DAX 30 – Supervisory Board Study 2019

Next Generation BoardsBoard Composition and SuccessionBoard and CEO AdvisoryLegal, Risk, and Compliance OfficersBoard Effectiveness
min Report
June 26, 2019
9 min
Next Generation BoardsBoard Composition and SuccessionBoard and CEO AdvisoryLegal, Risk, and Compliance OfficersBoard Effectiveness
After having made the statutory women's quota on DAX 30 shareholder representations, numbers of newly elected women board members have shrunk.


Key insights from this year's analysis by Russell Reynolds Associates 

In no other year have more board members been up for election. Thus, expectations for changes in board compositions were high in 2019. These expectations have been only partially fulfilled. Ninety-two seats were up for election (36 percent of all seats). Fifty-seven turned out to be re-elections of existing members. In total, 30 supervisory board members were replaced across the DAX 30 and another five non-executive director positions were newly created in the Linde-Praxair merger. This brings the total count of first-time elections to 35, still an above-average number for a single year.


After the 30 percent female quota was achieved last year by shareholder representatives, there was only a moderate increase this year. Surprisingly, among the newly elected members, the share of women was significantly below the 30 percent threshold.

The number of digital experts on supervisory boards continues to grow rapidly. As of 2019, 67 percent of DAX 30 companies are able to rely on this crucial expertise on their boards.

Cross-linkage of DAX 30 companies via supervisory board members with seats on multiple boards continues to decline; several directors have reduced their workload. However, 16.5 percent of shareholder representatives would likely be considered overboarded, according to the new German Corporate Governance Kodex, and would need to give up over 80 board seats to rectify this situation.

The Russell Reynolds Supervisory Board Survey is conducted annually and examines DAX 30 supervisory boards according to the criteria of breadth of experience, number of seats held by their members, gender, nationality, experience gathered abroad and length of term. Results are expressed by a mark and the average mark rose from 2.2 in 2018 to 2.0 in 2019. This year, the boards of Daimler, Lufthansa and SAP ranked highest. 

Gender representation in general is stagnating but is slowly increasing in leadership positions

A year after having made the statutory women's quota of 30 percent on DAX 30 shareholder representations, the numbers of newly elected women supervisory board members have shrunk. Women made up only 23 percent among newly elected directors, the smallest number since 2010. The overall quota did not decline because proportionately more men retired than women. The current quota is thus 32.3 percent. 


There has been some improvement concerning female representation in leadership positions. Martina Merz at thyssenkrupp has become the second chairwoman within the DAX 30. Another three MDAX chairwomen underline this positive trend. Of 132 DAX 30 committees, 17 are chaired by women (12.9 percent). While this is six more than in 2018, five positions are held by Martina Merz in her role as chairwoman. Thus, the dynamic growth of the women's share stopped in 2019 and women's influence in DAX 30 committees is advancing only slowly. The unequal distribution of power between men and women persists. This is also true for executive boards. While eight DAX 30 companies have 20 percent or more women on their executive boards, seven have none.

Accelerated increase in digital directors

The recruitment of digital experts to DAX 30 supervisory boards, on the other hand, has shown significant progress. Ten new digital experts were selected as non-executive directors in 2019 and more than two-thirds of all DAX 30 companies now have digital expertise on their supervisory bodies. 


Cross-linkage of DAX 30 supervisory boards declining

The survey also concluded that cross-linkage of DAX 30 supervisory board members has been much reduced. Seven companies have five or more connections to other DAX 30 companies via their supervisory board members, 16 companies are entwined with up to four other DAX 30 companies and seven companies have no ties to supervisory board members of their DAX 30 peers. Unbundling is moving ahead. The accumulation of board seats is being reduced, and the cross-entanglement previously known and criticised as Deutschland AG no longer exists in that form.

On the other hand, per the new definition of the German Corporate Governance Kodex, published in May 2019, 38 of the 230 individuals representing shareholders would likely be considered overboarded. By current estimate and if rigorously implemented, sitting top executives with supervisory board seats would have to resign 23 non-executive directorships and "regular" supervisory board members another 59 in order to reduce their workload to the recommended limit.

Comparatively low share of international members

Internationalisation of supervisory bodies saw a slight increase in 2019; the percentage of supervisory board members without a German passport grew from 28 percent to 30 percent. But half of that increase came by virtue of the Linde/Praxair merger that resulted in four Americans joining the DAX 30. Regarding internationalisation, Germany is lagging behind other countries. By way of comparison: The Swiss equivalent of the DAX 30, the SMI, has almost twice as many non-Swiss members (57 percent). 


Significant differences in board remuneration

Remuneration in 2018 was also examined by our survey. A steep gradient was observed in the DAX 30. The top spot goes to Deutsche Bank. A Deutsche Bank supervisory board member receives six times as much as a Merck supervisory board member. On average, DAX 30 supervisory board members received 191,000 euros, an increase of 7.3 percent compared to 2017. The gap between remuneration earned by supervisory board members and CEOs is likewise large. On average, a CEO gets 14 times as much as a supervisory board chair. This leaves questions with regards to equal pay for the time required from the chairpersons to fulfil the full set of their responsibilities.

Average grade improves further—Daimler, Lufthansa and SAP rank highest

Our study rates the composition of DAX 30 supervisory boards based on criteria such as business-relevant operational experience, positions held on other boards, gender ratio, nationalities and experience abroad, age distribution and tenure—with the first two weighted the highest. Applying a scoring system similar to that used in German schools (1 = best and 6 = worst), the average assessment of the composition of DAX 30 supervisory boards produced an overall score of 2.0 in 2019 compared to 2.2 in the previous year. The three companies sharing the top spot scored an excellent overall 1.5. SAP made a big leap, joining the previous year's leaders Daimler and Lufthansa.


In representative global interviews of leading institutional investors, the participants named five focus areas of governance for the coming years:


Along these lines we expect further focus on improving the composition, i.e., the range of experience available to company supervisory boards through their members. The speed of increase of digital expertise will likely not continue, now that two-thirds of companies have "ticked that box." The share of women should increase slightly, with women especially taking on more responsibility in leadership positions of committees and as chairpersons.

Our conversations with supervisory board members indicate more drive to include the concerns of a larger range of stakeholders in shaping the companies' futures. ESG is named as one highly relevant subject area for development of board expertise and creating long-term value for shareholders.

We do expect the effects of the new governance code to be less dramatic than expected at first glance, as most companies will use judgement when applying the "comply or explain" rule. This will especially hold true where personnel changes would be required for compliance.

For selected results from the DAX 30 Supervisory Board Study 2019, please click here.