Veteran managers continue to dominate supervisory boards. Why this urgently needs to change.

Dear readers of GermanBoardNews,

we are witnessing the next showdown between investors and the company: Shareholder advisory firm ISS has recommended that Tesla shareholders remove two board members – Kimbal Musk (brother of company CEO Elon Musk), and James Murdoch (son of media mogul Rupert Murdoch).

Murdoch’s actions in particular seem to be a thorn in the side of ISS experts. He sits on central board committees and is therefore largely responsible for serious corporate governance deficits at Tesla (such as “excessive” salaries for board members).

The case shows once again that when corporate governance is discussed, it is usually at the instigation of investors – and in the run-up to annual general meetings. Otherwise, there is – well, what? Indifference? Fatalism? Inertia?

Deutschland AG lives on

The fact that supervisory and executive boards, of all people, are reluctant to engage in governance debates is probably due to the fact that many of them would first have to put their own house in order. If you take a look at the supervisory boards of companies such as Daimler or Allianz, you will see that despite the code and the women’s quota, old-guard teams reminiscent of the Deutschland AG still dominate.

In contrast, newcomers such as HelloFresh and, above all, Zalando, whose supervisory boards we took a close look at for this issue, offer hope: Both boards are much more professional than they were a few years ago, have diverse members and are comparatively young. In comparison, Daimler & Co. look old in the truest sense of the word.

This begs the question: How are supervisory boards supposed to have an equal say in future topics such as artificial intelligence, or blockchain, when the personnel focus is clearly on past merits?

Supervisory boards need new majorities

It is clear to me that the code and the women’s quota have eliminated the worst excesses in corporate governance. But the big bang is still to come – and is overdue if the challenges ahead are to be mastered.

Now that the old-guard ranks have been carefully and well-dosed around women, digital natives and AI experts, the next stage must be ignited. In concrete terms, this means that the majority ratios on supervisory boards must change. We need fewer deserving managers – and more specialists for future topics.

To achieve this, however, decision-makers must break up traditional structures in personnel acquisition and look beyond established networks to find candidates.

Sincerely

Your Peter H. Dehnen