GSW Immobilien AG (GIB), Berlin’s largest residential landlord by market value, will be opposed by some shareholders today in a vote over how it handled the hiring of its chief executive officer, according to five of the investors.
At the annual shareholder meeting, investors will vote on a no-confidence motion that challenges the April appointment of CEO Bernd Kottmann, according to the agenda. They will also vote on whether to dismiss Chairman Eckart John von Freyend, who supervised Kottmann’s recruitment.
Regardless of the outcome, the meeting will put pressure on GSW to improve its corporate governance, said PGGM NV, the Dutch pension administrator that called for the vote, and four other investors that asked not to be named. Together, the five companies own about 13 percent of the shares.
“It’s a signal to the sector as a whole that transparency is becoming increasingly important and investors will demand improvements,” said Hans Op ’t Veld, head of listed real estate companies at PGGM. “We’re still the ultimate owners of the capital and the company should pay attention to us.”
PGGM owns about 3 percent of GSW, according to data compiled by Bloomberg. The biggest shareholders are Sun Life Financial Inc. (SLF), BlackRock Inc. (BLK:US) and Singapore’s wealth fund.
GSW has declined 12 percent since PGGM called on Kottmann to quit on May 15, greater than the 8.7 percent decline in the EPRA FTSE/NAREIT index of German property stocks. The company’s shares will probably continue to lag behind other real estate stocks if the vote is close, shareholders said.
“Investors are uncomfortable with the situation and that’s what’s caused the underperformance,” Op ’t Veld said.
GSW, which owns 60,000 apartments in Berlin, 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 gap between the two events raised questions about whether the search was thorough. The Dutch company also criticized Kottmann and Freyend for their track record at IVG Immobilien AG (IVG), a German real estate company.
PGGM’s proposal to oust the chairman must be approved by 75 percent of shareholders present at the meeting in Berlin. The no-confidence motion in the CEO must be passed by 50 percent of the voters.
Proxy voting service Glass Lewis & Co. advised investors to remove Freyend, and, along with Institutional Shareholder Services Inc., recommended opposing the no-confidence motion against Kottmann, according to documents obtained by Bloomberg.
There will probably be enough votes to remove the chairman, though the tally may be close, Peter Papadakos, London-based analyst at Green Street Advisors, said last week.
“The current chairman has allowed a situation to develop in which the perception exists -- whether true or not -- of potential conflicts of interest,” Papadakos wrote in a report on June 6, in which he advised clients to oust Freyend.
“There was a careful and systematic selection process with clear qualification requirements,” Freyend said by phone on June 7.
GSW took more than four weeks to find a CEO, which is longer than the public announcements reflect, Freyend said at the time.
Sun Life Financial owns about 19 percent of GSW, BlackRock owns 8.5 percent and the Government of Singapore Investment Corp. has a 6.2 percent stake, according to data compiled by Bloomberg. Other shareholders include Credit Suisse Group AG, Axa Financial Inc. and Morgan Stanley. (MS:US)
GSW and BlackRock declined to comment. Sun Life and GIC didn’t respond to requests for comment.
The shareholder meeting is due to start at 10 a.m. Berlin time.
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