Dusseldorf The dispute at the mechanical engineering company Deutz about the legally required appointment of a woman to a board position has massive personnel consequences. CEO Frank Hiller (55) has to leave the company.
The head of the supervisory board, Bernd Bohr (65), is also resigning as chairman, but remains a simple member of the supervisory board, the company announced after an extraordinary supervisory board meeting on Saturday evening. As a compromise solution, CFO Sebastian C. Schulte becomes the new CEO of the oldest engine factory in the world, founded in 1864. Bohr’s successor as chief supervisor is Dietmar Voggenreiter. The former Audi sales manager has been a simple member of the supervisory board since 2019. This opens up the opportunity for Deutz to find a CFO for the vacant position in the next few months and thus to comply with the new legal situation.
“With Sebastian Schulte, an analyst and team player with strong leadership is taking over as CEO of Deutz,” says Voggenreiter, the new chairman of the supervisory board. The CFO brings with him exactly the skills for a “profitable transformation”. The 43-year-old, who has a doctorate in economics, joined the company from Thyssenkrupp just over a year ago. “I am convinced that with him we will continue the constructive cooperation between the Supervisory Board and the Executive Board in a goal-oriented manner,” said Schulte.
The head of the supervisory board, Bernd Bohr, had previously announced a “legally compliant solution in the sense of Deutz”. The months-long and paralyzing dispute for the company is over for the time being. For days, the capital and employee sides had been looking for a solution to the muddled situation. The supervisory board has now decided to appoint a woman to the executive board again. A corresponding process has already been set up.
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A woman was CFO at Deutz once before: Margarete Haase from 2009 to 2018. Should a CFO be appointed, then in the middle of the technologically demanding transformation of the company, only one mechanical engineer, Head of Development Müller, will probably be represented on the Executive Board.
Above all, the current compromise could be expensive for Deutz. The payout from Hiller’s contract, which would have run until the end of 2026, is worth around five million euros on paper. The company did not say what the exact amount would have to be paid for Hiller, who is considered a tough negotiator. There is no polite phrase in the company announcement.
Just over a year ago, Bohr first filled the position of head of finance with Schulte and shortly afterwards the position of head of development with Markus Müller, both with men and thus failed to fill a woman on the board. The federal cabinet passed the draft law on January 6, 2021, and it came into force on August 12. According to the Second Management Positions Act (FüPoG II), listed companies like Deutz must appoint at least one woman to four board members.
Omissions of the Supervisory Board
The law was not yet in force at the time, but no company should have missed the big public debate about it. The company did not recognize or ignored the upcoming change in the legal situation. Ultimately, the chairman of the supervisory board is responsible for the composition of the board of directors. Especially since Bohr was only able to push through one of the board appointments with his double voting rights. Other companies had even appointed women to the board of directors in anticipation of the law. The opposite happened at Deutz.
Then Bohr looked for ways out of the mess. The attempt to comply with the legal situation with a fifth female member of the Management Board caused a complete lack of understanding among investors and employee representatives in view of the company’s economic situation.
According to Handelsblatt information, one of the other considerations was to promote sales manager Michael Wellenzohn to the position of general representative on the same terms and to appoint a woman to the board of directors. Both Wellenzohn and CEO Frank Hiller obviously found this absurd and protested vehemently to their supervisory board, which caused Hiller to fall out of favor with Bohr. It was a duel between two big egos.
Stock on the decline
The engine manufacturer, founded in 1864 and employing 4700 people, has now come out of the red again after the Corona year 2020 with sales of around 1.2 billion euros in the first nine months of 2021 and a meager profit of 24 million euros. However, the stock lost a quarter of its value in the past six months. Citadel Advisors LLC is currently the only one officially betting on falling Deutz prices. The billionaire Chicago-based hedge fund has a net short position in Deutz AG of 664,740 shares, or 0.55 percent of the outstanding share capital.
Ardan Livvey (AL), based in Amsterdam, is the largest single shareholder with five percent of the shares and has made critical comments about the management in the past year, but is currently holding back. The large German fund companies Union Invest (6.2 percent) and DWS (4.2 percent) also hold larger packages. Overall, institutional investors hold almost 60 percent of the shares. The turbulence of the past few months is likely to cause considerable discussion, if not more, at the analysts’ meeting on March 14 and at the shareholders’ meeting on April 28.
The company is in the midst of transformation. In addition to its engines powered by electricity and diesel or as a hybrid, Deutz is developing a hydrogen engine. Four years ago, the traditional manufacturer bought the start-up Torqeedo, which develops and manufactures electric boat motors. In addition, Deutz took over the battery specialist Futavis in 2019 and has since been able to produce battery packs in any shape. Deutz assumes that in the future commercial vehicles will be designed in such a way that there will be identical models with different drives.
When it comes to combustion engines, the company relies on cooperation. The people of Cologne no longer want to develop a completely new diesel independently. New or modified engines are only designed together with customers such as John Deere. Deutz also cooperates with the Chinese construction machinery giant Sany. The Chinese are extremely interested in German technology. A few years ago they took over the Swabian concrete machine manufacturer Putzmeister, at that time the technological world market leader.
More: Deutz leadership quarrels over women’s quota