Metro-CEO Eckhard Cordes's friends and foes

Two November will be the day of reckoning for Eckhard Cordes, chairman of the executive board of the German multinational Metro Group AG. The mother holding of Media Markt, Saturn, Metro, Makro, Galeria Inno and many more will then decide about Cordes’s position. In a story that could easily feature in a soap series on tv, Cordes has the two major stockholders on his side, but faces fierce opposition of minority stockholder and Media Markt founder Erich Kellerhals.

Even though Cordes still has a contract until October 2012, the November meeting of the supervisory board can already decide on a contract renewal. Mike Dawson, editor at German newspaper Lebensmittel Zeitung, thinks it will be a disputed decision, as “Cordes has been especially good at creating negative publicity”.

One major foe

Cordes’s biggest problem is his fierce rivalry with one of the most important shareholders of the Metro Group retail empire. Being the founder of one of the major companies that merged into Media Group, Erich Kellerhals (72) has an important minority share of Metro Group… and the right to veto. Any of Cordes’s decisions needs the approval of 80% of shareholders, and of course that of Kellerhals himself. 

Several important cases are still waiting for Cordes’s approval, such as the selling of underperforming units like Kaufhof (department stores) and Real (hypermarkets). Both have been terribly delayed by the strict (to say the least) company policy regarding his decisions. The flotation of consumer electronics chain Media-Saturn is also still pending: that process would go considerably smoother without people watching his fingers according to Cordes – another of his arguments to limit the powers of people like Kellerhals. Last March, Cordes obtained an important victory, as the retail powerhouse considerably limited the rights of minority stockholders (totalling 21% of Media Group’s shares).

Defending his life’s work

Kellerhals on the other hand remains critical and assertive: on the press conference announcing the 2010 company results, he even managed to cast a shadow on the excellent company results by demanding Cordes’s immediate departure. With abundant body language and strong words, Kellerhals made sure everyone understood that he was merely defending his life’s work. “I will not allow that mr. Cordes destroys what made us big and influential”, as the hale old man explained.

The German media happily covered the personal feud extensively and  pictured Cordes as the personification of the huge, authoritarian conglomerate that wants to silence self-made man Erich Kellerhaus – rendering the former terribly unpopular.

Ending the doubt

A major disadvantage for Cordes is of course that he has reached a satisfying outcome in none of the aforementioned cases. There is still no buyer for Kaufhof, still no peace at Media-Saturn and according to certain rumours, Cordes is even withdrawing the sale of hypermarkets Real. Moreover, Metro’s shares have lost half of their worth in the four years of Cordes’s reign at Metro Group – another argument for the shareholders not to like him.

Still, the two majority shareholders at Metro Group, the Haniel and Schmidt-Ruthenbeck families, have confirmed their support for Cordes. “He deserves our support because the shareholders think the continuing public doubt regarding Cordes and his position should end soon”, as Dawson states. 

Worried about bloodshed

Their worries are justified, because no-one knows what would happen if Kellerhals gets his way and Eckhard Cordes has to leave Metro Group after 2 November. There certainly is no successor present to take over, because “like all men of power, he (Cordes) has strived not to groom a serious contender who could challenge him”, as Lebensmittel Zeitung’s Dawson thinks. He continues to say that “they may recruit from outside a top banker, e.g. Deutsche Bank CEO or similar”.

Still, that doubt will linger, along with the feud with Kellerhals. Everyone, and Kellerhals in the first place, will watch Cordes very closely if he receives a contract renewal – even if the two families have pledged their support. “The conflict with Kellerhals is not over yet and I don’t think the Supervisory board meeting will solve the problem. Kellerhals’s blood is boiling and he wants revenge. He is old and rich and can not be bought with a judicial settlement. I don’t see this conflict end without some serious bloodshed”, as Dawson concludes.