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Executives at Volkswagen are preparing for an investor revolt following the news that three influential advisory groups are urging shareholders to cast their votes against all but one of the company's board members at the upcoming annual general meeting on Tuesday 14 May, according to a report in the Financial Times.
The German auto giant is still feeling the after effects from the diesel emissions scandal four years ago. Proxy advisers, bodies which provide advice to investors on how to vote at general meetings, believe that corporate governance is still a major risk at Volkswagen.
The past 12 months have been littered with scandals. Martin Winterkorn, the former CEO, was charged with fraud by prosecutors in Germany over the emissions scandal and the VW Group, including Audi and Porsche, have been fined €2.3-billion. Volkswagen has said that the emissions scandal has cost the company more than €30-billion in total.
One of the advisory groups is Institutional Shareholder Services, which has given VW the worst possible rating on corporate government and recommended that shareholders vote against the approval of all supervisory board members and executives.
“We believe they may be held responsible as board members for material failures of governance, stewardship, risk oversight, and fiduciary responsibilities at the company,” said the group in a statement.
Another proxy advisor, Glass Lewis, has recommended voting against all board members except one, Stefan Sommer, who joined the company in July 2018.
A third group, Deminor, has expressed concern that the executives who were in place at the time when the scandal took place are still in the same positions of power today. In a statement, the group said: “We are very far from the initial story spun by VW that this wrongdoing was committed by a few rogue engineers. Unfortunately for the company and its shareholders, this now looks like an attempt to cover up the truth.”
Volkswagen's annual general meeting comes just less than a month after the CEO of Bayer received a vote of no confidence from a majority of shareholders, a first in German corporate history. A similar outcome is very unlikely to happen at Volkswagen, however, as 90% of voting rights are held by shareholders who sit on the board.
VW board member Hiltrud Werner, who is the company's head of compliance, said that while she could understand the frustration, and would likely share it if she were outside the company, those with full knowledge of the company's efforts to reform "value the progress we make".
She added that Volkswagen's legal situation was very complex and the company faced a large number of lawsuits in over 50 countries “ranging from competition law to illegal advertising, from falsifying documents to pollution”.
“We sometimes would love to be more transparent or more open, but that will have to wait until the legal matters are solved,” Ms Werner said. “It needs far more than disappointment or open lawsuits to not discharge management [at the AGM].”
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