2024 Germany’s DAX AGM Season Review – Key Takeaways
For the German large-cap index (“DAX”) Alliance Advisors has analyzed all available voting results for AGMs held between 1 January 2024 until 31 July 2024, for all cases where also the recommendations from ISS and Glass Lewis were available. Where applicable, we also excluded non-Germany incorporated companies, as the voting guidelines and expectations from investors and proxy advisors can be different.
This meant that we could compare the voting results of 35 companies for the purposes of this report.
Executive Remuneration-Related Items
- For 35 different remuneration reports, ISS was three times against (=9%) and Glass Lewis eight times (=23%) against them. This also includes two cases where both were against the same report. The lowest support of such an item was at 58.3% only, and the average support 89.7%.
- At 12 different remuneration policies, the situation is similar. ISS was two times against (=17%) and Glass Lewis one time against (=8%) them. The lowest support was 40.4%, and the average support 85.0%.Supervisory Board (Re-)Elections
A total of 131 directors have been (re-)elected to the supervisory board.
- 50 of these 131 candidates have been female (=38%). ISS was against them 7 times (=14%) and Glass Lewisnot even one time. The lowest support was 76.4% and the average support was at 94.2%.
- 81 of these 131 candidates have been male (=62%). ISS was against them 28 times (=35%) and Glass Lewis9 times (=11%). The lowest support was 69.7% and the average support was at 93.5%. Discharges of Management & Supervisory Board Members
The discharge voting has an outstanding importance in Germany. First, the supervisory board members are not elected on an annual basis. Second, the management board members are appointed, but not elected.
We have separated the analysis for bundled discharge and individual discharge.
- For the bundled management board discharges, in all 18 cases ISS and Glass Lewis have been in favour. Thelowest support was at 92.8% and the average support at 97.4%.
- For the individual management board discharges, in all 102 cases ISS has been in favour. Glass Lewis was 90 times in favour and abstained on the remaining cases. The lowest support was at 93.0% and the average support at 97.8%.
- For the bundled supervisory board discharges, in all 19 cases both ISS and Glass Lewis have been in favour. The lowest support was at 86.1% and the average support at 98.7%.
- For the individual supervisory board discharges, in all 288 cases ISS has been in favour, and Glass Lewis against 22 cases (=8%). The lowest support was at 93.0% and the average support at 97.8%.
Virtual AGMs
Only one DAX company has renewed their authorization to hold a virtual AGM, limited to two years.
• Both ISS and Glass Lewis were in favour and the support was at 85.4%.
Authorizations limited up to two years were a common standard in 2023. Therefore, for the 2025 AGM season, it can be expected that many German companies will ask their shareholders to support a renewal of their authorization to hold virtual meetings, too. As already shown in 2023 – and according to our conversations with investors – mainly German and French investors will again oppose such as a matter of principle.
Interestingly, overall, our research for Austria showed investors to be less rigid.
Only one company limited the authorization until 2026, whereas five companies limited it until 2027, 10 companies until 2028 and two companies until 2029. Both ISS and Glass Lewis supported them all and none of them failed.
Transact Other Business
Whereas this is a standard item for example in Switzerland or Italy, it is somewhat new in Germany. ISS defines such agenda items as “Voting Instructions for Motions or Nominations by Shareholders that are not Made Accessible Before the AGM and that are Made or Amended in the Course of the AGM.“
The issue is quite simple. Certain ad hoc proposals can be requested during the AGM. If a shareholder representative has not been instructed for such an ad hoc proposal, the representative is not entitled to vote. Which means that the quorum for such a proposal could be very low. Thus, an investor (activist) with a relatively small stake could win the voting. To avoid it, Transact Other Business can be implemented into the AGM agenda. In that way, the quorum will not drop. Both, ISS and Glass Lewis can be expected to be against any such ad hoc proposal, thus in favour of the company.
- In the analysis-universe, two companies have implemented this agenda item. For both Brenntag and Bayer, proxy advisors backed the company.
What Is Next?
Shareholders are becoming more engaged and vocal, demanding transparency, accountability, and alignment with their expectations on issues like compensation or board diversity. Companies need to adapt by enhancing transparency, demonstrating strong corporate governance, and addressing shareholder concerns to maintain investor support. Boards play a crucial role in this process and are expected to proactively form a relationship with the relevant stewardship teams prior to the next Shareholder Meeting Season.
Whilst some institutional investors will only file their voting behaviour from votes submitted at Shareholder Meetings in 2024 in late Q3 of 2024, we anticipate that the engagement efforts of German corporates will have to address these concerns. The aim needs to be to provide further transparency and explanatory information to prove that the feedback of investors has been heard and incorporated.
If you would like to receive our suggestions on how to tackle your shareholder dissent prior to your next Shareholder Meeting, please contact us.
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