2023 European Proxy Season Review (Germany edition)

Morrow Sodali 2023 European Proxy Season Review
France | Germany | Greece | Ireland | Italy | Portugal | Spain | Switzerland | United Kingdom

Morrow Sodali is pleased to share its review of the 2023 Proxy Season in Germany. This comprehensive review highlights several key trends in corporate governance and shareholder engagement.

The 2023 European Proxy Season Review for Germany offers valuable insights into the evolving landscape of corporate governance in the country. Notably, the revision of the German Stock Corporation Act in July 2022 allowed companies to propose virtual-only general meetings, a change that received mixed reactions from investors and proxy advisors. While most DAX companies proposed virtual meetings at their 2023 AGMs, except for three specific issuers, support varied based on the company's shareholder structure and the specifics of the proposal. This signals a growing interest in adopting virtual formats, although technical challenges and implementation concerns continue to fuel debates in the market.

The report also sheds light on the state of governance in German boards, emphasizing the importance of independence, ESG oversight, and transparency. While supervisory board elections saw a decrease in support, non-executive remuneration policies garnered high approval rates. Transparency in compensation decisions and engagement with shareholders were highlighted as essential practices. Additionally, the implementation of ESG criteria in incentive schemes emerged as a key trend, aligning with evolving reporting standards and investor focus on sustainability metrics.

Looking ahead, the report advises boards to prepare for stricter guidelines, such as one-share-one-vote rules, and underscores the significance of climate and sustainability issues for companies, as evidenced by the first German vote on a climate transition proposal in 2023. Proxy advisors are placing increasing emphasis on governance, emissions disclosure, and adherence to international frameworks like TCFD, emphasizing the need for companies to engage with stakeholders in this evolving landscape. 

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