Buhlmann's Corner
German Corporate Governance reaches its teens
The Government Commission on the German Corporate Governance Code was set up eleven years ago, and now faces adolescence under a new chairman and a more transparent budget.
As Börsenzeitung correctly points out, the appointee to the chairmanship, Manfred Gentz, was one of those behind the disastrous Daimler-Chrysler entrepreneurial flop some time ago, but fairness requires that all the circumstances regarding the event be remembered in their true perspective. I well remember the lamentations of the stockholders, a number of whom saw fit to begin their weeping and wailing after the meeting had ended alea iacta est. Others even managed to gnash their teeth during the meeting, but none had the staying power to vote against the management. Gentz – who holds a number of prestigious posts mainly outside Germany – is unquestionably one of the best men for the job. Indeed, he would probably be the best chairman to guide the Commission through a complete reorganisation of its composite members, the transparency of their functions and, lastly, in shouldering responsibility for the budget, a task which, up to now, has been restricted exclusively to the issuers.
By contrast to the first chairman of the Commission who was given carte blanche, Gentz will be judged against a much more explicit set of standards.
My own view is that the Commission on the Corporate Governance Code should resign en bloc – not only because of documented events, but also to give the Commission and its new chairman a new broom to sweep clean with. I would welcome a Commission headed by a chairman whose guidance, clout and expectances make themselves felt. Gone, hopefully, are the days when a cabinet minister stepped into the breach left vacant by lack of Chancellery interest. The Commission needs a chairman whose leadership is unequivocal in its clarity.
Naturally, the new chairman must heed all sides who have something to say, and acknowledge the importance of the investors. While ensuring that the Commission give due weight to the viewpoint of the issuers, the chair must also guide the Commission toward assessing the corporate governance of the investors. Executives are right in complaining that their corporate governances are being hobbled by increasingly restrictive rules. Investors call the tune with no need to justify their results or how they are achieved. A new mindset is needed to curtail the supremacy of the money factor; it is only right that investors contribute towards the upkeep expenses of the Commission. It is unjustifiable that the burden be borne by the issuers associated under the DAI (Deutsches Aktieninstitut) umbrella organisation alone.
Corporate governance is in everyone’s interests. My own view is that if the good Lord (and not just the German Finance Minister) had meant mankind to plant glass (in the form of solar panels) in its meadows He would have invented glass seed instead of grass seed. If corporate governance were only a matter of economics, the good people of Limburg would have no call to take to the streets against their archbishop. It is true that churches and their funds are being nudged into taking action – the Lutheran church has already drawn up a catalogue of principles. Let’s hope that the theories get put into practice before the end of the world comes.