An influential advisory firm for Deutsche Börse shareholders has advised clients not to back the exchange’s Chief Executive Carsten Kengeter at an annual shareholders meeting next month, Handelsblatt has learned.
Glass Lewis said the failed merger with the London Stock Exchange and allegations of insider trading against Mr. Kengeter were enough reason for a vote of no confidence in management at the May 17 meeting. While such votes are non-binding in German companies, stiff resistance from shareholders will often force CEOs to resign.
Glass Lewis criticized plans to clear management of responsibility for the failed LSE deal and encouraged shareholders to vote against the measure at the May meeting: "We believe that, in light of the failed merger, there are differing views about the performance of the executive and supervisory boards,” the firm said in its recommendation, which Handelsblatt has obtained.
The firm also highlighted an ongoing investigation by Frankfurt prosecutors into whether Mr. Kengeter engaged in insider trading related to the merger's initial announcement. Mr. Kengeter has denied the charges and hopes to get his name cleared, but Glass Lewis argued it would be unwise to issue a vote of confidence in the CEO while the investigation was ongoing.
Deutsche Börse declined to comment. Mr. Kengeter has publicly acknowledged mistakes in his handling of the LSE merger at a recent meeting with members of Handelsblatt's Economic Club in Frankfurt. "We didn’t act as persuasively and emotionally in our communication as maybe was necessary,” he said in front of the approximately 90 club members in Frankfurt.
The chief executive also acknowledged criticism that he was naive about the political hurdles the deal faced: “I have to accept the accusation,” he said.
Despite his mistakes, Mr. Kengeter said he was interested in continuing at the helm of Deutsche Börse. His current contract expires next year.
“I am interested in continuing to help the exchange,” Mr. Kengeter said, “but I’m not going to insist.”
Michael Brächer is a financial editor in the investment team in Frankfurt. To contact the author: [email protected]