Hermes EOS is encouraging shareholders to take a stand against Volkswagen's "unsatisfactory progress" in dealing with corporate governance issues which contributed to the emissions scandal.
The investment advisory firm has urged VW shareholders not to absolve the management from responsibility for actions taken in 2016. It has also called for the rejection of the car firm's remuneration policy and for investors to vote against the discharge of the management and supervisory boards.
While it said elements of the revised pay policy were positive, such as bringing in absolute pay caps, Hermes said the performance criteria for the bonus aspect of the pay package were not "sufficiently challenging".
Dr Hans-Christoph Hirt, head of Hermes' stewardship and engagement team, said the company's recommendation to vote against the discharge of the management and supervisory boards "rests on Volkswagen's unsatisfactory progress in uncovering the corporate governance and culture problems which contributed to the emissions scandal".
Hermes feels the car giant has "failed to systematically address those problems to date".
We also oppose the revised remuneration policy.
While there have been some long overdue improvements to the policy, it still lacks sufficiently challenging performance metrics for the bonus component and, in our view, may provide an inappropriate level of pay for mediocre company performance.
Hermes is calling for three actions to be taken by VW: the publication of key findings of the external investigation by US law firm Jones Day, an independent review of corporate culture and a call for an independent board evaluation.
It said these are needed to draw the necessary conclusions from the scandal, "to overcome it and move on".
While VW's initial intention was to inform shareholders about the external investigation findings at last year's AGM, Hermes said no report had been published to date, and "according to the company, such a report will not be provided to the public in the future".
The global investment adviser has spoken out against the car firm's management before regarding the emissions scandal.
The incident first became public in the US in September 2015 and it emerged that VW had fitted "defeat devices" to around 11m cars worldwide, allowing them to circumvent pollution control tests.
At last year's AGM, Hermes called on shareholders to vote against VW's board and called for a special audit of its directors.