Hermes votes against Volkswagen board

VW has proposed re-electing its largest indirect shareholder to the supervisory board at the age of 75

Hermes Investment Management’s engagement unit Hermes EOS voted against Volkswagen’s directors at the company’s annual general meeting, amid concerns about its proposed supervisory board.

At the AGM on Tuesday (14 May), representatives from Hermes EOS recommended that investors vote against the candidates proposed for election to the supervisory board due to corporate governance concerns.

In a statement released on the morning of the meeting, head of Hemes EOS, Hans-Christoph Hirt, said “we still have significant concerns about Volkswagen’s governance structure, particularly the composition of its supervisory board.”

While Hirt said that while Hermes EOS was positive on VW’s strategy to become a global leader in electric vehicles and generally supportive of its commitment to climate protection, it feels that the company’s choice of candidates for the supervisory board was “disappointing”.

“Volkswagen has nominated Hessa Sultan Al-Jaber, Ferdinand Oliver Porsche, and Hans Michel Piëch for election to its supervisory board. We recommend voting against all three of these nominations as we consider them to be non-independent.

“The election of these candidates will result in a board with almost zero independent representation and a lack of sufficient sector and market experience amongst its members.”

In a Volkswagen investor update released prior to the AGM, the company said the decision to propose Hans Michel Piëch for re-election was “after detailed deliberation.” The company also acknowledged that he had reached the “maximum age of 75 years permitted under the Supervisory Board’s rules of procedure on the date of the election.” Hans Michel Piëch is indirectly the largest individual shareholder of Volkswagen Aktiengesellschaft.

The Hermes EOS boss says Volkswagen’s supervisory board has “missed a chance” to resolve “obvious gaps in experience” which would enable the business to achieve its ambitions of becoming a global leader in electric vehicles in critical markets.

“It has been almost four years since the emissions scandal broke and we urgently need to see tangible and credible evidence of improving governance and culture,” he said.

“We urge the company to conduct and report on an externally-facilitated supervisory board evaluation to identify experience and skills gaps and confirm the need for more independent expertise.”

Investors can watch coverage of the AGM in Berlin, here.