London - A second leading shareholder advisory firm recommended Volkswagen shareholders oppose next week's vote of confidence in the German carmaker's management on Wednesday, due to its handling of an emissions cheating scandal.
Wednesday's advice from Institutional Shareholder Services (ISS) follows a call from fellow advisory firm PIRC for investors to oppose Volkswagen's management board.
However, unlike PIRC, ISS backed a controversial dividend payout by Volkswagen, which has been caught in a diesel emissions test-cheating scandal that caused it to report a record loss and damaged the car company's share price.
The “Dieselgate” affair has prompted activist hedge fund TCI to call for a radical overhaul of automaker, setting the scene for a lively annual general meeting next week.
An ISS report gave VW the highest level of risk and the group said investors should vote against the both the management and supervisory boards. ISS also urged investors to vote against all non-independent nominees to the supervisory board, given what it said was a low board independence of just five percent.
Read also: The end of VW’s empire building age
ISS said it backed four special audits sought by shareholders Deutsche Schutzvereinigung fuer Wertpapierbesitz e.V. and Deminor Recovery Services, which aim to see if board members were in breach of their duty over the scandal.
Clarification of liability could result in shareholder claims for damages against individuals, it said, “and there are justifiable concerns about the company's ability to investigate these matters internally and present their findings to shareholders in an impartial and transparent manner”.
Unlike PIRC, however, ISS backed a planned dividend payout of 0.11 euros per ordinary share and 0.17 euros per preferred share, in spite of Volkswagen's 2015 loss.
REUTERS