Arguments rage in PNE shareholder showdown

It was billed as the ‘showdown of Cuxhaven’ and it happened last Tuesday. However, we must wait longer before we know the winner.

The ‘showdown of Cuxhaven’ may not sound an interesting name for a big battle. It is not exactly the ‘Rumble in the Jungle’. But, for us wind industry onlookers, it is a fight worth following because it concerns the future of German developer PNE Wind.

The firm may have sold its UK portfolio for €141m this week, but that is the least interesting thing that it did.

The ‘showdown’ itself took place the PNE Wind’s annual general meeting on Tuesday. On one side is PNE chief executive Martin Billhardt, chairman of the supervisory board Dieter Kuprian, and some other members of the supervisory board. On the other side is Volker Friedrichsen, who owns 15% of PNE, is a member of the supervisory board, and enjoys some of his own support on the board. The battle surrounds who should control the firm.

However, in the end, there was no resolution last week. The fight raged for 12 hours and, in the end, the meeting was postponed to be continued at a later date as yet undecided.

But how have things got so heated at PNE?

The animosity follows PNE’s acquisition of a 53% stake in fellow German developer WKN for €93m, which concluded in July 2013, from Friedrichsen. In its 2014 results, PNE said it had been forced to make writedowns because some of WKN’s projects were overvalued; and PNE claimed €6.2m from WKN in late 2014 because of the hit to its operating profit.

Billhardt has since said Friedrichsen is “exposed to a permanent conflict of interest” that “negatively impacts” his work on the PNE supervisory board. Billhardt has called for his removal, along with fellow board members Peter Baron von le Fort and Astrid Zielke.

Meanwhile, Friedrichsen has raised concerns about the way PNE is run, and particularly about pay. He argued that remuneration on the firm's supervisory board is one of the highest in Germany, even though the company’s turnover in 2014 was just €158m.

He also argued that PNE shareholders were being kept in the dark about the €341,000 that Kuprian was paid last year in his role as chairman of the company’s supervisory board, because €229,000 came from PNE and €112.500 from WKN. Friedrichsen also said he had lost confidence in PNE management, including Billhardt.

The PNE management and supervisory boards are set to thrash out these arguments at another AGM in the near future. It is difficult to imagine them coming to a resolution, and we would not be surprised to see one or more key player leave in the near future.

The big issue here to us is the accusation that pay is too high, as it goes right to the heart of how PNE is run. We cannot comment on whether PNE leaders are paid too much as, ultimately, this is a free market and it is not a concern as long as shareholders are happy.

However, it is natural that executive pay will come under scrutiny when a company has seen first quarter sales fall 54% year-on-year to €15.2m; and first quarter operating loss grow from €800,000 to €6m in the same period. This is from PNE first quarter results.

In its defence, PNE has asserted that it had a strong start to 2015, including a healthy set of development projects in Germany.

We are not particularly interested in those projects, though. We just want to know who will be in charge when they complete.