Werner Seifert, the Deutsche Börse chief executive, was ousted on Monday after relentless pressure from shareholders opposed to his long-held ambition to take over the London Stock Exchange.
In a boardroom shake-out unprecedented in German corporate history, Seifert is leaving with immediate effect to be followed by the chairperson, Rolf Breuer — one of Germany’s best-known businessmen — at the end of the year.
Three unnamed members of the supervisory board will also pay the price for Seifert’s second attempt to take over the LSE.
The Frankfurt exchange refused to disclose the details of any payoff for Seifert, who earned £1,6-million last year and has been fighting to save his position since he was forced to abort his latest move to take over the LSE in an attempt to appease investors.
Abandoning the £1,6-billion bid in March was not enough to silence his critics, mainly British and United States hedge funds that wanted the exchange to return surplus cash rather than spend it on a takeover.
The resignations followed meetings with investors ahead of the annual meeting this month, at which it became apparent the board would not win the backing of shareholders.
Rebel shareholders — led by the London-based hedge fund TCI — have tabled a resolution to unseat Breuer. Their presence on the Börse shareholder register illustrates a major change in Germany’s corporate governance. Just 7% of the exchange’s shares are held by Germans — down from 35% last year and a nominal 100% at flotation in 2000.
The exchange’s problems appear to have been exacerbated when one of the last German-based investors — DekaBank — said it would abstain on the motion to unseat Breuer at the annual meeting on May 25.
US and British investors, which held 50% of the stock in December, now hold more than three-quarters and are regarded as having ended the career of Seifert, who has transformed the exchange in his 10-year tenure.
Traditionally, changes in German corporate strategy or boards are wrought by a ”rich man’s club” of institutional investors, often the big banks or insurance firms, which hold shares in one another and wield their muscle unseen.
Breuer, who is chairperson of Deutsche Bank, where he was chief executive, is the epitome of the old-style corporate governance system that has been assailed by hedge funds such as TCI and other foreign investors for its lack of transparency and sensitivity to shareholder interests.
TCI welcomed the changes on Monday. ”We look forward to a serious dialogue with the board regarding the appointment of a new CEO, chairman and supervisory board directors. It is our hope that these changes will contribute to develop further the company for the benefit of all stakeholders,” the London-based fund said.
The resignations come in the throes of a debate in Germany about the role of foreign in vestors, denounced by social democrats as ”locusts” hellbent on asset-stripping and short-term financial gains.
While Breuer finds a new chief executive, the current finance director, Mathias Hlubek, will take the helm.
Bidding for the LSE is stalled as the Competition Commission investigates the abandoned Börse bid and one by Euronext. On Monday it emerged that LCH Clearnet, a body 41% owned by Euronext, told the competition watchdog that it opposed an LSE takeover.
The boardroom changes at Deutsche B̦rse may leave Euronext unopposed if the authorities back an LSE takeover. РGuardian Unlimited