual meeting. In October, the European High Court of Justice struck down a 47-year-old German law that capped investor voting rights in German companies at 20 percent regardless of equity stake. Dubbed the “Volkswagen Law,” the measure was primarily intended to prevent a hostile takeover of Volkswagen, Europe’s largest automaker. The law also imposed an 80 percent supermajority requirement to pass proposals at shareholder meetings, and gave the State of Lower Saxony--which owns a 20.1 percent stake in Volkswagen--the right to name two directors to the supervisory board.
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