Shareholder representatives criticized the role of Continental’s chief supervisor.
(Photo: Reuters)
Dusseldorf The shareholder representatives of Deka hold the chairman of the supervisory board Wolfgang Reitzle to task before the annual general meeting of Continental. “Continental is still caught up in the emissions scandal. The board of directors seems to be sticking their heads in the sand. He should finally bring clarity to the emissions scandal and clarify what role Chairman Wolfgang Reitzle played in it,” says Ingo Speich, Head of Sustainability and Corporate Governance at Deka Investment.
Even more: Deka will deny Reitzle discharge at the AGM of the Dax group. “We are abstaining from agenda item 4.1 exoneration of Dr. Wolfgang Reitzle due to the unclear role in the investigation of the emissions scandal,” says Deka. She is not alone in her criticism; the German Association for the Protection of Securities (DSW) will also abstain from voting on the discharge of the Supervisory Board.
“Unfortunately, there have been several internal, compliance-relevant incidents in recent years. Not only the diesel scandal is having an effect here. The more recent deviations from the rules regarding industrial hose production in Korbach also fall into this segment,” says DSW representative Alexander Vietinghoff-Scheel.
A good three years have passed since the first raid on Continental in the course of the diesel investigations by the Hanover public prosecutor. Since then, it has not been clarified what responsibility former and active managers of the company bear for the exhaust gas manipulations.
Among others, the former Continental boss Elmar Degenhart and the long-standing CFO Wolfgang Schäfer, who was fired at the end of 2021, are also accused. Continental supplied Volkswagen with software for the engine control of diesel engines, which showed manipulated exhaust gas values on the test bench.
The public prosecutor’s investigation is not yet complete. Meanwhile, a dispute is smoldering between Continental and the Vitesco drive division, which has since been split off, as to who should pay for possible fines. When the two companies separated, it was agreed that Vitesco should take over possible fines from the diesel scandal. The former group division, however, sees Continental as partly to blame. The outcome of the process is open. Both companies had to build up provisions in connection with diesel.
Deka representative Speich holds the supervisory board responsible for the consequences of the diesel dispute. “The supervisory board must show that it takes its monitoring function seriously. The uncertainty weighs on the share price and unnecessarily binds the Board of Management and the Supervisory Board. Continental is facing enormous future burdens, an unsolved emissions scandal will only weaken the company unnecessarily,” says Speich.
The group has recognized a need to catch up, at least in terms of the monitoring bodies. As of May 1st, former Mercedes manager Olaf Schick will take over the newly created Executive Board department for Integrity and Legal Affairs. Originally, Schick was only supposed to start in July. DSW representative Vietinghoff-Scheel welcomes the new personnel.
Conti’s car division continues to weaken
The shareholder representatives also see Continental in a difficult situation in the operational business. Conti has continued to have problems with its auto parts suppliers. Even in his third year as head of the Dax group, Nikolai Setzer has not succeeded in bringing the business with car software, sensors and car components into the profit zone in the long term. Conti remains heavily dependent on its tire business.
In addition, Conti was the victim of a hacker attack at the end of last year. Cyber criminals managed to steal 40 terabytes of data from the supplier. “The major cyber attack on Continental AG in the last fiscal year showed that our AG unfortunately seems to be very vulnerable here,” says Vietinghoff-Scheel.
This affects the share price and the market valuation. For the year as a whole, the Conti share has not moved from the spot, while the Dax was able to increase by a good 15 percent. The market capitalization is only around 13 billion euros. Conti is now one of the wobbly candidates in the Dax.
“The Continental shareholders look back on a lost year. The margins were alarmingly low in all divisions in the past financial year, the automotive sector is a shadow of itself,” writes Deka representative Speich. The supposed future investments would devour enormous sums and not bring the desired return.
Speich says there is also a lack of courage for more extensive restructuring. “The share price shows a conglomerate discount, which has widened due to the weak economic development in the past year.”
More: Shareholder representatives are demanding the replacement of Wolfgang Reitzle