Keynote speech at the 13th German Supervisory Board Meeting

The motto of the 13th German Supervisory Board meeting is “Thinking Corporate Governance Further”. And for good reason.

Some of you will remember: last November, at the 12th DART, Rolf Nonnenmacher, Chairman of the Government Commission on the German Corporate Governance Code, spoke about his vision of the’fundamental revision of the Code’ announced six months earlier. At that time I had hoped that a lively, transparent debate would develop – and that new approaches would also be seriously discussed.

But this discussion, should it ever really have taken place, has largely come to a standstill. The Commission meets behind closed doors – and nobody knows what criteria it uses to select the stakeholders with whom it discusses the reform plans.

Unfortunately, there is no real public debate either. Although a few investors have been urging corporate governance standards with growing vehemence this AGM season, most will remain silent as long as the dividend is right. The media, in turn, are sometimes lost in polemics, for example when they disqualify the chairman of the supervisory board across the board.

What does this mean for us Supervisory Board members? I mean: We must revive – and put our stamp on – the debate on corporate governance standards in general and code reform in particular as soon as possible.

Lack of diversity in the Government Commission

After all, we cannot be satisfied that representatives of our profession are blamed across the board for undesirable developments (I recall the cases of Deutsche Bank and Deutsche Börse) – but on the other hand we have little influence on the standards according to which corporate management and supervision are assessed as’best practice’ in Germany.

Let’s not kid ourselves: Although the government commission also includes supervisory boards, the bottom line is that investors, shareholder protectors and auditors dominate. The important sectors of the German economy are not represented in the Government Commission . There can be no question of a government commission as the voice of business within the framework of self-regulation, as was originally the concept of the Code.

If the Commission were a supervisory board, it would have to be acknowledged as lacking in diversity.

The result is, to put it carefully, questionable. The Code has developed into a small patchwork of references, recommendations and self-evident facts, which many find bureaucratic and patronising.

I am convinced that this paternalism takes decision-makers out of their responsibility rather than into their own – and is therefore a very important reason why we are at best making slow progress in matters of corporate governance and, 16 years after the entry into force of the Code, are still experiencing numerous cases that can only be shaken.

Let’s take responsibility!

Do we have to accept this? I mean: No. It is high time to question and reform our current corporate governance system with the Government Commission at its core. In my opinion, we, the members of the Supervisory Board, are the central shapers of corporate governance in Germany.

If we are blamed for undesirable developments – do we not also have to take responsibility for the design of standards?

I have therefore invited the chairmen of the supervisory boards of listed companies to take part in an initiative that gives us supervisory boards a stronger voice – and for this I was very pleased to receive support.

I would like to extend this invitation here today to all members of the Supervisory Board. I outlined what a new corporate governance system in Germany could look like with my draft for a new, lean and future-oriented code and today in a guest article in the Börsen-Zeitung. I would be very pleased if you would take the time after the DART to think about it – and not be stingy with comments, suggestions and criticism.

Finally, a positive comment: despite the sometimes controversial criticism, there can be no doubt in my view that we are making progress in professionalising our profession. Supervisory boards are therefore not only appointed, but also capable of assuming the role of corporate governance creator.

Yours, Peter H. Dehnen