Shareholders of German landlord GSW Immobilien AG (GIB) were advised to vote against the proposed dismissal of newly appointed Chief Executive Officer Bernd Kottmann, documents obtained by Bloomberg show.
Glass Lewis & Co., the proxy advisory service, said investors should oppose a no-confidence motion against the CEO on June 18 while voting to remove Chairman Eckart John von Freyend because of the way Kottmann’s hiring was handled, according to a report to shareholders. Institutional Shareholder Services Inc., based in Rockville Maryland, said in a separate report that investors should support the retention of both men.
“Through a lack of transparency and poor shareholder engagement, the entire recruitment process has been shrouded in confusion and speculation,” San Francisco-based Glass Lewis said.
Dutch investor PGGM NV called for the vote on May 15, saying that GSW’s hiring of Kottmann didn’t follow the correct procedure. GSW said on March 18 that Kottmann would succeed Thomas Zinnoecker as CEO on April 16. The appointment was made about a week after GSW announced Zinnoecker’s departure. PGGM said the short span between the two events raised questions about whether the search was thorough.
“We are very surprised Glass Lewis formed an opinion without contacting us and asking about the background,” Freyend said today. “The board feels vindicated by the ISS recommendation.”
GSW took longer to find a new CEO than the public announcements reflect, Freyend said. The search began on Feb. 13, before Zinnoecker’s departure was announced, and lasted for more than four weeks, he said.
“There was a careful and systematic selection process with clear qualification requirements,’ Freyend said. “There are differences between the Anglo-Saxon world and the German world; our processes are often not as formal, and even though we’re becoming more international, it’s not unusual in Germany to hire a CEO the way we did.”
PGGM has a stake of about 3 percent in GSW, according to an October 2012 statement.
The Dutch company criticized Kottmann and Freyend for their track record at IVG Immobilien AG (IVG), a German real estate company. Kottmann worked at IVG from 1997 to 2009, first as chief operating officer and then as chief financial officer starting in 2007. The company has lost about 98 percent of its market value since 2008 and is in talks to restructure more than 3 billion euros ($4 billion) of debt.
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