German Executives To Disclose Their Incomes - Shareholders Get More Rights

Monday, July 11, 2005

Executives of Germany's 1,000 biggest public companies will have to disclose their incomes from 2006 onwards. The German Bundesrat, the lower house of parliament, today ratified a law that will sanction those companies who refuse to comply with fines of up to 50,000 Euros per executive. The disclosure rules require companies to detail executives' salaries including all items such as stock options, material and pension benefits. Severance packages will have to be disclosed in the future as well. Currently only 20 of the 30 companies included in the German DAX index disclose managers pay. BMW, DaimlerChrysler, Porsche, BASF and Munich Re so far refused to publish these numbers.
The Bundesrat also strenghtened shareholders rights by adapting another law. Damage claims against the supervisory board or the top management will require only the backing of one percent or 100,000 Euros of issued share capital. The threshold lay at 5 percent until now. On the other hand shareholders will not be able to block resolutions of the AGM with drawn out lawsuits anymore. In the past individual shareholders often blocked AGM resolutions on technical reasons in order to extort compensation.
Will Volkswagen Be The First In Court?
It will be interesting to see whether shareholders will take on Volkswagen which is entangled in a scandal with allegations that executives paid expenses for the services of Brazilian prostitutes via company accounts. It is also alleged that the management board bought the complicity of the work council with fun trips to Brazil on the company's executive jets.
Peter Hartz, responsible for staff affairs on the management board and the mind behind Germany's revised unemployment payments system that carries his name, offered his resignation last Friday. The supervisory board has not yet decided on a meeting where his offer will be discussed. Hartz is alleged to have signed off the payments regarding the amorous services and having enjoyed them himself. His company biography does not elaborate on his marital status.
Volkswagen also faces other allegations of corruption regarding its Czech subsidiary Skoda where some managers have stepped down already.


Wikinvest Wire