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2010]

The German Supervisory Board on Its Way to Professionalism

143

political significance of those issues.129 On the other hand, the supervisory board is still allowed to delegate detailed questions to the compensation committee, such as the negotiation on individual conditions of management board contracts.130 This is meaningful, as it cannot be expected from a large codetermined supervisory board with, for instance, twenty members to negotiate efficiently with every individual management board member.131 Nevertheless, the supervisory board as a whole must have sufficient knowledge about and it must ultimately resolve on all of the major issues of executive compensation. In this regard, the new law is persuasive, as is strikes a balance between a higher level of transparency as to executive compensation, and excessive demands of the supervisory board as a whole.132

F. Accounting Law Reform Act

Besides the changes regarding the audit committee,133 the Accounting Law Reform Act of 2009 improved the overall corporate governance system of the German stock corporation in several ways. The new law improved the monitoring function of the supervisory board and its audit committee as well as their responsibility as to accounting, auditing, internal control and risk management.

I. Disclosure Report on Corporate Governance

To begin with, under the revised Section 161, both the management board and the supervisory board have not only to disclose whether they comply with the recommendations of the GCGC or not on an annual basis. Additionally, in case they do not, they have to explain why, i.e., they have to give specific reasons for not complying with any recommendation.

The new obligation to explain non‐compliance was already requested by the Government Commission “German Corporate Governance Code”134 and legal scholarship135 and is

online.de/Dokumente/Stellungnahme BDI BDA DAI zum VorstAG endg.pdf, last accessed 23 January 2010.

132

See also, Thüsing (note 100), 524.

133

See, section E.II of this paper.

134

BERICHT DER REGIERUNGSKOMMISSION CORPORATE GOVERNANCE margin number 10 (Theodor Baums ed., 2001).

129

See, Wehlte (note 128), 216‐217; but, see also, Bauer & Arnold (note 101), 731.

130

See also, Thüsing (note 100), 524; van Kann & Keiluweit (note 100), 1590; Hoffmann‐Becking & Krieger (note 100), 9; Annuß & Theusinger (note 100), 2439.

131

See, BDI et al., Stellungnahme zum Entwurf eines Gesetzes zur Angemessenheit der Vorstandsvergütung

(VorstAG),

BT‐Dr.

16/12278,

6

(2009),

available

at:

http://www.bdi‐

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