Welcome to the Centre for Corporate Governance
Corporate Governance in Germany is characterized by a number of unique features, chief among them being the requirement under the German Stock Corporation Law (AktG) that boards of directors are divided into two tiers: a management board (called the Vorstand) which is solely responsible for the management of the company, and a supervisory board (called the Aufsichtsrat), which is charged with overseeing the activity of the management board. German boards of directors are also unique in that, under the German 'Co-determination Law', supervisory board members of large companies (> 500 employees) are elected both by shareholders and by company employees: the employees elect one third or half of the board (depending on the size of the company). Neither shareholders nor employees elect members to the management board; instead, these members are appointed by the supervisory board. The German Corporate Governance Code (Codex) works on a 'comply or explain'-basis and aims at making the German Corporate Governance system more transparent and understandable.
Corporate Governance Forum
Corporate governance newsletters
The current issue of the Deloitte Corporate Governance Forum focuses on Executive and Supervisory Board remuneration.
By way of an introduction, current developments in Supervisory Board remuneration at medium-sized and large companies are presented and the appropriateness of the remuneration levels critically discussed. The extended requirements of the German Corporate Governance Code (GCGC) with regard to the disclosure of Executive Board remuneration are also explained.
The issue continues with the key results of the recent Deloitte survey on the development of Executive Board remuneration at DAX companies and also international developments in management remuneration. The legal contributions explain Federal Supreme Court (BGH) decisions on the treatment of incorrectly elected Supervisory Board members and also the breach of duty by Executive directors when acting outside the company’s objects and points to the implications for Supervisory Board practice. The contributions which focus on accounting issues discuss the balance sheet presentation of share-based remuneration, indicate possible developments in the valuation of pension provisions and present currently proposed changes to accounting for leases in IFRS financial statements.
Corporate Governance Forum - Special Issue
On 30 November 2011, the EU Commission published legislative proposals for the regulation of the audit of annual accounts.
The draft severely restricts the decisionmaking powers of supervisory boards and shareholders regarding the appointment of auditors and would, in our view, have far-reaching consequences not only for the auditors, but also for the companies to be audited, and for the German economy as a whole.
This special issue of Corporate Governance Forum explains the proposals for the new regulation and their implications.
Governance specialists from Deloitte member firms around the globe (Asia, Middle East, Europe, and the Americas) provide insight into 12 boardroom priorities for 2012. Each article contribution includes questions that directors may ask to further explore the issues with their own boards, as well as related resources for each topic.
Impact of Corporate Governance on Share Prices
Deloitte together with the university of Duisburg-Essen carried out a survey on the impact of corporate governance on listed companies' share prices. The survey is based on data provided by 87 listed companies and 59 financial analysts. The study reveals a number of interesting results: For example, company representatives assume that they can appraise the effects of providing transparent information to financial analysts very well. However, financial analysts tend to estimate the effects of confidence-building measures to be more important than do company representatives.
> Download PDF (German only)
Corporate Governance Code: Amendments in 2012
The German Corporate Governance Code has been amended as per May 15, 2012. In the light of the aim of professionalising the work performed by the supervisory boards of listed German companies, particular attention has been paid to adding details to the Code recommendation concerning the independence of supervisory board members (Point 5.4). Besides this amendment the Government Commission for the German Corporate Governance Code among other things redesignates as a recommendation the existing proposal that the chairman of the supervisory board should not also be chairman of the audit committee.
Furthermore, the Government Commission has changed the recommendation for the remuneration structure of the supervisory board members. Thus where performance-based remuneration is also awarded in addition to a basic salary, the former will primarily be related to longterm company performance.
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New rules regarding the appropriateness of Management Board Remuneration
The Act regarding the Appropriateness of Management Board Remuneration (VorstAG) came into force on August 5, 2009. It aims to address shortcomings regarding management board remuneration, which has been seen as one cause of the current financial and economic crisis. The following publication from the law firm Mayer Brown provides details on the new regulations.
(published with permission)
Board Composition: Turning a Complex Issue into a Strategic Asset
In this briefing, Russell Reynolds Associates’ European CEO/Board Services team reviews the numerous factors affecting the composition of European supervisory boards and offers a model of director attributes to guide boards in refining their composition strategy.
Risk Intelligent Governance
A Practical Guide for Boards
This publication advises boards on their risk oversight responsibilities by providing six areas of focus and action-oriented steps, questions for management, and tools that may help the board implement improvements in each area.
Directors' Alert 2013: Lead or to be led
The fourth edition of the Global Center for Corporate Governance’s Director Alert, a global publication examining some of the top challenges likely to face companies and their boards of directors in 2013, focuses on governance topics such as strategy, capital management, management succession, risk oversight, growth and regulation. Each article includes questions that directors may ask to further explore the issues with their own boards, as well as additional resources on each topic.
FEE Discussion Paper: The functioning of Audit Committees
The objective of this discussion paper issued by the Federation of European Accountants (FEE) is to contribute to the debate regarding improvements to corporate governance for companies as well as to the discussions regarding audit policy in general. The discussion paper recommends various improvements in relation to establishment, composition, competences and responsibilities as well as reporting to and from the audit committee with the overall aim of improving the quality of financial information provided by companies.
Responses are welcome to any aspects of the paper and especially on the questions raised by 28 September 2012.
> View PDF
Director 360° Study
Changing roles, new challenges
This publication from the Deloitte Global Center for Corporate Governance offers a wide perspective on the views and concerns of boards around the world. Based on in-depth interviews with 215 directors at listed and private companies across 12 countries, this survey explores topical issues regarding board effectiveness, how boards are functioning, and the changing roles of directors.
Increasing Gender Diversity on Boards
Current Index of Formal Approaches
Globally, governments and businesses are discussing gender diversity on boards. This tool describes the different approaches countries have taken to increase women’s representation in the boardroom and summarizes the same key aspects of each approach, including:
• Voluntary Efforts
While the advantages and disadvantages of each method are open to debate, the general consensus is that gender diversity on boards is good for business. This tool gives readers, including board directors, corporate leaders, and policy makers, a straightforward way to make comparisons.
The topic of boardroom diversity is long-standing. This second edition report from the Deloitte Global Center for Corporate Governance examines legislative efforts being pursued across 17 countries in order to encourage more women to serve on listed company boards.
European board diversity analysis 2010: Is it getting easier to find women on European boards?
This study issued by Egon Zehender International provides results from a survey of 340 of the largest companies across 17 European countries to see how many women are engaged in board work in Europe, what is the nature of their engagement – executive roles vs. non-executive roles, leadership roles on the board or within committees – and whether female participation on boards has increased or decreased over time. The research also looked at the backgrounds of directors in terms of international vs. local profiles. Data on 4,875 board positions and 5,052 committee positions was included in this research.
(Posted with permission from Egon Zehnder International, copyright 2010)
Board leadership: A global perspective
The research, covering Canada, Germany, France, the United Kingdom, and the United States, reveals small declines in split CEO/chairman roles in three of the five markets analyzed and a strong increase in independent chairs in the United States.
Stephen Davis, Executive Director at Yale University School of Management’s Millstein Center for Corporate Governance and Performance, and a regular contributor to corporate governance discussions throughout the world, provided views on the topic.
Dusseldorf Governance Forum
Deloitte together with the Millstein Center for Corporate Governance of the Yale School of Management held a conference in Düsseldorf, Germany, on May 18, 2009 entitled “Corporate Governance in Challenging Times: Past – Present – Future”. You can find the English language documentation of this event here.
Axia Award brochure
Survey results on corporate governance practices of mid-market family-owned companies in Germany.
> Download PDF (German only)
FEE Discussion Paper on Auditor’s role in Providing Assurance for Corporate Governance Statements
This discussion paper issued by The Federation of European Accountants (FEE) shows that despite a range of legal systems, institutional frameworks and traditions, there is considerable convergence across Europe in the issues addressed in national corporate governance codes. The paper considers the potential involvement of an independent auditor to increase the degree of confidence in corporate governance disclosure.
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