Shareholder values

EADS is a Dutch public limited company (“NV”), with headquarters in the university town of Leiden. When this pan-European enterprise was set up in 2000, the Netherlands happened to be both tax haven and neutral ground, quite in the centre of Europe. Initially EADS, one of the world's largest arms companies, was just a letterbox company, registered in Schiphol. But after its Astrium space division took over Dutch Space (formerly Fokker Space) in 2006, EADS moved its official headquarters together with some staff to Leiden. While Paris and Munich are still the centres of gravity for EADS, its legal basis requires their shareholders meeting to be held in Amsterdam. In recent years this normally rather dull event takes place in the prestigous Okura hotel.

This year we decided to welcome the shareholders at the entrance of the Okura.

Most shareholders were in a good mood, as the losses of 2009 had turned into profits, partly thanks to some firm Libyan contracts.

Not everybody at the meeting was so happy. Together with two German colleagues I was inside at the meeting thanks to three shares that were 'lent' to us. Of course we used the opportunity to ask some nasty critical questions to the board of directors.

We wanted to know for example whether and what lessons they had learned from the recent events in the Middle East and North Africa. And what they thought of the fact that now both Libyan rebels (through Qatar) and Khadaffi's troops were using MILAN anti-tank weapons. And what happened to the EADS agency that was set up in Tripoli as soon as the arms embargo against Libya was ended in 2004.

While EADS CEO Louis Gallois politely tried to answer all questions, unfortunately (but not unexpectedly) the quality of the answers was poor. Indeed, the classic excuse of arms companies was raised again: we only sell weapons that we are allowed to sell by our governments. This is about politics and we don't do politics. “It's not the industry to take this decision”, Gallois said with a straight face. He also assured the shareholders though that EADS had not sold “equipment that could have been used against demonstrators”. But, as Gallois made clear, “I am not apologetic on our military activities”.

Less scrupulous shareholders did not need apologies for what is a clearly a 'win-win-win-win' situation for the value of their shares. Having sold to both Khadaffi and the allied forces that now attack him, also soon replenishing Qatar's depleted MILAN stocks and with rebels that have already indicated that European arms producers are more than welcome to resume deliveries should they take over the country. That is shareholder value for money.

[FS, 27 May 2011]