Economy & Politics

ColumnThe terrible year of German supervisory boards

Capital columnist Bernd Ziesemer
Personal-Financial.com columnist Bernd ZiesemerMartin Kress

When it comes to the division of labor between board members and supervisory boards, the German economy is divided into two neatly separated spheres. There is the beautiful, perfect world of bureaucratic corporate governance rules, in which everyone eagerly writes reports and ticks off relevant lists. And there is the boring world of entrepreneurial practice, in which you don’t care about the many noble words of the code and everyone does what he thinks is right. 2020 could go down in the history of German corporate culture as Annus horribilis in this regard.

The year began with a new case of management chaos in the VW group, where works councils once again acted as the real masters of the management, put the incumbent chief executive on call and the presidency of the supervisory board with the Porsche Piëch clan more and more to the actual power center ( which contradicts company law). Afterwards, Wirecard finally brought to light the years of complete failure of several generations of supervisory boards.

The previous head of the supervisory board said goodbye to Commerzbank last week and there was not a single person with the guts to take responsibility for the violently lurching bank in the hour of need. And on the same day Joe Kaeser at Siemens defeated the corporate governance rules with a big leap and now changes directly from the executive chair of the entire group to the chairman of the split-off energy division without a two-year cooling-off phase.

“Corporate Governance matters!”

Of course there are big differences between the four cases, which could easily be supplemented by further examples from many other groups. Wirecard is expanding day by day into a major fraud at many levels and it may take years to be brought to justice. In the other cases, there can be no question of a violation of applicable law and law. Formally, everything is OK at VW, Commerzbank or Siemens. But the Wirecard case shows that you have to fight back from the beginning. Not immediately, but at some point the flagrant violations of a clear division of labor between board members and supervisory boards will take their toll. Not necessarily with a total loss like at Wirecard, but nevertheless with sharp price losses for the shareholders. Or as the British and Americans put it succinctly: “Corporate Governance matters!”

This finding was already much more firmly established in Germany a few years ago than it is today. It does not go forward, but rather backwards with the corporate culture in many groups. In individual cases, the shareholders rebel – for example by refusing to discharge the acts of supervisory board and management board members (albeit without consequences), such as at Bayer AG. Overall, however, the capital collecting agencies fail to enforce competent supervisory boards and to sanction non-compliance with the rules. And the small shareholders complain strongly, but have nothing to say in practice.

The only thing left is the legislator, who intervenes more because the voluntary mechanisms do not work. One can already assume that the Wirecard case will trigger a new regulatory push. The economy should not complain about this: The board members and supervisory boards have to attribute it to themselves.


Bernd Ziesemer is a capital columnist. The business journalist was editor-in-chief of the Handelsblatt from 2002 to 2010. Until 2014 he was managing director of the corporate publishing division of Hoffmann and Campe. Ziesemer’s column appears regularly on Personal-Financial.com. Here you can follow him on Twitter.


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