BIS regularly reviews VW’s governance structure and risk profile. BIS has engaged regularly with VW’s Supervisory Board chair since 2016 on a range of environmental, social and governance topics, and has frequent dialogue with VW’s Investor Relations and Sustainability teams. We have on numerous occasions encouraged the company to improve the number of independent directors on the Supervisory Board to enhance the level of independent oversight of management. We have regularly discussed board composition, minority shareholder interests and Supervisory Board transparency.
… When analyzing the independence level of the Supervisory Board, BIS only considers members who are elected by shareholders, and excludes government or employee representatives whose presence might be legally required. With two independent members (at the time of the AGM), the current level of independence on VW’s Supervisory Board does not meet BIS’ expectations for controlled companies. In controlled companies, BlackRock expects the number of independent Supervisory Board members to be no less than one-third of the shareholder representatives.
…The insufficient level of independence on VW’s Supervisory Board impedes its ability to form sub-committees that meet BIS’ expectations of majority independence with an independent chair. In our assessment, the insufficient independent oversight provided by VW’s Supervisory Board played a major role in the events which led to the company employing what has become known as a ‘defeat device’ in some of its diesel engine cars, as uncovered in 2015. This was software which could detect when the engine’s CO2 emissions were being tested and adjust performance in order to improve results. VW faces ongoing investigations and legal proceedings in relation to the 2015 incident, which continues to impact shareholder value.
- Resolution on the formal approval for fiscal year 2019 of the actions of the members of the Board of Management H. Diess, J. Heizmann and A. Renschler who held office in fiscal year 2019
We voted against the discharge of members of the Board of Management who were already serving at the time of the emissions incident. In doing so, we are holding those individuals accountable for the deficiencies in VW’s governance practices and management of its material risks. This is consistent with our approach since VW’s 2016 AGM.