People make companies succeed

Increasing Requirements and Appropriate Compensation for Supervisory Work

The recent amendment of the German Corporate Governance Code includes the proposal to limit the tenure of supervisory directors and to publicize any failure to attend board sessions. Questions of time management and flexibility are becoming increasingly relevant for competent supervisory work. A recent Kienbaum study has revealed how much more time supervisory activities require today when compared to 15 years ago. This is evident in the sheer hours invested in an increasing number of board sessions today, and in the increasing need for specialist knowhow. To consolidate that knowhow and ensure the presence of the expertise required for special supervisory activities, many activities are being delegated to dedicated committees for later presentation to the complete board. This trend is powering a trend towards performance-independent compensation, with the remuneration offered to supervisory directors depending on compensation for special roles and responsibilities.