Activists draw blood in fight for
By Richard Milne in London and
Daniel Schäfer in,Frankfurt
Published: January 21 2010 19:52
| Last updated: January 21 2010 19:52
Investors agitating for change at the top of
Infineon yesterday claimed an important victory for corporate governance in
Germany when they forced the chipmaker's chairman-designate to promise to
step down early.
The climbdown represents a significant moment
in German corporate governance as Infineon caved in to the demands of
foreign shareholders led by Hermes, the UK activist fund, for a new start on
the supervisory board.
Klaus Wucherer, Infineon's choice for
chairman and a current non-executive director at the struggling chipmaker,
offered to serve only one year instead of five if elected as chairman.
The offer was the latest round in the first
big proxy fight in Germany led by institutional investors before Infineon's
annual meeting next month.
Hans Hirt, Hermes' head of European corporate
governance, welcomed Mr Wucherer's offer but said the investors would carry
on the fight to ensure that their candidate - Willi Berchtold, the finance
director of one of Germany's largest private companies - gained a seat on
Infineon's board at the annual meeting.
"Any compromise has to involve him becoming a
supervisory board member," he said.
Hermes' campaign received a further boost
yesterday as Glass Lewis, the investor advisory company, added its support
for Mr Berchtold and against Mr Wucherer, joining the similar recommendation
of RiskMetrics . Together the two groups are followed by significant numbers
of shareholders, often a third or more of shareholders at annual meetings.
No shareholder has publicly backed Mr
Wucherer but the chairman-designate told the Financial Times: "I had very
positive feedback from every investor I have spoken to. But there has been
the danger that it would become a tight race - regardless of who will win."
Mr Wucherer wants to use the year to lead a
dialogue with shareholders to find a new chairman. He warned that support
inside Infineon for Mr Berchtold was weak and that he could not expect to
become chairman: "The chairman needs the support not only of the
shareholders but also of the supervisory board. I have signals that the
supervisory board does not support Mr Berchtold."
Shareholders can nominate board members
but,in Germany, the members of the supervisory board itself choose the
chairman. Mr Hirt said more discussions "cannot be the solution" and warned
that Mr Wucherer serving just one year would lead to "a lame-duck chairman,
which will cause uncertainty at the company".
The fight is a novelty in Germany and
suggests that foreign shareholders, supported by big German funds such as
DWS, are becoming more assertive in their dealings with companies.