Depfa
DAGF at the annual general meeting of Depfa Bank Plc
(Update of April 30, 2007)
Deminor is actively engageing Depfa on behalf of DAGF with the objective of improving its governance structure. The AGM of Depfa Bank was held in Dublin on 20 April 2007 and was another opportunity for DAGF to raise a number of important issues, including the dividend and remuneration policies of Depfa.
The list of questions for the AGM we communicated to Depfa is available in PDF (see other publications on the restricted part of this web site). Although Depfa raised its payout ratio from 18% in 2005 to 26% in 2006, the payout remains far below Depfa's peers. The bank also needs to have a consistent dividend policy and to communicate on such policy.
We insisted again on these issues during the Q&A session. Several questions were also asked with respect to the remuneration policy. We believe that the remuneration paid to the management (including the variable remuneration and the share awards) is not in line with shareholders' interests. Depfa has distributed low dividends since 2002 and although the share price doubled in 2003 (which was not considered as satisfactory even by the bank's management), the evolution of the share on the stock market has been very disappointing during the last three years.
Our position is confirmed by our comparative analysis of the remuneration policy of Depfa and other banks listed on the Frankfurt Stock Exchange (see PDF document sub "other publications" on the restricted part of this web site). Due to the limited agenda of the meeting it was not possible to ask questions on all issues that we have already raised in previous letters to Depfa. Nevertheless, we managed during discussions that followed the AGM to insist once more on the need for Depfa Bank to improve its communication policy with investors and analysts as well as its corporate governance, including the separation of Chairman and CEO.
Our views and opinions will again be communicated to Depfa with additional arguments and recommendations in order for Depfa to bring those required changes. Please find on the restricted part of our web site (sub "other publications") some articles that were published in the German press on the occasion of Depfa's AGM.
For further questions, please call Pierre Nothomb or Charles Demoulin (+ 32 2 674 71 10).