Do Commerzbank CEO Manfred Knof and Deutsche Bank CEO Christian Sewing earn too much? This question worries the shareholders before the general meetings.
(Photo: dpa)
Frankfurt The influential shareholder advisor ISS supports Deutsche Bank before the general meeting. The experts advise their customers to discharge the supervisory board and the executive board. The ISS recommends that the shareholders also approve the remuneration of the management. At Commerzbank, on the other hand, the consultants see reason for complaints, especially with regard to the salary of CEO Manfred Knof.
At Deutsche Bank, ISS argues that top management pay is roughly in line with the industry average. “Problematic remuneration practices” could not be identified. In this case, too, ISS cannot do without criticism. In particular, the high level of pension contributions for top executives is “reasonably worrying,” warns the consultant, who belongs to Deutsche Börse.
Significantly sharper opposition to the remuneration practices of the largest domestic financial institution came from US voting rights advisor Glass Lewis. In his report, he advised shareholders to vote against the remuneration report at the Annual General Meeting on May 19.
The basic salary for CEO Christian Sewing is “excessive”, is one of the reasons given. A comparison with the average fixed salaries of CEOs in the DAX and at other European banks has shown that the CEO of Deutsche Bank receives a “significantly higher basic salary” than the comparison group.
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>>Read here: Shareholder advisor criticizes high basic salaries at Deutsche Bank
Sewing had received a fixed salary of 3.6 million euros last year. Together with his bonus he even earned 8.8 million euros. According to calculations by Glass Lewis, the average fixed salary of Dax bosses in 2020 was 1.4 million euros.
Deutsche Bank: Searches are a thorn in the side of ISS
As with remuneration, ISS advises only “conditional” approval when discharging the Executive Board and Supervisory Board. While this time there is no managerial misconduct that would justify a refusal to grant discharge, the report says, shareholders should “continuously monitor” whether the bank is making real progress in improving its risk systems.
The same applies to the legal investigations against the institute. Shareholders should pay particular attention to the searches on April 29, when the Frankfurt public prosecutor, the Federal Criminal Police Office and the financial regulator Bafin der Bank paid a visit regarding possible failings in the fight against money laundering.
According to information from several people familiar with the subject, this was triggered by business dealings with former Syrian Vice President Rifaat al-Assad. The brother of former Syrian ruler Hafez al-Assad according to the information, was not a customer of the Germans Bankbut the money house is involved in the processing of payments from the bank as part of its correspondent banking business Assad-clans have been involved. From the point of view of the investigators, the German Bank therefore have to submit a money laundering report in a timely manner.
In another dispute, ISS fully supports Deutsche Bank. The shareholder advisors recommend rejecting a counter-motion by Riebeck Brewery von 1862 AG. Behind it is the longtime Deutsche Bank critic Karl Walter Freitag.
In his extensive supplementary motion to the agenda, Freitag accuses CEO Sewing of, among other things, breaches of duty, conflicts of interest and a lack of impartiality. However, Friday did not provide any clear evidence for this, according to the ISS analysis.
Criticism of the salary of the Commerzbank boss
At Commerzbank, ISS recommends that shareholders refuse to approve the remuneration report at the Annual General Meeting on May 11th – and justifies this, among other things, with the payment of the CEO Manfred Knof, who has been in office since the beginning of 2021.
Knof received total compensation of 5.7 million euros last year and benefited from two special payments that he had been promised as part of his move from Deutsche Bank.
He was reimbursed variable remuneration of EUR 387,000, which he lost because of his move to Deutsche Bank. He also received an extra contribution of one million euros for his company pension scheme. There is no “convincing justification” for this payment in the compensation report, ISS complained. In the 2020 annual report, Commerzbank explained that it had accommodated Knof in terms of remuneration because he had earned significantly more at Deutsche Bank.
In addition, ISS complained that IT director Jörg Hessenmüller, who left last autumn, received a severance payment of 1.98 million euros, “although it seems as if the initiative to resign came from him”.
Commerzbank initially extended Hessenmüller’s contract by five years in June 2021 – but then canceled it again in the fall. The reason: According to insiders, Hessenmüller had not informed the supervisory board sufficiently in advance about serious problems with a large outsourcing project. Its stop cost Germany’s second largest private bank more than 200 million euros.
In contrast to the remuneration report, ISS recommends approval of the new payment system for board members at the general meeting. This sets ISS apart from its competitor Glass Lewis. He considers the new remuneration system to be backward-looking and has therefore spoken out in favor of its rejection. However, Glass Lewis gave the green light for the compensation report.
More: Deutsche Bank increases bonuses – nevertheless there are fewer income millionaires