Fresenius Medical Care on Thursday became the latest German company to face a reproach from investors, with only a narrow majority of shareholders giving its top management and supervisory board their vote of approval.
At the dialysis clinic operator’s annual general meeting, 56.81 percent of shareholders voted in favour of ratifying the executive board’s business conduct during 2018, Fresenius said.
In addition, its non-executive supervisory board, won just 52.32 percent of the vote.
A vote on management’s performance is a prominent feature at every German AGM. Approval rates are typically above 95 percent and are seen as a key gauge of investor sentiment, although the vote is largely symbolic because it has no bearing on management’s liability or tenure.
The low score for Fresenius Medical Care’s management comes as shareholders of German companies increasingly demand better corporate governance and an end to scandals.
Last month, shareholders at Bayer delivered the first ever vote of no confidence to the serving management of a DAX-listed company, amid anger over mounting litigation risks from the group’s $63 billion takeover of seed maker Monsanto.
At Fresenius Medical Care, shareholder advisory group ISS had recommended that investors vote against approving the actions of management.
ISS based its decision on the company’s $231 million settlement with the U.S. justice department at the end of March to resolve allegations that Fresenius paid bribes to officials in several countries to win or retain business. ISS also said that Fresenius’s long-term payout ratios were low.
Many institutional investors often follow the recommendations of ISS on voting behaviour at annual general meetings.
Shares in Fresenius Medical Care fell more than 34 percent in 2018, hurt by a profit warning in October as it grappled with a slowdown in its key North American business and a lower percentage of patients on higher paying insurance schemes.
A spokesman for Fresenius Medical Care said the company respected the outcome of the vote but said it believed the recommendation by ISS was not justified.
“We do not dismiss the topic, on the contrary,” the spokesman said, referring to the bribery case. “How we have handled it since the discovery of the incident shows that we take the matter very seriously and have always kept it up to date.”