Hermes seeks Infineon succession plan

The battle over corporate governance at Infineon has resurfaced after an influential UK investor urged the German chipmaker’s chairman to present a succession plan in the next two weeks.

Hermes, the UK fund manager instrumental in a shareholder revolt at the German group this year, has sent Klaus Wucherer, Infineon’s chairman, a letter pressing him publicly to outline details of a departure timescale and investor involvement in the search for his successor.

The move comes amid widespread speculation among investors and analysts that Mr Wucherer might now be unwilling to propose a candidate to succeed him at the next shareholder meeting in February 2011.

Infineon on Sunday declined to comment.

But a senior executive told the Financial Times that the succession process was well on track and that Mr Wucherer had informed Infineon’s largest investors in detail about the criteria for searching for a new chairman.

“Everything is going as planned. In the next few weeks there will be talks with a number of candidates and Mr Wucherer will present his successor at the AGM in February,” the executive said.

But in Hermes’ letter dated on Friday, obtained by the Financial Times, Hans Hirt, head of corporate governance, wrote that he was “worried” about the abundant speculation.

“Those rumours inflict damage on the company and prevent investors from regaining the trust they have lost in the past few years,” Mr Hirt wrote.

The letter could reignite a spat between investors and Mr Wucherer, who narrowly avoided being ousted at this year’s shareholder meeting by proposing to stay at Infineon’s helm for only one year.

Two investors told the FT that they did not feel well-informed over the search for a chairman, which will need to be finalised by the end of November to bring it onto the agenda for February’s shareholder meeting.

Investors have been puzzled by rumours that Infineon has hired a London-based headhunting firm specialising in high-paid international top executives, which is seen as a fruitless move because the group’s chairman receives a €50,000 ($70,000) annual salary.

In the letter, Hermes proposed that Mr Wucherer urgently assess the supervisory board’s remuneration and, if needed, ask for an increase at February’s shareholder meeting to be able to lure an “outstanding candidate” to replace him. People close to Infineon said that the group was already pondering such a move.

Infineon has for years been the target of shareholders’ anger over the group’s abysmal share price performance in the years before 2010 and owhat they perceive to be poor corporate governance.

But this time, Infineon’s investors might be mollified by rapidly rising revenues and profits and a 40 per cent increase in Infineon’s share price this year.