Boardroom events challenge Germany's corporate governance

11 February 2010

Many institutional investors are hopeful that recent developments in the boardrooms of major German companies could signal a shift in the nation's approach to corporate governance.

The conflict between what the Wall Street Journal describes as the "clubby culture" of German organisations and the growing activism of shareholders has been characterised by events at Infineon Technologies, a chip manufacturer.

With current chairman Max Dietrich Kley preparing to step down at Infineon, the company has proposed fellow board chairman Klaus Wucherer, a long-standing non-executive director, as his replacement.

However, this choice has been fiercely opposed by a group of international and domestic shareholders, led by the UK-based fund manager Hermes.

Last month, head of German equities at DWS Henning Gebhardt told the Financial Times why the dispute is expected to have major implications for corporate governance in Germany.

"In future, supervisory boards will have to think twice whom they propose as chairman. They will more likely consult shareholders during the selection process," he explained.

His comments echo those of Hans-Ulrich Wilsing, a lawyer specialising in corporate governance, who told the Wall Street Journal that the shareholder revolt will have "a definite impact on the future discussion of corporate governance questions in Germany".