Over the past ten years, Russell Reynolds Associates has conducted an annual board survey, which examines the supervisory boards of the constituent companies of the DAX 30 index. This year we additionally focus on an analysis of the management boards of DAX 30 companies, examining trends in diversity, tenure and experience.
Unlike supervisory boards, which are held to a mandatory quota of 30 percent female representation by the German Corporate Governance Code (2020), the target percentage of female management board members is defined by the supervisory board. Despite an increase in female representation on supervisory boards, the share of female representation on executive committees has remained relatively flat over the past three years. In 2019, top management positions in German companies comprise, on average, only 14 percent female executives. There are, however, several significant outliers contributing to the lower average percentage; seven DAX 30 companies have no female representation in top management positions whatsoever. In contrast to other European countries, Germany still lags behind its peers. Norway leads the pack with 27 percent female representation in top management positions, followed closely by Sweden and the UK.
|Sweden OMX 30||23.7%|
|UK FTSE 100||22.5%|
|USA Fortune 500 Boards||22.2%|
|Finland OMX 25||20.9%|
|France CAC 40||19.6%|
|Denmark OMX 25||17.1%|
|Spain IBEX 35||16.2%|
|Germany DAX 30||14.2%|
|Italy FSTE MIB||11.8%|
There is a significant variance in the numbers of female executives in DAX companies; from a high of 25 percent to a low of zero. Seven companies of the DAX 30 have no women on their management board.
The internationalisation of newly appointed management board members has increased significantly over the past five years. Among division heads and executives with central functions, some 35 percent are non-German.
A majority (66 percent) of management board members were groomed into their roles from within the company. However, it is interesting to note that CFOs have a better chance of a lateral appointment, with 50 percent being externally appointed.
DAX 30 management board members are compensated at an average of 3.8 million euros per annum.1 Compensation does vary; at the most expensive end of the spectrum Linde pays its management board members an average of 8.9 million euros per annum, roughly five times what MTU pays. On average DAX 30 management board members were granted 60 percent of their maximum possible compensation in 2019.
Germany is not making headway in filling top positions with women in its 30 DAX companies: the number of women on DAX boards has stagnated at 14 percent for three years. Previously, it had doubled within four years, from 7 percent in 2014 to just under 14 percent in 2018. Of the 190 board members of DAX companies, 27 are currently women. Five are CFOs, and six are chief human resources officers (CHROs), but none are CEOs.
|CEO||CFO||Central functions||Division / Region|
The debate triggered five years ago by the law on equal rights in management positions did accelerate the appointment of female management board members for a while. But this momentum has stalled during the past three years, and the same seems to be true for DAX supervisory boards. Once the legally required 30 percent had been achieved, the quota of women has been stagnating at a third.
Among the DAX companies there are great differences regarding the number of women management board members. Six companies have a female share of 25 percent on their boards of directors (Covestro, Daimler, Deutsche Telekom, Fresenius Medical Care, Vonovia, Wirecard), two have 20 percent (Allianz, Merck), and seven DAX companies don’t have a woman on their management boards (Bayer, E.ON, HeidelbergCement, Infineon, MTU Aero Engines, RWE, Siemens).
|COMPANY||MEN||WOMEN||TOTAL||SHARE OF WOMEN|
|Fresenius Medical Care||6||2||8||25%|
|MTU Aero Engines||4||0||4||0%|
More female DAX board members have an international background than their male peers: 44 percent are from abroad; among men the number is around 30 percent.
|Germany||Other Europe||Americas||Asia Pacific||Middle East & Africa|
Overall, two-thirds of all board members hail from Germany, one third from abroad, of which some 20 percent from elsewhere in Europe. 83 percent of all CEOs are Germans. Even though the proportion of locals manning the upper board echelons has been stubbornly high, the internationalisation of DAX boards has recently increased considerably. In the past two years, almost as many foreigners as Germans were appointed to DAX boards.
Around 17 percent of all current CEOs were appointed from outside, while 83 percent were developed internally to become CEOs. Only half the current CFOs were found inside the company, while the other half were recruited outside.
|Total – internal vs. external|
|Appointed from outside the company||Promoted from within the company|
|Appointed from outside the company||17%||18%||34%||35%||43%|
|Appointed from outside the company into the management board, and then promoted as CEO||83%||82%||66%||65%||57%|
|Promoted from within the company||83%||82%||66%||65%||57%|
Analyzing tenure in a company vs. the age at the time of board appointment, produces a mixed bag. Seven board members have been with the firm for 35 years, nine have been board members for at least 15 years, and another seven were aged between 30 and 40 when they were appointed. Joe Kaeser at Siemens has been with his employer the longest, logging 40 years of service. Frank Appel of Deutsche Post has been CEO longer than anyone, running the company for the last 18 years.
Remuneration also is all over the scale. In 2019, board members at Linde (EUR 8.9 million), Deutsche Bank (EUR 6.6 million), and SAP (EUR 6.3 million) were the highest earners. MTU (EUR 1.6 million) and Infineon (EUR 1.8 million) had the lowest average pay-out. 2
Although there remains a lot of work to be done regarding the women quota, it is nonetheless true that additions to the board of management tend to become more diverse. One can work one’s way up in a company and stay with the same firm for a lifetime, or one can join from outside as a board member, and one can increasingly do so from abroad. One can become a DAX management board member at age 30 or even be CEO for 18 years. The trend towards greater diversity continues.