Glass Lewis urges shareholders to vote against Deutsche Bank's pay report

Glass Lewis, the influential proxy adviser, has urged DWS shareholders to vote against the German asset manager's remuneration report over concerns about the excessive severance package awarded to former chief executive Asoka Woehrmann.

Glass Lewis said the €8.2 m payment was awarded to Woehrmann, who resigned from DWS in June 2022, without providing a specific breakdown of severance payment components and how they have been calculated.

As of June 15th, Glass Lewis said investors should question the size of this payment and if this is the best use of the company's capital.

Glass Lewis also raised concerns about the base salary awarded to current CEO Stefan Hoops, who took over the top job last year after overseeing Deutsche Bank's corporate bank.

READ DWS chief exec said the salary of the proxy adviser is significantly higher than peers and represents an almost 17% premium on the former CEO's fixed pay.

Glass Lewis said the average base salary of CEOs of German-listed companies ranges from €800,000 for those within the SDAX - a stock market index of small and medium-sized companies - to €1.6 m for those biggest businesses found on the main DAX index. Last year, the proxy adviser raised a similar concern about Woehrmann's high base salary when it recommended shareholders to vote against DWS's pay report.

The current remuneration system in place for members of its executive board was approved by the majority of its shareholders in 2021, and promotes its long-strategy by linking variable pay to relevant and challenging targets, said a spokeswoman for DWS.

Due to the international nature of the DWS Group, compensation market data from international asset managers that are similar in terms of assets under management and number of employees are utilized in particular - a mere focus on listed German companies is therefore not appropriate and does not reflect the global setup and reach of DWS. Glass Lewis has also recommended that DWS shareholders abstain from voting to ratify general partner and supervisory board acts - commonly seen as expressions of trust in the management and supervisory boards, rather than official votes of confidence. It is the second year in a row that the company has advised shareholders to abstain.

Low levels of shareholder support for a ratification vote is a source of embarrassment for a company and can lead to reputational damage to members of the management or supervisory boards, Glass Lewis said.

The proxy adviser cites the ongoing investigations into DWS's ESG credentials and a probe by German prosecutors into Woehrmann's relationship with businessman Daniel Wruck as reasons for shareholders to abstain.

German authorities are investigating whether Woehrmann's business relationship with Wruck had any bearing on Deutsche Bank's investment in German startup Auto 1 Fintech in 2018 and DWS's acquisition of stakes in two units of the financial tech company Arabesque Group.

Wruck was an investor in Auto 1 Fintech and a paid adviser to Arabesque Group, which owns Arabesque S-Ray and Arabesque AI, the two divisions where DWS invested during 2019 and 2020.

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