An association representing employee shareholders in Siemens AG wants to cut the compensation for supervisory board members at the German technology giant.
The body has filed a counter-proposal for the firm’s annual general meeting (AGM) next Tuesday (January 28). According to the proposal from the Verein von Belegschaftsaktionären in der Siemens AG (VBA), the compensation of the board chair, currently held by former ThyssenKrupp executive Gerhard Cromme, would be cut to €200,000 annually from €280,000 now.
Moreover, base pay for each of the 20 members of the board would be lowered to €100,000 annually from €140,000. The proposal allows additional pay beyond the base for committee chairs, but strikes the extra €1,500 in compensation paid to directors every time they show up to a board meeting.
The VBA said: “The compensation paid to members of the Supervisory Board is too high compared with the average pay for employees of Siemens AG and as such unacceptable.”
The VBA puts the average salary at €60,000 a year. Regarding the extra pay for attendance, the VBA said it was problematic both because board members drew a salary and were reimbursed for expenses and value-added-tax (VAT).
VBA deputy chair Birgit Grube told RI that the association represented 6,000 former and current Siemens employees who had close to a million voting rights. “And since we have taken up this issue, we’re pleased to see that we are growing.” Grube, herself an employee representative on Siemens’ board between 1993 and 2008, added that the compensation paid to directors today was out of proportion in her view.The voting rights held with the VBA represent just under 1% of Siemens’ outstanding share capital. Current and former employees own 5.3% of the share capital, making them one of the firm’s biggest shareholder blocs. Others are the Siemens family which holds 6% of the company’s shares as well as US asset manager BlackRock and Qatar, which hold 3%.
Meanwhile, more pressure on Siemens’ board has come from the German Association of Critical Shareholders (DKAA). The DKAA, which represents €12.5m worth of the company’s shares, has filed a counter-proposal urging denial of discharge for board members following the premature departures of former chief executive Peter Löscher and three other executives.
“The premature departures mean the Siemens group will incur charges totalling €31m, which could have been prevented by careful personnel selection,” said the DKAA, adding that the event raised questions about the board’s competence when it comes to recruiting executives.
Löscher, who received severance pay totalling €17.2m, was hired by Cromme in 2007. Although his contract was renewed in 2011 for another six years, he was forced out last July. According to German news reports, the main reason was that the current CEO, Joe Käser, managed to convince Cromme and other influential board members that he could do a better job than Löscher. The DKAA said a second reason why Siemens’ board – and management for that matter – should be deprived of shareholder discharge was the company’s continued involvement in a controversial Brazilian dam project. Link