German Law Journal
[Vol. 11 No. 02
This is consistent with empirical studies that could not find any persuasive evidence for the fact that firms with a majority of independent board members perform better than other companies do.91 However, some studies indicate that a reasonable number of independent board members may improve the performance of the company.92 This data is based on the fact that independent board members frequently lack firm‐ or industry‐specific knowledge, skills and experience. Therefore, under its self‐organization duty, the supervisory board is responsible for constituting itself with an appropriate mixture of independent and affiliated board members.93 The non‐independent members have to be chosen due to their knowledge, skills and experience that are valuable for the given supervisory board and company. As a result, companies are still able to keep in touch with major creditors, such as banks, as well as major suppliers and major customers by according them a supervisory board seat.
Change from Management Board to Supervisory Board
Recommendation: Change shall not be the Rule
In connection with increasing the independence standards of supervisory board members, Section 5.4.4 GCGC as of 2005 recommended, “It shall not be the rule for the former Management Board chairman [CEO] or a Management Board member to become Supervisory Board chairman or the chairman of a Supervisory Board committee.” If such a change was intended, the supervisory board should present special grounds. A vast majority of all companies listed on the German stock exchange complied with this recommendation.94
Prior to the Code’s 2005 amendment, former CEOs have been the chairman of the supervisory board in fifteen of the largest thirty companies listed at the German stock
91 See, Sanjai Bhagat & Bernard Black, Independent Directors, in THE NEW PALGRAVE DICTIONARY OF ECONOMICS AND THE LAW, 283 (Peter Newman ed., 1998); more empirical evidences as to the relation between firm performance and board composition is provided by Brändle & Noll (note 1), 1363‐1365.
92 Id. Bhagat & Black, 283; Eddy Wymeersch, Corporate Governance Regeln in ausgewählten Rechtssystemen, in HANDBUCH CORPORATE GOVERNANCE, 87, 94 (Peter Hommelhoff et al. eds., 2003).
93 See generally, Peter Hommelhoff, Der aktienrechtliche Organstreit – Vorüberlegungen zu den Organkompetenzen und ihrer gerichtlichen Durchsetzbarkeit, 143 ZHR 288, 298‐300 (1979); Peter Hommelhoff, Die Autarkie des Aufsichtsrats – Besprechung der Entscheidung BGHZ 85, 293 “Hertie“ –, 12 ZGR 551, 561‐562, 568‐569 (1983); LIEDER (note 2), 625‐627.
See, v. Werder & Talaulicar (note 74), 828 table 5: 87%.