Posts Tagged 'Germany'

Germany Sets Gender Quota in Boardrooms

by Alison Smale and Claire Cain Miller for The New York Times

Germany on Friday became the latest and most significant country so far to commit to improving the representation of women on corporate boards, passing a law that requires some of Europe’s biggest companies to give 30 percent of supervisory seats to women beginning next year.

Fewer than 20 percent of the seats on corporate boards in Germany are held by women, while some of the biggest multinational companies in the world are based here, including Volkswagen, BMW and Daimler — the maker of Mercedes-Benz vehicles — as well as Siemens, Deutsche Bank, BASF, Bayer and Merck.

Supporters said the measure has the potential to substantially alter the landscape of corporate governance here and to have repercussions far beyond Germany’s borders.

In passing the law, Germany joined a trend in Europe to accomplish what has not happened organically, or through general pressure: to legislate a much greater role for women in boardrooms. Read more here.

Seeking German Women for Boardrooms as Quotas Near

by Tino Andresen and Birgit Jennen for Bloomberg

Time is running out for Ulrich Lehner, the supervisory board chairman of German steelmaker ThyssenKrupp AG, as lawmakers prepare to enforce female quotas in corporate boardrooms.

The number of women on the board that oversees ThyssenKrupp’s executives is set to rise to four of a total 20 after a shareholder meeting today, short of the 30 percent minimum that will be required. Starting in 2016, more than 100 of the country’s biggest listed companies will be forced to choose women when filling vacant supervisory board seats to reach the threshold. This year, smaller firms must set their own targets and publicize plans to achieve these.

“Good women are a rare commodity” for supervisory boards, Lehner told journalists in Dusseldorf on Jan. 27. “Where will these women come from who are suitable to take up supervisory board positions? They come from the same places as suitable men come from, from occupations that qualify them to supervise companies.” Read more here.

Lufthansa Board Stares Down Investors in Chairman Dispute

Richard Weiss, May 7 2013, Bloomberg

The decision by Deutsche Lufthansa AG (LHA)’s supervisory board to back Wolfgang Mayrhuber’s aspirations to become chairman against investor opposition shows the hurdles in dismantling the chief executive-to-chairman German model.

Mayrhuber, the German airline’s chief executive officer until 2010, renewed his candidacy yesterday to join the board, less than 12 hours after saying he’d back out following criticism from some shareholders. Mayrhuber, 66, changed his mind after the board voiced its “repeated wish” for him to run and key shareholders gave their blessing, the airline said.

The back and forth in the Lufthansa boardroom laid bare the growing tensions between investors no longer willing to accept the previously common transition of executives to the supervisory panel, and a board that had to offset Mayrhuber’s years of expertise against a code of conduct demanding a clearer demarcation line between the two management spheres. Continue reading…

Europe, US take different approaches to whistleblowing

by Michael Knigge for The Deutsche Welle, September 5th, 2010.

The ongoing wrangling over the methods of WikiLeaks has led to a broader debate about whistleblowing. While it has been an accepted practice in the United States for a long time, that’s not the case in Europe.

When Germans want to talk about whistleblowing they quickly run into a linguistic problem: There is no German word for it. In order to describe a whistleblower in their own language Germans have to resort to a negatively connotated word like informant or paraphrase it some other way. That’s why Germans often simply use the English word to talk about whistleblowing.

The lack of a proper name for the practice is indicative of the role and acceptance of whistleblowing in Germany.

“In Germany there are no laws to protect whistleblowers or to serve as an incentive for whistleblowing,” Johannes Ludwig, a professor at Hamburg’s University of Applied Sciences and a board member of Germany’s Whistleblower Netzwerk, told Deutsche Welle. “In the US there is both.”

The reasons why whistleblowing plays a much smaller role in Germany than in the US are historical and also shaped by mentality, argues Ludwig. The US was founded by people that didn’t want to acccept the traditional hierarchical structures in Europe. (continue reading… )

Current Corporate Governance Trends in Germany

About a decade or so ago, publicly traded German operating companies were characterized by stable management boards with mostly German nationals serving as board members, and stable shareholder bases characterized by a preponderance of cross-holdings by German banks, insurance companies and other operating companies. In general, there was little shareholder activism and German companies were run using a consensus style basis, with different parties giving input and decisions being made that strived for unified outcomes among the different stakeholders. This source of stability aided the German economy and allowed Germany to develop into one of the wealthiest, most prosperous Western Democracies in the world. In fact, Germany became the world’s leading exporter until only overtaken by China this past year.

However, Germany’s foray into the global economy now makes German companies recognize the important topic of corporate governance, which is a world-wide phenomenon that publicly traded companies must address. Currently, foreign investors are investing in German companies to a larger degree than in the past and activist shareholders are making their views known to management and taking action as a result. In their 22nd of August, 2008 edition, the highly respected German newspaper, Handelsblatt, published their leading story with the headline “Foreigners increase pressure on companies – international investors use general meetings for criticism.”…(continue reading)

Corporate Governance and Internal Capital Markets

by Belen Villalonga, for The Harvard Law School Forum at Harvard Law School, Febraury 16, 2010.

In our paper, Corporate Governance and Internal Capital Markets, which was recently published on SSRN, my co-author, Zacharias Sautner, and I take advantage of a unique opportunity for a natural experiment provided by a recent tax change in Germany to explore the link between corporate governance and internal capital markets. In 2002, the prevailing 52% corporate tax on capital gains from investments in other corporations was repealed, thus eliminating a significant barrier to changes in ownership structures. The tax repeal affected most large shareholders in German corporations since, in addition to companies, banks, and other financial institutions that are commonly organized in corporate form, most wealthy individual and family shareholders in Germany hold their shares through intermediate corporations (La Porta, López de Silanes, and Shleifer (1999); Franks and Meyer (2001); Faccio and Lang (2002)). Indeed, the tax change gave rise to a significant reshuffling of corporate ownership structures. This exogenous shock allows us to overcome or at least mitigate concerns about the endogeneity of ownership in estimating its effect on internal capital markets.

The significant change in ownership structures that resulted from the German tax reform offers an additional advantage from an econometric point of view: It creates a longitudinal variation that is unusual in ownership studies and which, combined with the already-large cross-sectional variation in German ownership structures, allows us to identify the effects of ownership changes and structure with much greater statistical power than what could be obtained from U.S. data. Moreover, because German corporations disclosed segment information during our sample period, we are able to compute measures of diversification and internal capital market efficiency similar to those used by other researchers on U.S. data…(continue reading)

Infineon Revolt Becomes Governance Test Case

by Neil Baker, for Compliance Week, January 25, 2010.

The battle between German electronics company Infineon and rebel shareholders is rapidly turning into a test case of the country’s corporate governance practices, with more shareholders now opposing the company’s choice of supervisory board chairman.

Infineon has run into trouble over its desire to appoint Klaus Wucherer to chair its supervisory board. Wucherer has been a director of the company since 1999; Hermes, a U.K. activist investor, has started a campaign against his chairmanship, arguing a more independent candidate was needed.

The Hermes campaign is the first time that an institutional investor has tried to force out a senior director of a big German company. Two other large institutions, Legal & General and Bank of New York Mellon, have now joined the attack, backing proposals to appoint an alternative candidate, Willi Berchtold, director of auto components company ZF Friedrichshafen…(continue reading)

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