European Investors urges immediate action from Wirecard to improve governance
By appointing Thomas Eichelmann as Chairman of the Supervisory board, Wirecard violates an important provision of the German Corporate Governance Code. Mr Eichelmann also holds the chair of the Audit Committee. The German Corporate Governance Code provides however that the chairman of the Supervisory Board shall not chair the audit committee.
Paul Koster, CEO of European Investors: “Given the recent allegations of potential fraud at Wirecard, European Investors believes it is crucial that Wirecard adheres to the highest governance standards.“
International standard of good governance
The German Corporate Governance Code provides that the chairman of the Supervisory Board shall not chair the audit committee. The provision is a well-known international standard of good governance and is also part of the UK and Dutch Governance Codes for example.
This is to assure the independence of the Audit Committee within the governance of listed companies. Moreover, an independent audit committee chairman is preeminent for effective whistleblower procedures as employees should be able to report possible misconduct, irregularities and/or possible fraud to the committee without (fear of) reprisal. Currently, the latter is essential at Wirecard.
European Investors’ analysis shows that 29 from the 30 DAX Index companies comply with this provision. Wirecard therefore is the outlier.
Investors request an explanation
Wirecard recently announced the unexpected resignation of Wulf Matthias as Chairman of the Supervisory Board as well as the election of Thomas Eichelmann as his successor with immediate effect.
The internal control and risk management systems at Wirecard are under scrutiny as a result of (recent) allegations concerning misleading accounting and fraud. With an ongoing special audit by KPMG, European Investors believes Wirecard owes its shareholders a detailed and adequate motivation for the far-reaching decision of replacing the chairperson of the Supervisory Board and to uphold the combination of the chair positions.“