Shareholders succeed in getting governance review at German multinational ThyssenKrupp

Investors gain unique concession at German bluechip

A number of private and institutional shareholders, represented by German shareholder lobby DSW, have induced German steel and industrial goods giant ThyssenKrupp to accept an independent review of its governance following a string of missteps that have cost the firm billions of euros and tarnished its reputation.

The shareholder action comes against the backdrop of €12bn in losses from new steel mills in Brazil and the US and a near €200m fine from Germany’s cartel office for price fixing.

While the problems led to the ousting of former chief executive Ekkehard Schulz and several other senior ThyssenKrupp executives in 2011 as well as supervisory board chairman Gerhard Cromme last spring, this has not mollified ThyssenKrupp’s critical shareholders.

At the firm’s annual general meeting in January, DSW and Christian Strenger, the former Deutsche Bank fund management executive who is on the board of Hermes Equity Ownership Services, demanded ThyssenKrupp submit to the review, which would focus on its legal compliance and how decisions on investments in big projects are made.

The shareholders behind the DSW, some of whom are fund managers, own 2.3m shares in ThyssenKrupp.Now, according to DSW chief executive Marc Tüngler, ThyssenKrupp has accepted the review, which will be conducted by international accounting firm BDO and Professor Hans-Joachim Böcking, a corporate governance expert at Frankfurt’s Goethe University.

The results will be announced at ThyssenKrupp’s AGM in 2014.

“The acceptance shows that the cultural change at ThyssenKrupp is not just happening on paper but is actually taking place,” said Tüngler, adding that this was the first time the shareholders of a DAX-listed firm had successfully brought about an independent audit.

Schulz’s replacement as CEO of the conglomerate is Heinrich Hiesinger, a former Siemens executive. At the AGM in January, Hiesinger and his colleagues in management and on the board were discharged by shareholders, but only after a close vote.

Around 30% of the firm’s shareholders, including Hermes Equity Ownership Services (Hermes EOS), the German Association of Institutional Shareholders (VIP); the German Association of Ethical Shareholders (DKAA); and DSW voted against discharge. DSW release