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Ackermann as Chairman Skirts Governance Rules Bank Espoused

Deutsche Bank AG CEO Josef Ackermann
Deutsche Bank AG chief executive officer Josef Ackermann . Photographer: Hannelore Foerster/Bloomberg

July 29 (Bloomberg) -- Josef Ackermann, a beacon of corporate Germany as chief executive officer of Deutsche Bank AG for the last nine years, may become the first top manager to skirt rules the lender espoused to toughen management supervision.

Ackermann, 63, is set to replace Clemens Boersig as chairman of Deutsche Bank’s supervisory board next year, when Anshu Jain, the head of investment banking, and Juergen Fitschen, who steers the Frankfurt-based lender’s domestic business, move up to share the CEO role.

That will make Deutsche Bank the first DAX Index member to seek an exemption to German corporate governance rules introduced in 2009 that call for a two-year grace period before a CEO can accept the role of supervisory board chairman. The guard change throws into question Ackermann’s independence in supervising executives he helped groom for the top job.

“Moving from the CEO post to head of the supervisory board is a severe violation of the tough corporate governance standards in Germany,” said Klaus Fleischer, a professor for banking and finance at the University of Applied Sciences in Munich. “There is the risk that Ackermann will keep to being deeply involved in the day-to-day business instead of overseeing his successors. The two-year ban has been introduced to prevent exactly that.”

Two-Tiered System

In Germany, corporate law requires listed companies to be headed by a two-tier system with a management board responsible for day-to-day operations and a supervisory board, whose main task is to oversee the management board and appoint its members. Half of the supervisory board members represents employees while the other half is elected by shareholders. The supervisory board chairman has two votes in case of a draw.

The corporate governance rules broke the German tradition of CEOs ending their careers in the supervisory board chairman’s seat. Deutsche Bank Chairman Clemens Boersig, who assumed the role after stepping down as finance chief in 2006, has repeatedly endorsed the Corporate Governance Code, in the bank’s annual reports and on its website.

“The supervisory board is regarded as a pillar of corporate governance in German companies,” Boersig said in a 2006 speech after taking the chairman position. “Not only does it have to be a governor, but also a critical companion and a competent sparring partner.”


Of BASF SE, Bayer AG and Deutsche Lufthansa AG, DAX companies that have had CEO changes since the new rules were introduced, all have complied. Former BASF CEO Juergen Hambrecht moved to take the chairman job at Fuchs Petrolub AG when he retired from the Ludwigshafen-based chemical maker in May.

Werner Wenning, who stepped down as CEO of Bayer last year after more than 40 years at the Leverkusen-based drugs and chemical company, is now the top oversight steward at energy company EON AG. Wolfgang Mayrhuber, Lufthansa’s CEO from 2003 to 2010, became supervisory board chairman of semiconductor company Infineon Technologies AG in January.

While Ekkehard Schulz, the former CEO of ThyssenKrupp AG, joined the steelmaker’s supervisory board as a member in January, he didn’t become chairman.

Schulz was able to join the board by garnering the support of the Alfried Krupp von Bohlen und Halbach Foundation, which owns about 25 percent of the steelmaker’s voting rights. Deutsche Bank aims to make use of the same 25 percent hurdle in its bid to have Ackermann elected chairman at the 2012 shareholders’ meeting.


A clause in the 2009 rules grants an exception for CEOs becoming chairmen if they have the support of shareholders controlling at least 25 percent of the voting rights. Such an extraordinary appointment should be “justified to the general meeting,” according to the corporate governance code.

“It’s not specific to Ackermann, but rather the fundamental question of whether it’s smart for a company and company culture,” said Wolfgang Bosbach, a member of Chancellor Angela Merkel’s Christian Democratic Union and the chairman of the all-party interior committee. “A supervisory board chairman has a completely different role to a CEO.”

Klaus-Peter Mueller, who chairs the Commission of the German Corporate Governance Code, declined to be interviewed for this article. Mueller, the supervisory board chairman of Deutsche Bank’s cross-town rival Commerzbank AG since May 2008, is one of seven supervisory board chairmen at DAX Index companies who assumed the role directly after retiring as CEO.


“A management board member has know-how relating to the company,” Mueller said in a statement two months before the law was implemented in July 2009. Given the “fast-moving nature of national and international developments,” a two-year gap carries the risk of inside knowledge being lost, he said.

Ackermann, in 2007, said he wouldn’t follow the German tradition of a CEO retiring to the supervisory board chairman post. He declined to be interviewed for this article. Ackermann will concentrate on his role as CEO until May, Stefan Baron, his spokesman, said in an e-mailed response to Bloomberg News’s interview request.

“I am absolutely convinced that a chief executive, under normal circumstances, shouldn’t switch to the supervisory board,” Ackermann said, according to a 2007 Manager Magazin report. The same year, he said he would make a “bad supervisory board chairman” because he’s too involved in the business “and wouldn’t be able to let go,” according to Die Welt newspaper.

Greek Crisis

As recently as April of this year, in an interview with Die Welt, Ackermann repeated that he wouldn’t take the chairman role at Deutsche Bank.

Since then, European leaders have agreed on a 159 billion-euro ($228 billion) plan to prevent the Greek debt crisis from spiralling and empowered their 440 billion-euro rescue fund to buy debt across stressed euro nations.

They also persuaded private investors to help foot the bill, a step Ackermann, as chairman of the Institute of International Finance, said “should have solved the Greek problem,” in an interview with Germany’s ARD television on July 22.

Ackermann said Europe’s lenders and insurers are “hit hard” by their role in the deal and writedowns banks will take on Greek holdings will amount to 21 percent under the plan. The Deutsche Bank CEO attended the July 21 gathering in Brussels of government leaders and bankers who hashed out the plan.

Merkel, Papandreou

In his nine years at the helm of Deutsche Bank, Ackermann has gained statesman-like status as he steered the lender through the credit crunch, following the collapse of Lehman Brothers Holdings Inc., without a state bailout.

He counselled German Chancellor Angela Merkel on the rescue of property lender Hypo Real Estate Holding AG in 2008, and stood beside Finance Minister Wolfgang Schaeuble on June 30 in Berlin to announce an agreement by banks and insurers to roll over Greek debt holdings.

In February 2010, he traveled to Athens to meet with Greece’s Prime Minister George Papandreou as the southern European country’s indebtedness endangered other euro-zone nations and Europe’s financial system. He led an effort among German firms to assist Greece and shore up confidence in the country, two people with knowledge of the situation said in April of that year.

Deutsche Bank’s shares have dropped 45 percent in Frankfurt trading from the 69.284-euro closing price on May 23, 2002, when Ackermann became CEO. That’s less than the 54 percent decline in the same period for the 49-company Stoxx 600 Banks Index, and the 83 percent slump in Commerzbank, the second-largest German bank. Deutsche Bank fell 1.4 percent to 37.785 euros as of 10:55 a.m. local time today.

‘Makes Sense’

Deutsche Bank’s supervisory board member Marlehn Thieme said on July 12 she urged Ackermann to become chairman “so that his skills and network will remain at the bank.”

Some investors concur with Thieme, and indicated they would support Ackermann’s election.

“In this case we’ll vote with a bit of stomach-ache for the solution, even if it isn’t the best result from a corporate governance perspective,” said Lars Labryga, a Berlin-based board member at SdK group that represents private investors. “We’ll be among the shareholders needed to approve” Ackermann’s election as Deutsche Bank chairman, he said in a July 26 phone interview.

“It’s a very tough situation,” Labryga said. “You need someone of the caliber of Joe Ackermann for us to vote for this. We represent the interests of individual shareholders and with respect to Deutsche Bank, this makes sense.”

The new leadership will take over at a time of stricter rules on capital and liquidity that make it harder for banks to generate the returns they did before the financial crisis. Deutsche Bank is also integrating acquisitions, including Deutsche Postbank AG, to cut its dependence on investment banking and raise pretax earnings from consumer lending, money management and transaction banking.

German ‘Flagship’

Having the trio of Jain, Fitschen and Ackermann running the company would help it manage regulatory issues and macroeconomic risks, JPMorgan Cazenove analysts led by Kian Abouhossein said in a July 24 note.

Deutsche Bank’s decisions to appoint co-CEOs and seek Ackermann’s election as chairman “provide for both renewal and continuity and thus for the pre-condition of continued success,” the lender said in a July 25 statement.

The bank is seeking Ackermann’s election so it “will continue to profit from his knowledge, experience and professional network,’ it said. “Deutsche Bank will take all necessary steps to fulfil the legal pre-conditions for this move.”

Ackermann, who was closely involved in the decision-making process, endorsed the plan and said he was willing to “continue serving the bank in this new capacity,” in the statement.

“It was good that the automatism of CEOs crowning their careers by becoming head of the supervisory board was broken,” said SdK’s Labryga. “With Deutsche Bank being such a flagship of German business, many companies that don’t have the same merits will seek to go back to the old ways.”

To contact the reporters on this story: Nicholas Comfort in Frankfurt at; Oliver Suess in Munich Bureau at

To contact the editor responsible for this story: Frank Connelly at

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