Board evaluation in the German supervisory board

The German Corporate Governance Code recommends:’ the supervisory board shall regularly evaluate its efficiency’ (GCGC 5.6).

All of those German corporations which do not explain their non-compliance with this recommendation therefore have to evaluate their boards.

As the experience of DSW in the last AGM season shows, board evaluation were – up till then- only carried out  in a few cases. This was reason enough for DSW to initiate and develop a guide in order to evaluate the efficiency of the supervisory board. DSW has a deep knowledge in Corporate Governance issues as it was member of the governmental commission ’Corporate Governance’ led by Professor Baums and is still member of the Code commission (German Corporate Governance Code) headed by Dr. Gerhard Cromme.

Based on this expertise and the experiences out of 50 board memberships, DSW developed a detailed catalogue of questions to evaluate the boards’ work. Also international standards were taken into account.

The catalogue with more than 100 questions covers the following issues:

• Self-image of the board
• Activities of the board
• Remuneration issues
• Composition of the board
• Composition of the committees
• Selection procedure for board and committee members.

One of the objectives of a board evaluation can be more efficiency in the boards’ work and potential for improvement.

DSW in general recommends single interviews with each member of the board by an external, independent person. The outcome should be analysed in an anonymous manner.

If you need any assistance or are interested in the topic ‘board evaluation’ please contact Jella Benner-Heinacher.