ÖBAG: Our Boards Are Great!
A closer look at the holding company which oversees the Austrian state's shareholdings worth €34 billion in several major corporations which generate annual dividends of more than €650 million.
It always starts with a tweet. In this case, a pretty par for the course Austrian news article about a former Kurz party general secretary leaving politics for a cosy job with the company owned by one of the largest donor’s to the ÖVP. Absolutely normal modern Austria stuff, the quick shift from politics to lucrative private sector when you have exhausted both your political capital and therefore usefulness to those pulling the strings behind the scenes. However, what really struck me was buried in the text. The daughter of the donor, CEO of his company, sits on the board of ÖBAG:
Huh, I thought. That sounds interesting. So I decided to take a fresh look at who else is sitting on the ÖBAG management and supervisory boards after the holding faded from the news as the Schmid text scandals (for whom CEO of ÖBAG was his dream job until he was forced to resign in June 2021; the job, while it lasted, was Schmid’s reward for his unwavering loyalty to team Kurz) saw the end of their five minutes of infamy. Schmid had joined ÖBAG from his post as general secretary of the finance ministry.
ÖBAG is, per its own website:
…an independent holding company seeking to manage its investment portfolio leveraging an active management approach. Focused on long-term value creation, our mission is to preserve and grow our investments for generations – on behalf of all Austrians.
In other words, it is tasked with managing government stakes in companies on behalf of taxpayers. The government receives dividends from the shares it owns, and those are fed into the government budget.
So, what does ÖBAG own and how big is it?
€34 billion is huge, by any measure. That isn’t the total market capitalisation of these eleven companies; it is only the value of the Austrian state’s shares in those companies. Austria’s entire GDP is estimated to reach €383 billion in 2021, so the shares ÖBAG currently manages on behalf of the Austrian state have a value of nearly 10% of the country’s GDP.
A quick overview of ÖBAG’s portfolio it oversees, all values as of Dec 31, 2021:
51.0% of Verbund worth €17.5 billion (electricity) 31.5% of OMV worth €5.1 billion (oil & gas, chemicals) 28.4% of A1 worth €1.4 billion (telecom) 52.9% of Post worth €1.3 billion (post office, banking) 100.0% of BIG worth €9.0 billion (property, real estate) 33.2% of Casinos Austria worth €135 million (gaming) 33.0% of APK worth €20 million (pensions) other unvalued: Fimbag, GKB-Bergbau, IMIB, Schoeller-Bleckmann
These shares also pay dividends, which feed into the Austrian state budget. The 2021 figures aren’t ready yet, but the 2020 ÖBAG annual report (a piece of modern history in its own right) says dividends of more than €650 million were distributed to the Republic of Austria in 2021. Less than 2% dividend yield, not fantastic, but also nothing to roll your eyes at. Imagine how many covid tests that pays for (over 100 million at the current rate of €6 per test paid by the Austrian government to Alles Gurgelt).
Now that we’ve established what ÖBAG is and which assets it is responsible for overseeing (and don’t forget — voting as shareholders on all key decisions made by those respective companies’ boards of directors), let’s have a look at both who manages ÖBAG on a day to day basis (management board) and who oversees ÖBAG (supervisory board).
You probably last heard of ÖBAG in June 2021, when Schmid had to go and a search was launched for a new CEO with a reported annual salary of between €600,000 -€800,000. A few days later, a veteran of Pricewaterhouse Coopers and already sitting on the boards of Verbund, Erste Bank, and Austrian Airlines, Christina Catasta, was named interim ÖBAG CEO. I suppose meaning, she agreed to take on the role, but not forever. To be honest, it sounded like she had an awful lot of work on her plate already as a retired person.
By September 2021, Catasta had joined the boards of A1 and OMV, both ÖBAG holdings. Amazing how the “Frauenquota” in Austria can be achieved by nominating the one woman you trust to a dozen boards. I joke, but only a little bit.
A new CEO of ÖBAG took over in February 2022, so just a few weeks ago. She is a lawyer, Edith Hlawati, and already sits on the boards of two portfolio companies: A1 and Post. Hlawati will earn a reported €585,000 - €750,000 annual salary. Obviously someone must have said the role filled in the interim by a woman should be passed to another woman who could stay for longer. Fair enough. Hlawati’s Wiki bio doesn’t say much, but by all measures she does seem to have decades of experience in corporate law and advising on corporate finance, IPOs and the like.
The new CEO is now supported by two “Executive Directors” and two “Directors”. This is interesting because the 2020 annual report only mentions two Directors: Maximillian Schnödl (Head of Strategy) and Martin Holzinger (Head of Operations). Of the two, only Holzinger remains as a Director. Schnödl was very young when he joined ÖBAG, fresh from America, Harvard, Silicon Valley, as a (my favourite word in Austrian!) Digitalisierungsexperte, and from the look of the timing of things, on good terms with Kurz and Schmid. It is therefore probably not surprising that his name is no longer on the list of ÖBAG management.
The two new Executive Directors are consultant Carola Wahl and ex-OMV Robert Stajic. A new Director, Aakriti Chandihok is named who is responsible for legal and compliance. This Die Presse article amusingly refers to the new governance structure as of January 2022 as the “six eye principle”. Clearly after the shitstorm Schmid left in his departure (something that was hinted about even in April before his June resignation), someone decided it was time to make ÖBAG look like more than just a club for ÖVP loyalists. I also found a press article quoting Kogler as having suggested a four eye principle for ÖBAG in the wake of the Schmid scandal, so I guess someone decided six is even better than four?
So, that’s the day-to-day management team. Objectively speaking, everyone currently on the team appears to be properly qualified for their jobs. Sharing of power. Three women on a five person team. Outstanding.
Now let’s look at the Supervisory Board. The appear to make modest compensation in their roles; around €20,000 annually per this 2020 corporate government document.
Supervisory Board chairman remains Helmut Kern. Here you see him smiling for the cameras with Van der Bellen and Schmid in 2019. Kern himself only joined ÖBAG as supervisory board chairman in 2019. Although Kern lacked hands-on industry experience (he came from the consulting side and had run hospitals, he was reported to be on good terms with Kurz, and had supported him in the election campaign.
Kern had some interesting words to say about the new female CEO, Hlawati, when her appointment was announced last August.
Margaret fucking Thatcher! (pardon my French) You know how you know a society has made progress on involving women at top levels in business and politics? When you don’t have to accompany the nomination of a woman for an important job with a comment about her being a woman. When it becomes a non-issue. A July 2021 headline reads ÖBAG “repaired its Frauenquota” at its general meeting. No, I am not kidding: Auf der heutigen Hauptversammlung wird die Frauenquote repariert.
So now it gets interesting. In July 2021, the ÖBAG supervisory board announced it had replaced two men whose contracts were up with two women on its supervisory board. One of the new women is Nicole Schachenhofer, a member of the OMV supervisory board and a representative of the OMV employee council. Sold gold credentials, by any measure. The other new woman on the board is Caroline Toifl, a lawyer specialising in tax. Fair enough, at first glance. Kern said about the appointments at the time:
Extensive experience in the context of overseeing shares worth €34 billion is not a particularly descriptive choice of words. In the case of Caroline Toifl, I took a closer look at what kind of lawyer she is, given that law isn’t the same as sitting on corporate boards, managing major corporations, participating in management decisions, evaluating capex allocations, etc. What I found blew my mind.
July 2021, Toifl nominated to ÖBAG supervisory board:
April 2021, Toifl put on the cover of a magazine listing Austria’s top up and coming lawyers.
February 2021, Toifl giving press interviews as defense lawyer for a Martin W., ex-BVT accused of having helped Jan Marsalek of the Wirecard scandal who is still a fugitive. Martin W. is said to be the last person Marsalek met with before he fled Austria for Belarus (incidentally, a country A1 is still operating in despite it being run by ruthless dictator Lukashenko; wrote more about that here).
Can we just think about that for a second? How does a top-rated up and coming young criminal defense lawyer involved in defending Martin W., accused of having helped a famous fugitive, get nominated to oversee Austrian state shareholdings worth €34 billion? How does that happen? Were there no other female tax lawyers with corporate experience in Austria, if that was the profile the board was looking for?
I checked several times to see if there are two Caroline Toifls practicing as lawyers in Vienna, and nope, couldn’t find another one. She links to the glossy magazine lawyer rating on her homepage:
CAROLINE TOIFL.DIE RECHTSANWÄLTIN UND STEUERBERATERIN (2. v. l.) hat
The remaining Supervisory Board members at ÖBAG all have some industry expertise (some very senior, some less so), and although for sure ÖVP connections, such as what I learned on the tweet that got me down this rabbit hole (Iris Ordner to her credit has years of business experience, sits on several supervisory boards, and has top academic business and engineering degrees).
Perhaps more digging can be done another day, I’m just surprised that I stumbled upon this story as an ordinary person with access to Google, and I can’t find media reports from within Austria questioning any of this. Strange. Everything I wrote here is based on media reports and public information. The papers repeat the same APA story from July 2021 announcing the board changes without questioning the rationale behind them.
Celebrating women in business is great although if you are a modern, developed society you don’t have to shout about it. Women have no fewer qualifications than men to lead companies or boards, what is the big deal? Let’s treat women just like we treat men: ask what qualifies them to be there in the first place. In this case, I can’t find any obvious answers.
How do “defense and criminal representation in commercial criminal matters”, knowledge of how to defend against charges of tax fraud, and helping clients through tax audits qualify one to serve on a board managing assets on behalf of the Austrian state across diverse industries worth €34 billion, contributing €650 in annual dividends, and providing over 135,000 jobs? I don’t have a good answer to that question.
As for Thomas Schmid, he left a lot in his wake. He is still the subject of legal processes related to his chats.
All of this, I think, provides a strong argument for selling the shares in the open market and having the Austrian state exit all of these companies. An umbrella company like ÖBAG only lends itself to attempts at political (including from abroad) influence, inefficient management, too many chefs in the kitchen, particularly those without the relevant experience necessary to help guide these companies they manage the shares in.
A final thought. This isn’t about one person who ended up in a role with surprisingly few direct qualifications, or a political ally who had to leave his dream job after his texts were exposed. Those are just symptoms of the disease. The state is no better shareholder than the average passive institutional investor, and running ÖBAG for sure costs the Austrian budget several million Euros each year.
Sell the shares worth €34 billion, invest them in infrastructure, hospitals, schools, kindergartens, universities for the future, adult education, integration, climate-friendly projects, affordable housing, a future for the young generation of Austria, the entire social spending wish list!
Publicly owned companies are always inherently more efficient because they have to report to the stock market every single day. Get the state and ÖBAG out. It’s a leftover from a bygone era of inefficient state ownership of national industry.