Ackermann defends huge Mannesmann bonuses
Friday 03 November 2006
Deutsche Bank's chief executive, Josef Ackermann, yesterday defended the multimillion-euro bonuses awarded to top Mannesmann executives during the company's controversial takeover by Vodafone in 2000, insisting that the €57m (£38m) payments were made to ensure that the deal was a success.
Mr Ackermann told a regional court in Dusseldorf that the payments served as "special compensation for the executives' extraordinary achievements" and were designed to finish the job of integrating Mannesmann into Vodafone.
"It was our conviction that the success of the new company in the first month was dependent on the full commitment of the team," Mr Ackermann told the court. "If there had been even the slightest indication of illegality, then I would not have acted as I did," he insisted.
"Such bonuses determine the image of a company, internally and externally. They show that achievement matters," he added.
Mr Ackermann, together with five other former Mannesmann executives, is undergoing a retrial ordered by a German federal court last December after all were acquitted in their first trial in 2004.
The six face charges of criminal breach of trust that are alleged to have occurred in 2000 when the company was merged with Vodafone in a €154bn takeover.
During the merger, Mannesmann executives were awarded the bonus payments. German prosecutors maintain that the awards were excessive, ignored the interests of shareholders and violated legal obligations to be good stewards of company funds.
In Germany, the case has been portrayed as a battle between practitioners of Anglo-American business and those who adhere to the more restrained style of traditional German company management.
However, defence lawyers maintain that the payments were an appropriate reward for increasing the value of the company during the takeover battle. Specifically defending a €3m bonus paid to the Mannesmann board chairman, Joachim Funk, Mr Ackermann said: "It was a signal to the workforce to end hostilities after the takeover battle."
Mr Ackermann is on trial with Mr Funk, Klaus Esser, the former Mannesmann chief executive, Dietmar Droste, the company personnel chief, and the former board members Juergen Ladberg and Klaus Zwickel, who is the former head of Germany's IG Metall engineering workers' union.
Mr Esser, who substantially raised Vodafone's bid during negotiations that led to the takeover, insisted yesterday that his own reward of more than €15m was "not uniquely high, only uniquely transparent".
Mr Ackermann was a member of the Mannesmann supervisory board at the time of the takeover and did not receive any bonus himself. He has said that he will resign his post as the head of Germany's biggest bank if convicted. The case is expected to last until the end of February 2007.
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