2024 Germany’s SDAX AGM Season Review – Key Takeaways
For the German small-cap index (“SDAX”) 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 58 companies for the purposes of this report.
Executive Remuneration-Related Items
- For 56 different remuneration reports, ISS recommended 33 times against (=59%) and Glass Lewis 23 times against them (=41%). This also includes 19 times where both proxy advisors recommended against the same report (=34%). The lowest support of such an item was at 29.3% of the votes cast only, and the average support being 85.3% of the voted shares cast. Two companies had no voting on their remuneration report on the agenda.
- For the 22 different remuneration policies, the situation is similar. ISS recommended to vote against 12 times (=55%) and Glass Lewis recommended 4 times (=18%) against. This also includes 4 times where both were against the same report (=18%). The lowest support was 33.9% of the votes cast, and the average support 88.0%.Supervisory Board (Re-)Elections
A total of 59 directors have been (re-)elected to the supervisory board at the observed SDAX companies.
- Only 19 of these 59 candidates were female (=32%). ISS recommended against four of these candidates (=21%) and Glass Lewis against five (=26%). This also includes one case where both proxy advisors recommended against the same female director. The lowest support was 75.1% of the shares voted and the average support was at 92.2%.
- 40 of these 59 candidates were male (=68%). ISS recommended to vote against them 17 times (=48%) and Glass Lewis five times (=13%). This also includes four cases where both Proxy Advisors recommended against the same male director. The lowest support was 59.2% and the average support was at 90.5%.Shareholder Proposals
Within the observed companies, we have found eight relevant shareholder proposals. This means that these agenda items have been put on the agenda not by the management, but on shareholder request and a vote has been casted and/or disclosed.
- These eight cases have occurred at only three companies. One company had five such agenda items, another two and the last one only one such agenda item.
- ISS was against six of the shareholder proposal (=75%), and Glass Lewis was against seven (=88%).
Virtual AGMs
Only one company had a virtual-AGM related item on their agenda.
- The company asked for a renewal until 2026, which has been supported by ISS and Glass Lewis, with an approval rate of 98.7%.
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.
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. Thus, at companies where shareholders are dissatisfied, they may opt to use this instrument to express it through a negative vote.
We have separated the analysis for bundled and individual discharge of each board.
- For the bundled management board discharges, in 34 cases only ISS has been against one of these items.The lowest support was at 75.1% and the average support at 96.4%.
- For the individual management board discharges, in all 48 cases ISS and Glass Lewis have been in favour. The lowest support was at 49.1% and the average support at 94.3%.
- For the bundled supervisory board discharges, in all 42 cases both ISS and Glass Lewis have been against one items, but not against the same. The lowest support was at 71.2% and the average support at 94.4%.
- For the individual supervisory board discharges, at all 131 cases ISS recommended against only once, and Glass Lewis four times (=13%). In none of these cases both proxy advisors were against the same item. The lowest support was at 36.5% and the average support at 92.1%.The lowest support was at 61.2% of the votes cast only, and the average support being 72.0% of the voted shares cast.
The Kommanditgesellschaft auf Aktien
Within our analyzed SDAX group of 58 companies, eleven (=19%) are Kommanditgesellschaft auf Aktien (”KGaA”). The KGaA is a hybrid legal form, which has elements from both, a limited partnership and a stock corporation. For them, the authority and scope for influence of the supervisory board of a KGaA is limited in comparison to a supervisory board of a pure stock corporation. The general partner instead has a lot of the competencies which a supervisory board normally has.
- For the 11 discharges of the General Partner, ISS was once against. The lowest support was at 96.1% and the average support was at 98.6%
In the past, we have observed that this multiple board setup can be confusing for international institutional investors. Negative votes against KGaA’s supervisory boards maybe sometimes should have fallen to the general partner, as the matters criticized were often under their influence or responsibility.
So, we asked the question if the discharge voting for a company’s supervisory board was higher or lower relative to the discharge voting of their general partner.
- For each of the 11 companies, the general partner had a higher approval rate for their discharge than their supervisory board achieved.
- The highest difference at one company was at 16.5 percentage points (general partner = 99.5% vs. supervisory board = 83.0%), the lowest difference at a company 0.4 percentage points (96.1% vs. 95.6%). The average difference is at 4.5 percentage points.
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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