We permit the publication of our auditors’ report, provided the report is published in full only and is accompanied by the full financial statements to which our auditors’ report relates, and is only published on an access-controlled page on your website, to enable users to verify that an auditors’ report by independent accountants has been commissioned by the directors and issued. Such permission to publish is given by us without accepting or assuming any responsibility or liability to any third party users save where we have agreed terms with them in writing.

Our consent is given on condition that before any third party accesses our auditors’ report via the webpage they first document their agreement to the following terms of access to our report via a click-through webpage with an 'I accept' button. The terms to be included on your website are as follows:

I accept and agree for and on behalf of myself and the Trust I represent (each a "recipient") that:

  1. PricewaterhouseCoopers LLP (“PwC”) accepts no liability (including liability for negligence) to each recipient in relation to PwC’s report. The report is provided to each recipient for information purposes only. If a recipient relies on PwC’s report, it does so entirely at its own risk;
  2. No recipient will bring a claim against PwC which relates to the access to the report by a recipient;
  3. Neither PwC’s report, nor information obtained from it, may be made available to anyone else without PwC’s prior written consent, except where required by law or regulation; and
  4. PwC’s report was prepared with Hermes Property Unit Trust's interests in mind. It was not prepared with any recipient's interests in mind or for its use. PwC’s report is not a substitute for any enquiries that a recipient should make. The financial statements are as at 25 March 2017, and thus PwC’s auditors’ report is based on historical information. Any projection of such information or PwC’s opinion thereon to future periods is subject to the risk that changes may occur after the reports are issued and the description of controls may no longer accurately portray the system of internal control. For these reasons, such projection of information to future periods would be inappropriate.
  5. PwC will be entitled to the benefit of and to enforce these terms.
I accept

1. Select your country

  • United Kingdom
  • Austria
  • Australia
  • Belgium
  • Denmark
  • Finland
  • France
  • Germany
  • Iceland
  • Ireland
  • Italy
  • Luxembourg
  • Netherlands
  • Norway
  • Singapore
  • Spain
  • Sweden
  • Switzerland
  • USA
  • Other

2. Select your investor type

  • Financial Advisor
  • Discretionary Investment Manager
  • Wealth Manager
  • Family Office
  • Institutional Investor
  • Investment Consultant
  • Charity, Foundation & Endowment Investor
  • Retail Investor
  • Press
  • None of the above

3. Accept our terms and conditions

By clicking Proceed I confirm I have read the important information and agree to the terms of use.


The Hermes Investment Management website uses cookies to remember your preferences and help us improve the site.
By proceeding, you agree to cookies being placed on your computer.
Read our privacy and cookie policy.

Hermes EOS comments ahead of Deutsche Bank AGM

Home / Press Centre / Hermes EOS comments ahead of the Deutsche Bank AGM

Ahead of the Deutsche Bank AGM tomorrow, Hans-Christoph Hirt, Head of Hermes EOS at Hermes Investment Management, assesses the bank’s progress and highlights areas for improvement.

Robust strategy progress despite reversals

We welcome the focus of Deutsche Bank’s Strategy 2020 on reducing the bank’s scope, complexity and costs and shrinking risk-weighted assets with the ultimate objective of creating sustainable returns for shareholders. Deutsche has made robust progress in the implementation of Strategy 2020, including significantly improving its capital position.

We commend Deutsche for the way it handled a very difficult period in the second half of 2016 following rumours about the size of a potential settlement with the US Department of Justice (DOJ) for mis-selling mortgage-backed securities before the financial crisis. The $7.2 billion settlement with the DOJ and progress on other significant litigation matters is very welcome.

However, the reversal of Deutsche’s strategy on Postbank, which was put up for sale in 2015 but will now be re-integrated, and its Asset Management business, which the bank very recently declared core but now plans to partly float, raises questions about the bank’s ability to develop thoroughly considered strategic positions and then execute them. We recognise there were fundamental reasons for these strategy shifts, but Deutsche should now move forward with the re-integration of Postbank and the flotation of a minority stake of its Asset Management.

We look forward to the management board’s further execution of Strategy 2020 and delivering on the cost reduction, capital and return targets communicated for 2018 through 2020.

Supervisory board election

We are supporting the election of the proposed candidates for election to the supervisory board. However, two of the candidates have been suggested by two of Deutsche’s largest shareholder groups. While there is nothing wrong in principle with the representation of major shareholders on the supervisory board, we urge the nomination committee to carefully monitor its composition and ensure a robust nomination process. It is vital that the supervisory board is composed in a way that ensures an optimal mix of experience, skills, diversity and adequate independence. This can be compromised when major shareholders press for representation by their candidates on the supervisory board. The nomination committee should consider and communicate how it will manage this challenge going forward.

Remuneration of management board

We commend Deutsche for not paying any bonuses to the members of the management board for a second year in a row. Furthermore, we welcome the significantly reduced size (down almost 80%) of the bonus pool for senior employees1 . While a total of €1.1 billion was granted to retain key staff2, the overall approach to remuneration has sent a positive signal to shareholders that the bank is committed to aligning management and executive pay better to shareholder returns.

Last year we opposed the proposed new remuneration system due to an array of concerns, ranging from the inadequate transparency regarding the performance criteria and targets in general and the proposed so-called Division Performance Award, to the high level of discretion of the supervisory board concerning variable remuneration. We are pleased to see that that the supervisory board has taken the criticism of shareholders into account and overhauled the remuneration system. Many of our suggestions, including better disclosures, a reduced weighting of relative Total Shareholder Return (TSR) and the adjustment of the peer group, have been implemented. We also welcome the removal of the Division Performance Award. While we continue to have concerns about the lack of specific disclosures around certain performance metrics and particularly targets, in the light of the good track record of the supervisory board in exercising discretion, we will support the new remuneration system.

Culture and transparency improvements needed

We remain underwhelmed by Deutsche’s progress on culture change. The most recent employee engagement survey suggests that the employee commitment and enablement index levels have declined to critical lows3 . However, we welcome the fact that more Deutsche Bank employees now observe changes in their behaviour.

Further to this, we urge Deutsche to develop an ambitious sustainability strategy with tangible targets which is integrated into and supportive of its business strategy. Given the more pressing issues highlighted above, this has not been a focus of the bank over the last couple of years. However, in support of Deutsche’s objective to create adequate returns for shareholders, it needs to move from a reactive to a proactive approach to sustainability.

In the light of the substantial shareholder support for special audit proposals at last year’s AGM and similar requests this year, we implore Deutsche to be more transparent about the internal investigations that it has conducted into alleged wrongdoing by management and supervisory board members. This is a necessary step, to provide clarity, regain shareholder trust and move on.

  1. 1 Deutsche Bank Annual Report 2016, p. 239
  2. 2 Deutsche Bank Annual Report 2016, p. 244
  3. 3 Deutsche Bank Annual Report 2016, p. 254-255
Share this post:
Hans-Christoph Hirt Dr Hans-Christoph Hirt is an executive director and board member at Hermes EOS and as Head of the organisation responsible for the sustainable success of the business. He leads and oversees the global engagement programme and the quality of the services Hermes EOS provides to its clients around the world. Hans also leads some high-profile stewardship activities, including priority engagements with major companies in Asia and Germany, as well as interactions with key regulators and organisations. Prior to joining Hermes EOS, Hans worked with international law firm Ashurst. He is the author of numerous publications on corporate governance and law, responsible investment and stewardship. Currently, he is a member of the Steering Committee of the UN PRI Investor Engagement Clearinghouse and the Shareholder Responsibilities Committee of the International Corporate Governance Network. In 2015, he joined the Institutional Investor Council in Malaysia. Hans is a UK-qualified lawyer, holds degrees in Business Administration from universities in Germany and the UK, the ACCA qualification and a PhD from the London School of Economics (LSE). He continues to be involved in academia as a Corporate Governance Fellow at the LSE’s Financial Markets Group and a Teaching Fellow at University College London. Hans speaks French, German and Mandarin.
Read all articles by Hans-Christoph Hirt

Find posts by author

  • Alex Knox, ACA
  • Andrew Jackson
  • Andrew Parry
  • Claire Gavini
  • Dr Michael Viehs
  • Emeric Chenebaux
  • Eoin Murray
  • Geoffrey Wan, CFA
  • Harriet Steel
  • Ilana Elbim
  • Jonathan Pines, CFA
  • Joseph Buckley
  • Louise Dudley
  • Mark Sherlock, CFA
  • Martin Todd
  • Maxime Le Floch, CFA
  • Michael Russell, CFA
  • Michael Vaughan
  • Neil Williams
  • Nick Spooner
  • Nina Röhrbein
  • Peter Hofbauer
  • Philip Nell
  • Saker Nusseibeh
  • Silvia Dall’Angelo
  • Tatiana Bosteels
  • Tim Crockford
  • Tommaso Mancuso
  • Yasmin Chowdhury

Find posts by category

  • eos
  • governance
  • stewardship

Press contacts