GSW shareholders vote no confidence in CEO Bernd Kottmann

Listed German residential company GSW has been thrown into turmoil after 63% of shareholders backed a motion of no confidence in CEO Bernd Kottmann.

The support for the motion far exceeded the 50% needed but does not compel him to resign.

GSW's supervisory board is to hold an extraordinary meeting in the next few days to decide how to respond.

A question mark also hangs over the supervisory board as 70% of shareholders represented during the general meeting on Tuesday backed a separate motion calling for the dismissal of supervisory board chairman Eckart John von Freyend.

The result of the vote on Von Freyend is not bidding as a majority of 75% would have been needed for the motion to be carried.

Speaking to a Bloomberg journalist after the meeting, Von Freyend did not indicate whether he or Kottmann would step down.

Both motions had been submitted by shareholder PGGM, a €133 bn pension fund administrator rooted in the Dutch healthcare sector.

PGGM tabled the motions after raising concerns about how Kottmann was appointed in April.

In a statement in May, PGGM said it believed the appointment of Kottmann was not done in a transparent way. Kottmann came from troubled German listed company IVG Immobilien to replace Thomas Zinnoecker in mid-April. Once the leader of the German property pack with a market capitalisation of €7.2 bn in 2007, IVG has since dwindled into a penny stock with a market cap of just €83 mln in May this year.

Zinnoecker GSW left to head Gagfah, the largest residential property owner in Germany.

'PGGM deems it extremely important that the companies it invests in should have and maintain a robust corporate governance structure,' the second largest pension fund in the Netherlands said. 'PGGM finds the procedure adopted for the recent appointment of a new CEO at GSW to be unacceptable,' it added.

PGGM said there were 'several indications' that cast doubt on the diligence of the appointment process, and that written and verbal inquiries directed to Von Freyend failed to dispel these concerns.

PGGM noted that both Kottmann and Von Freyend worked at IVG, which PGGM said 'got into great difficulties in 2008 under their management.'