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Ex-DWS head Strenger gains governance concession at BMW-linked SGL Carbon

Pressure results in formation of conflict-of-interest committee

Christian Strenger, a former CEO of Deutsche Bank’s fund unit DWS, has singlehandedly persuaded German industrial group SGL Carbon to create a special committee to guard against any conflict of interest involving BMW heiress Susanne Klatten, the firm’s new chair and part-owner.

As the heiress to the multi-billion-euro Quandt family fortune, Klatten is Germany’s wealthiest woman. Through her own investment firm, Klatten owns 28% in SGL Carbon and has sat on its board since 2009. She was elected as its new chair during the firm’s annual general meeting (AGM) on April 30.

Klatten and her brother, Stefan Quandt, also sit on the board of German carmaker BMW in which the Quandt family holds a 46.7% stake. The two companies have launched a joint venture called “SGL Automotive Carbon Fibres” which is developing products for new electric cars from BMW. BMW also acquired a 15.7% stake in SGL Carbon to cement the alliance.

In a counter-proposal filed before the AGM, Strenger warned that once Klatten was elected chair, there would be an even greater danger of a conflict of interest. “Ms Klatten already finds herself in a potential conflict of interest given that she has both BMW and SGL Carbon’s interests at heart.“Her shareholding in BMW, however, is worth more…This could become more problematic once she is given more power as supervisory board chair,” wrote Strenger, who has a small shareholding in SGL Carbon. Board chairs at listed German firms have two votes.

Strenger added that since the board had not informed shareholders about the problem, it was in breach of Germany’s corporate governance code and should not be discharged. Two years after his retirement from DWS in 1999, Strenger was asked by the German government to help draw up the code.

In response, SGL’s board denied that it was in breach, noting that the code only required the firm to inform its shareholders of actual conflicts of interest and not “theoretically possible” ones.

Yet at the AGM, SGL Carbon agreed to a proposal by Strenger that a special committee be created to ensure that Klatten avoided any conflicts. “In exchange, Mr Strenger withdrew his counter-proposal denying the board discharge for 2012,” said a spokesman for SGL Carbon. Strenger’s criticisms of Klatten were echoed by the German Association of Institutional Shareholders (VIP) during the AGM.