Frankfurt / Munich / Düsseldorf (ots) –
- The time and content required for supervisory board mandates has increased significantly. Digitization plays an important role in this. At the same time, major corporate scandals show that the liability risks for supervisory boards in the event of breaches of duty have increased at least as much.
- More than a third of the supervisory boards (35 percent) are now women, and the statutory quota for women is largely met.
The dominant topic on the supervisory boards in recent years has been the statutory quota for women since 2016. Spencer Stuart, one of the top three executive search and leadership advisory companies worldwide, uses the “Board Index” to analyze how the work of the supervisory board and governance in relevant companies is changing and developing. To this end, Spencer Stuart examines all DAX 30 companies worldwide and in Germany as well as 38 companies from the M-DAX, S-DAX and Tec-DAX according to clearly defined criteria. It is currently evident that companies have made further progress in meeting the quota for women compared to 2018. Overall, the proportion of women rose from 32 percent to 35 percent of all mandates. This means that 90 percent of companies now meet the legal requirements.
Only a few women sit on the supervisory board
Despite this positive development, men clearly continue to dominate German supervisory bodies. Only a few companies have more women on the supervisory board than the law requires. In addition, there are only five of the companies examined with a woman at the top of the supervisory board. “The statutory quota for women has not yet had a major impact on the election of the chairman of the supervisory board,” says Dr. Claudia Schütz, member of Spencer Stuart’s German Board Practice. “However, we assume that this will change in the coming years with the growing experience of female supervisory boards. After all, the number of female chairmen has already risen from three to five compared to 2018.” In the DAX-30, only one company, Henkel, has a woman at the head of the supervisory body.
Fewer members, more meetings and committees
“At the same time, especially in a long-term comparison, the control obligations and requirements for the supervisory board have increased substantially,” says Ralf Landmann, Germany’s managing director of Spencer Stuart. This can be demonstrated on the one hand by the number of annual meetings, which has increased significantly from an average of 4.6 in 2008 to 7.1 in 2020. At the same time, the size of the supervisory board has decreased from an average of 16 people to 14 since 2010. The control work is therefore distributed over fewer shoulders. And it has not become less or less demanding – on the contrary. There have been numerous regular meetings in various committees. Practically all companies have introduced special committees, on average there are four with different functions and meeting cycles. For example, the work in the Audit Committee, which reviews the annual financial statements, discusses internal and external audit reports in detail with the auditors and prepares them for the plenary session, requires special knowledge of accounting and financial issues. Industry / sector expertise is also urgently required.
97 percent of the supervisory boards appoint members to an audit committee. A risk committee, on the other hand, is only found in seven percent of companies, and these are without exception financial institutions that are obliged to do so under the Banking Act. Almost half of all the companies examined also regularly discuss corporate strategy on the supervisory board; six years ago, such strategy meetings were only common at every third company.
Committees are becoming more digital
In order to find suitable supervisory boards, 93 percent of companies have now published a requirements profile for supervisory boards. Management experience remains a crucial requirement for the calling. At least 75 percent of the shareholder representatives on the supervisory board have these. In addition, experience in financial matters plays an outstanding role, 56 percent meet this requirement, an increase compared to the previous year of 49 percent. In contrast, the proportion of supervisory boards with industry experience fell slightly by two percentage points to 41 percent. Technology and digital skills are still in demand. Almost a third of the supervisory boards now meet this important requirement. “Not only to understand the digital strategy, but to question it competently and to classify and evaluate it in comparison to competitors – that is becoming an increasingly important task of the supervisory board,” says Landmann.
Corporate and accounting scandals illustrate the liability risks for supervisory boards
Recent events in Germany show how important it is to take the task of controlling the board very seriously. If there are corporate scandals with falsification of the balance sheet and even presumed criminal acts by board members, the question of a possible joint responsibility or even a culpable breach of duty by the supervisory board quickly arises. “Each individual supervisory board must be aware that it is their task to advise and control the management board, to check the internal control system, to critically question the figures and the strategy in order to get a comprehensive and differentiated picture of the To provide in the company, “says Landmann. Against this background, it is astonishing that although all the supervisory bodies in the Board Index have their work evaluated once a year, only 13 percent have such a board review carried out by external experts. “External specialists can make an important contribution here to identify deficits in control and to develop a critical view of the quality of the work of the supervisory board,” says Claudia Schütz.
More detailed information is available on the following selected topics in the “Board Index 2020 Germany”:
- Supervisory board remuneration: The sharp increase in previous years has flattened out.
- Share of foreign members on the supervisory board: continues to rise, but remains very heterogeneous, ranges from zero to 30 percent on the shareholder side
- Age and term of office of supervisory boards: More and more companies are introducing upper age limits.
- Former members of the board of directors on the supervisory board: At least they are not represented as often in the DAX as they used to be.
- Chairman of the Supervisory Board: is 65 years old on average, but varies widely.
You can find the entire Spencer Stuart Board Index 2020 Germany as an online version here.
To the study
The Board Index is an inventory of the activity of boards in major European countries and the USA. In Germany it has been published every two years for 18 years; the results are regularly placed in an international context. Spencer Stuart has been evaluating publicly available data from companies since 2012. For the latest Board Index 2020, the data from 68 companies were recorded. This includes all DAX 30 companies as well as 38 from the M-DAX, S-DAX and Tec-DAX.
About Spencer Stuart
Spencer Stuart has been a formative thought leader in the top executive search industry since it was founded in 1956. As one of the largest providers worldwide and in Germany, the partnership advises leading companies and organizations in filling key positions with suitable personalities. Spencer Stuart also supports clients with leadership advisory services in the development of potential and talent, in cultural issues and in the establishment and further development of supervisory bodies. Spencer Stuart has particular expertise in accompanying business-critical decisions at the highest level, in succession and takeover situations as well as in strategic processes and change phases. The company is represented worldwide with more than 60 offices in over 30 countries and covers different industries and functions with in-depth competence with more than 50 practices.
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Spencer Stuart Board Index Germany Higher requirements increasing risk German supervisory boards