Deutsche Bank AG shareholders should not sign off on management’s actions for the past year, an influential advisory firm recommended, citing ongoing legal investigations against the lender.
Proxy adviser Glass Lewis listed probes against Deutsche Bank’s asset manager DWS Group and an unidentified management board member in connection with a tax evasion scheme known as cum-ex, a report published on Sunday said.
It also cited a raid last week related to the bank’s reporting on potential money laundering.
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While Glass Lewis said it is “unaware of any substantial indications to suggest that management board members overwhelmingly failed to fulfill their duty to shareholders,” it recommended shareholders “abstain from voting on ratification proposals as a matter of caution” as long as the outcome of the various probes is uncertain.
Deutsche Bank chief executive officer Christian Sewing and departing supervisory board chairman Paul Achleitner will likely seek to highlight at the May 19 meeting what they see as a successful turnaround of the lender over the past three years, yet the Glass Lewis report also shows how much the string of new regulatory and legal issues have cast a shadow over the German lender, despite a strong rise in profitability.
The issues cited involve allegations against DWS that it overstated how much it factors environmental, social and governance considerations into its investment decisions, and Deutsche Bank’s role in a tax scam known as cum-ex that allegedly has cost German taxpayers billions of euros.
Outgoing Deutsche Bank chief risk officer Stuart Lewis is being investigated over his role in the transactions, Bloomberg reported last year.
This year’s meeting will feature a motion by one investor to oust Sewing, even though Deutsche Bank has dismissed the proposal, and labeled it as “riddled with half-truths and conspiracy theories.”
The meeting will be the last for Achleitner, as he is set to be succeeded as chairman by former Aegon NV chief executive officer Alexander Wynaendts.
Glass Lewis recommended voting for Wynaendts.
The adviser also recommended voting against ratifying Deutsche Bank’s remuneration report, saying Sewing’s base salary was “excessive,” and criticizing “poor” disclosure on annual bonus metrics and performance targets.
Sewing earned 8.8 million euros (US$9.3 million) last year.
“We are concerned about the high base salaries paid to management board members, some of which have been further increased in the past year,” the report said.
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